Stayin’ Alive: Subprime Myths

October 24, 2008

So, the way the conservative story goes, in 1995 Bill Clinton forced Fannie Mae and Freddie Mac to give home loans to low-income families that wouldn’t otherwise qualify, which started the subprime mess that has led to your underwater 401k.

The problem is almost none of that is true according to pesky facts:

Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

-More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

-Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

-Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

During those same explosive three years, private investment banks – not Fannie and Freddie – dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

Read the rest of the article for more facts that won’t cooperate with Republican smears.

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