The Automatic Earth
I’m convinced that whatever anybody says to the contrary, Fannie and Freddie have been used for at least 2 years to dump losses incurred by Wall Street’s largest lenders, including Countrywide. I’m equally convinced that the Treasury and the Federal Reserve knew about this, and gave their permission. Perhaps the scheme even originated there. The key line in the Washington Post article is this one: “Fannie Mae Executive Vice President Thomas A. Lund said the company pursued the purchase of subprime loans in 2006 and 2007 at the request of lenders, who wanted Fannie Mae to take the loans off their books.”. They don’t even try to hide it much. And why should they? After all, they can continue to claim, as the Post quotes from an internal Fannie document, that “The company recognized the already weak performance of subprime loans but predicted that they would get better in 2007″. More
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