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Comment by fanboy123 | Hacker News Reader

because private label mortgage issuance shut down. over 90 pct of mortgage origination are now agency. this includes all refis which rolls crap out of private label onto the govt sheets. we went from investors loaning money to the taxpayer and this is a subtle method of bailing out the fin industry. no way fin instutions would have paid back any govt loans without this help and its a convenient place to sweep away the losses.

also prime mortgages from the bubble years got hammered and of course that hurt them.

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because private label mortgage issuance shut down. over 90 pct of mortgage origination are now agency.

Interesting - it's as if the private sector has figured out that maybe fewer mortgages should be issued until we come up with better underwriting standards.

Fannie/Freddie are now taking taxpayer dollars to continue issuing mortgages that the private sector considers too risky.

Clearly, Fannie/Freddie are paragons of underwriting and would never issue bad loans.

also prime mortgages from the bubble years got hammered and of course that hurt them.

Wait, Fannie/Freddie made bad loans and assigned them the label "prime"? They clearly had nothing to do with the mortgage mess whatsoever.

Well, without them to pick up the slack we would have almost NO mortgages issued in this country, which some of us might think is bad. The alternative would be for rates to rise (some of us might think this is a good thing, which it might be) and to allow housing prices to fall. This has many knock on effects like crippling pension funds and banks and insurance companies etc etc.

I find it horrible that guilty parties profited/are profiting from their mistakes. But its a complicated problem which is why we are going to go through hell to fix it.

FWIW I this does not excuse govt behavior, which leans far far too much in the way of banker cronyism, which might have been the original point of the article. I am just pointing out that its a complicated situation that is a mess to sort out.

Also I never stated that fre/frn never made bad loans and were not players in this whole debacle. I just stated that they were not the main engine of horrific growth and the "cause" of all of these problems.

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