Republican Talking Point Smackdown — Freddie Mac and Fannie Mae Are Not Responsible for the Meltdown
John McCain has been talking this bit of idiocy up ever since his call to fire the Chairman of the SEC landed like a dud. It has been taken up by the wingnut media for dissemination to their aggrieved and credulous constituencies. Let’s take a look at why this talking point is complete bull and why they think this is useful to them. This is going to be long (go get your cocktail now) — but unlike any wingnut talking point, there is plenty of data along the way here. We’ll start with this graph from Brad Delong:
Frankly, this ought to be the end of the discussion. Using data from the Federal Reserve Board, you can see who was writing mortgages throughout the life of the housing bubble though the bubble bursting. And the conforming mortgages that Fannie and Freddie could acquire became a smaller part of the total mortgage market share starting in 2002, absolutely cratered (for a combination of reasons — market, political, structural (their accounting scandal) in 2004, 2005 and started ramping back up as the bubble began to pop. The giant spike at the end is when the Administration (aided and abetted by Congress) rejiggered the conforming limits of these GSEs to get them to take on jumbo loans in an impotent attempt to put their fingers in the dike.
