One of the reasons I chastise idealogues like Peter Wallison is that while they are busy chasing their white whales, they ignore real issues. Important things that don’t fit neatly into their dogmatic driven narratives.
While they are fantasizing about laying the blame for the credit crisis on the GSEs, they are missing all the really bad stuff that is actually happening with them: The banks have been selling their near junk loans and bad debt to Fannie/Freddie at full price, then having the GSEs take the write down.
In other words, the GSEs have become a backdoor bailout for failed bank policies.
I will have more on Monday, but in the meantime, have a gander at these prior posts:>
• Fannie And Freddie And the Backdoor Bank Bailout (May 12, 2010)
• GSEs: $1 Trillion Dumping Ground for Bad Bank Loans (Jun 14, 2010)
• Backdoor Bailouts for Goldman Sachs? (Mar 6, 2009)
• Which Banks Got Fed Loans During the Meltdown? (Dec 3, 2010)
• Fannie / Freddie Acquitted (Sep 22, 2010)
Always remember when investigating these things: Follow the money!