From the transcript: BACKGROUND HOW WE GOT HERE!!!! (to your point)
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Seeing their market share decline as a result fo this change of demand, the GSEs made the decision to widen their focus from the safter prime loans and begin chasing the non-prime market, loosening long-standing underwiriting and risk managment standards along the way. This would be a fateful decision that not only proved disastrous for the companies themselves – but ultimately also for the American Taxpayer.
Once again….RP was right in what happened and you are trying some rhetorical tool to make your arguement.He never stated that the GSE’s caused the problem but that the passgae of the bill would add fuel to the fire of a false housing boom. Which is exactly what happened.[/quote]
You have to read that quote in historical context. It doesn’t say anywhere in there that the GSE’s were a significant party to the growth of the housing bubble or the cause of its crash. The GSE’s didn’t loosen their standards and get into the subprime market until late in 2006, well after the peak. By that time, the crash had already begun. That was what he was referring to in the last sentence of the quoted piece. The GSE management decided it would be a good idea to both acquire subprime loans and became, by far, the biggest buyer of mortgage backed securities, something they had never done before. (Indeed, they have always issued MBS, but never before bought them.) That was the disasterous decision for both the shareholders of the GSE’s and the federal government, ergo, the taxpayers. That decision probably temporarily slowed the crash.
Paul was right in his prediction. He was dead wrong on how or why it was going to happen.
