Outrage at McCain--a loser strategy.

A mostly political Weblog.
Sept. 15 2008 6:24 PM

Listen, Obamaphiles!

Outrage at McCain's "lies" is a total loser strategy.

(Continued from Page 62)

Huh? Does Krugman not know that Fannie Mae was a huge buyer of subprime mortgages, including mortgages from Angelo Mozilo's Countrywide? David Smith's eerily prescient AHI blog noted  that Fannie Mae and Freddie Mac reportedly bought $35 billion in subprimes in the first quarter of 2007 alone.

What you need to know here is that the right — the WSJ editorial page, Heritage, etc. — hates, hates, hates Fannie and Freddie. Why? Because they don't want quasi-public entities competing with Angelo Mozilo.

"Huh?" again. Conn Carroll responds:

The problem is that Fannie was Countrywide's No. 1 enabler. ... When he was CEO of Fannie, former Barack Obama campaign adviser Jim Johnson worked personally with Mozilo to streamline the two companies' business relationship.

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Could Mozilo have done his subprime thing without Johnson and Fannie Mae as a backup to purchase his junky mortgages?

P.S.: Krugman suggests Fannie's problem is that it wasn't a true government agency, but rather a hybrid public/private partnership that privatized profits and socialized losses.

Liberals like Fannie the way it was for the first 30 years — a purely public enterprise.

Good point--according to Smith Fannie seems to have been using all sorts of tricks to turn profits using its implicit government credit guarantee.But if Fannie had been a pure government enterprise, would it really have refrained from supporting Mozilo-style subprime lending? I'm not so sure. Providing "affordable housing" was a policy crusade of Johnson, among others, and a popular goal on Capitol Hill (where Mozilo had done so much to ensure that his "friends" would be receptive to his particular method of pursuing affordability).

P.P.S.: Krugman also writes, boldly:

You could say that the Fannie-Freddie experience shows that regulation works.

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