The Mysterious Ways Of Fannie And Freddie | Johan Norberg | Cato Institute: Commentary

The Mysterious Ways Of Fannie And Freddie | Johan Norberg | Cato Institute: Commentary: "When Congress created the Commission they wanted a crisis narrative of greedy bankers and passive regulators. In other words, they wanted to put the blame somewhere else. Fannie Mae and Freddie Mac are creatures of Congress and it was Congress that pushed them to undermine underwriting standards and increase lending to low-income households while stalling reform.

Fannie and Freddie regularly let members of Congress announce large housing developments for low-income earners in exchange for political and financial support; over the past decade the two GSEs spent almost $200 million on lobbying and contributions to both parties, but most of all to Democrats, the present majority. Politicians wanted scapegoats on stage--Fannie and Freddie representatives would have functioned as a mirror."

"Investment bankers have been publicly scolded by the Commission for taking on so much risk, with leverage ratios around 30 to 1. Shouldn't they ask how Fannie Mae and Freddie Mac ended up with a leverage ratio closer to 60 to 1?"