Fannie Mae defender trips himself
Robert Kuttner, the liberal co-founder and co-editor of The American Prospect, has written a piece for his periodical that attacks the findings in a new book on the mortgage meltdown, Reckless Endangerment. The book's authors are a long time New York Times business reporter and a respected independent research analyst. But Kuttner has trouble coming to terms with the conclusion in Reckless, namely that the revered progressive ideal of homeownership for everyone is a very real culprit.
Kuttner's article is entitled "Fannie Backwards" and it basically agrees with the premise in Reckless that Fannie Mae executives, beginning in the 1990's, rode the company into new and dangerous lending practices for personal financial gain. His objection is that greedy private lenders lead the way in producing millions of shaky loans (notably sub-prime loans) and not the quasi-government entity with the acronym of FNMA! Fannie only followed along later! Remember, to those of Kuttner's persuasion, "Government" is good and private endeavors are bad.
To prove his point that Fannie Mae was late to the party, he notes in his "Fannie Backwards" column that FNMA did not start buying these "sketchy" mortgages packaged into securities until 2004:
Fannie did start purchasing large numbers of sketchy mortgages, in an effort to defend its market share, but only around 2004.
By then, he says, "subprime was a huge industry with plenty of buyers on Wall Street." One problem though, Kuttner had previously written on the mortgage collapse in a 2008 article that pinned the year of FNMA purchasing large quantities of mortgage-backed securities in the year 2000! That article was called cutely "Little Orphan Fannie".
Here is what he wrote then:
After 2000, Fannie also served to abet the sub-prime mess. For the most part, Fannie refused to buy the very worst sub-prime loans, but it was happy to buy so called "Alt-A" loans, which were a slightly milder version of the same abuse-very risky loans with exorbitant interest costs (and profits) and almost non-existent standards, that are now going into default at almost the same rate as sub-prime.
It is apparent that Kuttler cannot bring himself to acknowledge that "big government" was a prime mover and shaker in the subprime meltdown. The subsequent economic collapse had since been blamed on the Bush tax cuts by every Democrat politician and liberal media pundit. Can't get away with that anymore. By the way, Reckless Endangerment is a great read and should be in every high school in America.
J. James Estrada