Monday, November 17, 2008

Fannie and Freddie not to blame for housing bubble

Krugman calls the Republican sponsored myth that the financial crisis was due to Fannie and Freddie Mac "utterly false." He notes what has been clear for some time:
Fannie/Freddie did some bad things, and did, it turns out, get to some extent into subprime. But thanks to the accounting scandals, they were actually withdrawing from the market during the height of the housing bubble — the vast majority of the loans now going bad came from the private sector.

Yet it’s now clear that the phony account of the crisis — that it’s all due to Fannie, Freddie, and nasty liberals forcing poor Angelo Mozilo to make loans to Those People — is setting in as Republican orthodoxy, part of what you have to believe to be a respectable member of the party.

To what extent will the US news media alow this patently false account of the crisis to be disseminated unchallenged, as just "the other side's" view of the matter?

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SPECIAL COVERAGE I live-blogged the spontaneous Obama victory celebration in Washington DC. Experience what it felt like to be among thousands of deliriously happy people gathered outside the White House. Click here.

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