Quote Originally Posted by sarbox68
And the reason why is because they were (in many cases) guaranteed by the government through Fannie and Freddie. So the bank could 1) write the loan with minimal oversight, 2) have it federally guaranteed and therefore 3) package it and sell it as investment grade paper so they could 4) rinse and repeat. This is the sh!t that happens when you don't think government programs all the way through....
I'm pretty sure that the subprime mess is as much or more Wall Street's fault than it is Fannie & Freddie's (if you separate F&F from Wall St.). Investment banks bought up bad loans, repackaged them, solicited AAA ratings from the Wall St. ratings agencies (Standard & Poor's etc.) and sold them to unsuspecting investors. Sure, the way Fannie & Freddie were let loose in the late 60's was a HUGE mistake, and they bought some of these bad loans, but they're in no way responsible for the entire mortgage crisis.