Letting Fannie and Freddie Off the Hook

Although they played a part in the ensuing financial panic, noted economist Mark Zandi argues why Fannie Mae and Freddie Mac don't deserve to be blamed for the housing bubble.

Zandi sees many groups to blame for the U.S. housing bubble of the last decade, but finds that Fannie and Freddie, who were making just a fraction of the subprime loans as the private sector at the height of the bubble, should not be considered among them. He sees America's broken mortgage securitization machine as the fundamental source of the problem.

"Getting history right for this dark economic period is critical if we are to design a better mortgage finance system for the future. If Fannie Mae and Freddie Mac are responsible for the debacle, then perhaps government's role in a future mortgage finance system should be minimal. But if private lenders deserve most of the blame, the case grows for giving government an important role in backstopping and overseeing the system."

Full Story: Fannie and Freddie don’t deserve blame for bubble

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