There are two OpEds in today’s New York Times regarding the GSEs. One of them is full of insight and intelligence and rationality.
The other is by John Carney.
The insightful column, Say Goodbye to Fannie and Freddie, was written by former St. Louis Fed president Bill Poole.
During the credit bubble and housing boom, the Alan Greenspan led FOMC was terribly irresponsible in their actions and inactions. But there were two voices of reason at the Fed: Ed Gramlich and Bill Poole. Both were unfortunately ignored by the Maestro (as he was then known). Gramlich warned against subprime loans and predatory lending, while Poole was a sharp critic of the GSEs.
I cited Poole in Bailout Nation for “his many cautionary warnings about the GSEs.”
As to the less insightful OpEd, well, John and I have disagreed about this — and other things — for years. He seems to prefer talking points to data; he started putting the crisis blame on the CRA, before he moved on to blaming the GSEs. His arguments tend towards the blissfully data-free.
In the Times, John begins his column with this misleading statement: “Despite their central roles in the housing bubble, the Federal Housing Administration, Fannie Mae and Freddie Mac now back more than 95 percent of new mortgages.” (Update: I don’t have a problem with the 95% -post-bailout receivership figure; since the collapse, FNM/FRE are the only game in town). I lose interest when an author’s premise is based on a false talking point, especially one that lacks supporting data.
Far too many electrons have been sacrificed in detailing my views on FNM/FRE, but the short version is they were just 2 more crappy banks — as much to blame as Citi and Countrywide and Bank of America and Lehman Brothers and Washington Mutual and Bear Stearns and Merrill and . . . well you get the idea. But the talking point that this all was caused by Fannie & Freddie? The data simply is not there.
Regardless of your thoughts on the GSEs, these two OpEds illuminate how — and how not to — write a persuasive editorial . . .
Say Goodbye to Fannie and Freddie
NYT, August 11, 2010
Too Big Not to Fail
NYT, August 11, 2010
Fannie Mae Looks Like Hell (November 16th, 2007)
Blaming Greenspan (June 2007)
Subprime Mortgages: America’s Latest Boom and Bust (May 8th, 2008)
Poole: Save Fannie/Freddie, Then Dismantle Them (July 27th, 2008)
Misunderstanding Credit and Housing Crises: Blaming the CRA, GSEs (October 2nd, 2008)
Fannie Mae and the Financial Crisis (October 5th, 2008)
CRA Thought Experiment (June 26th, 2009)
Who is to Blame, 1-25 (June 29th, 2009)
$100,000 CRA Challenge (June 29th, 2009)
Get Me ReWrite ! (May 13th, 2010)
Global Housing Boom (July 20th, 2010)