Isn't it correct that Fannie and Freddie influenced the whole thing, because the banks wanted in on the gravy train as well, ci?
Not really. Sub-prime lending, ARM lending where totally inappropriate, utter lack of responsibility to administer to loans the second they're written, (and tons more stuff I don't yet have a firm grasp on) was a time-bomb of its own making. Some of these things work well in a rising market price bubble; but is doomed to failure when real estate values create negative equity positions. It's a fun ride when simply signing a mortgage gets you an R.O.I., almost regardless... and banks make tons of dough when equity magically appears, thereby making absurdly risky paper valuable, but it is an extremely irresponsible strategy for both the real estate purchaser and the lending institution when more traditional safeguards are not observed.
Fannie and Freddie, while not the soundest business models in the first place, were no accident, and government couldn't in good faith abandon its responsibility to back them. They should be reigned in for the time being, at least, but they are hardly the whole of the problem.
I look at it as a house of cards, and all you need is one big weak joint, one flash point to undermine the whole thing. Its all interconnected.
Likely you're only looking at the piece of the puzzle Rush is flapping his jacks about. That is certainly not all there is to it. What do you suppose happens when banks lend dough on say a $500,000 dollar home, with little down, on an adjustable rate mortgage... only to have the home's value go down creating negative equity? How about when they qualified people at for an ARM at the current rate, literally pretending that they didn't know the purchaser would no longer qualify when the rate went up? How about the no to low doc nonsense for those who did show up with some cash?
There seems to have been an unregulated orgy going on that very much resembled a Ponzi Scheme in that the people pushing the paper were profiting immediately, knowing full well the bubble market would have to come to an end. I'm still learning the extent of the irresponsibility myself; but don't let Rush convince you it's all
about Fanny and Freddie. It ain't.