It is pure shit. Or at least the article about the report is. It claims that the GSE’s bought subprime loans. They didn’t, until after the bubble already started bursting in 2006, and that was mainly in the form of purchases of MBS’s. (A stupid move, cost the taxpayers billions, but had nothing to do with creating the bubble.)
It also cites Countrywide as one of the main offenders. Indeed. But Countrywide, as a piece of their total business, did very little with the GSE’s. They were the Wall Street darlings for providing inventory to package and resell in the private MBS market.
It also mentions the CRA again, which wasn’t (and still isn’t) an issue for mortgage banks, only commercial banks. Hence, lenders like Countrywide were under no obligation to meet CRA standards. They did voluntarily agree to meet HUD standards, which are often the target of criticism. The problem with that line of criticism is that they didn’t meet those standards. A report just issued about a month ago showed that Countrywide failed to meet HUD underwriting standards on half of the loans tested. Remember, Countrywide was the go-to subprime lender. Was the go-to lender for product for Wall Street. And they sold products which were ineligible for the GSE to purchase.
This horse has been dead for years. It should stay that way.
