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Jul 17, 2012


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David Wharton
State and local governments should not be giving financial aid to corporations responsible for our financial crisis ...

There was a lot discussion here, some months ago, on the topic of Fannie and Freddie's responsibility for the financial crash. I still think Fannie and Freddie played an important role in the financial crisis; do the dissenters want to weigh in on whether Jeff's off base?

Ed Cone

I haven't seen much disagreement here with the proposition that F&F played an important role, DW -- just with the attempted whitewash that puts the lion's share of the blame on them in an effort to shift scrutiny from other parties, especially the financial industry (these attempts often misstate the mechanics of the market and the chronology of the bubble, among other flaws).

In fact, I've tried to argue often that F&F are best understood as parts of the financial industry, not something different and opposed.

Andrew Brod

I think the media release is off-base when it claims that Fannie and Freddie were "responsible for our financial crisis."

David Wharton

"F&F are best understood as parts of the financial industry, not something different and opposed."

You got that right, buddy!


Wall st was starved for MBS. It was a vehicle,that no one understood, for them to move piles of shit. Everyone else was an enabler.

David Wharton

"Wall St." and "starved" in the same sentence ... hah! ... only in the sense that this guy is starved.

Andrew Brod

That movie made me hungry.

David Wharton

Would you like a mint, sir?

Andrew Brod

It's only wafer thin.

Jeff Thigpen

Andy, I didn't mean to infer that they were the only entity responsible for the financial crisis. I do think its fair to say they had a role as one of many factors and shouldn't get a free ride on excise taxes that go to state and local governments. I think the central issue is their claim to a tax exemption from the excise tax in land transactions. On that point our position is pretty clear, we think it's highly questionable based on the US District Ct decision and the fact they are traded on the NY Stock Exchange. I wouldn't say these groups were "enablers", but more like incestuous facilitators and partners.

Andrew Brod

Jeff, even if your request is based on the GSEs (i.e. F&F) being merely among the entities responsible for the fiscal crisis, then it's based on a misconception and should be rejected.

Yes, the GSEs joined the party, but they didn't throw it. And yes, the GSEs have been investigated by Congress for their role in the financial crisis of 2008, but the investigations were bogus and, by the way, highly partisan. Perhaps you have to indulge such silliness in order to get both Repubs and Dems to sign on to this, but silliness it is.

However, I don't think your request actually depends logically on the GSEs having been a cause of the financial crisis. It stands on its own, don't you think? Invoking the financial crisis just muddies the waters.

Jeff Thigpen

Andy, our request is based on how the law governing excises taxes should apply to Fannie/Freddie. My comment about F/F and the financial crisis was my opinion.

I'm really interested in your view that F/F are not among the entities responsible for the financial crisis (or fiscal crisis). Can you drill down a bit from your point of view? Feel free to email me.

Jeff Thigpen

Not that I'm implying they are like "THE" reason for the crisis. But in all fairness, they have been part of a very dysfunctional housing finance system.

Andrew Brod

"My comment about F/F and the financial crisis was my opinion."

Right. And it muddies the waters. If that's what you're going for, then cool.

And I realize that you're not claiming that the GSEs were the only cause (though that's far from clear when your media release refers merely to "corporations responsible for our financial crisis"). I addressed that already.

I agree that the GSEs are "part of a very dysfunctional housing finance system." So is my bank, the State Employees' Credit Union. But I don't think SECU should be blamed for that system.

I've said elsewhere, perhaps on this blog, that the GSEs joined the MBS party, but they didn't throw it. Take away the GSEs and you would have had the same crisis.

Andrew Brod

In fact, this thread illustrates your mistake. Your request to the attorney general raises a valid issue, and I'm curious to see his opinion. But because you inserted an extraneous thread of an opinion about the financial crisis in your media release, we're arguing about something else.

jeff thigpen

Andy, I remain convinced this is nothing a beer can't resolve...

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