In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
And yet Fannie got into trouble guaranteeing loans to MIDDLE-income borrowers.
Fannie and Freddie never did much for affordable housing. Their activities were consistent with maximizing profits for their shareholders.
http://www.federalreserve.gov/pubs/feds/2006/200630/200630abs.html
http://www.federalreserve.gov/pubs/feds/2006/200630/200630abs.html
So it’s Clinton’s fault.