The Fannie Mae-Freddie Mac Big Lie!

The most persistent and shameless aspect in the right-wing's narrative of the economic collapse is its insistence on pinning the whole shebang on Fannie Mae and Freddie Mac, of course along with those "deadbeat Americans who took on too much debt."

Never mentioned are Realtor-appraiser collusion artificially jacking-up housing prices, private mortgage companies' predatory lending, bundling of toxic debt, ratings agencies' deceptive complicity, unregulated derivatives, excessive speculation, insufficient capital to debt ratios by, and inadequate regulation of, Wall Street banks and everyone in the pipeline making out by keeping their hands out and their mouths shut.

The Fannie-Freddie myth is so entrenched on the right there is simply no common ground to address the complex monstrosity that has taken hold of the American economy.

Fannie had been around since 1938 as a government agency and, along with Freddie, became a government-sponsored, private, for-profit corporation in 1968, the year Freddie was started. Their purpose is to underwrite mortgages in the secondary market thereby allowing primary lenders to enlarge their pool of loans and make housing more affordable for more Americans. So after kicking around for years without a problem, the housing market goes bust and they're the only ones held responsible?

True, by 2000 Fannie and Freddie needed to be upended for a series of complicated reasons. They had become poorly managed and rife with corruption. And also true, they were placed in government conservatorship as part of the response to the housing crash. But the role they played was comparatively modest, $168 billion in subprime mortgages compared to $1.3 trillion in total.

The other culprit in the conservatives' maleficent trifecta is the Community Reinvestment Act, created by Congress in1977 to overcome banks' pervasive practice of redlining minority areas for mortgages. However, its provisions only apply to commercial banks not the hundreds of mortgage companies like Countrywide and New Century, now caput, which generated 84 percent of the subprime paper. Only one of the top 25 subprime lenders was directly subject to the CRA.

With plenty of blame to go around why do Republicans disregard the other 80 percent of the transgressions that got us into this mess?

Two reasons: To spank the Democrats who have historically defended Fannie's and Freddie's affordable housing provisions. Which raises the ancillary question, why wouldn't Republicans also want to support affordable housing?

Second: If the fault lies solely with Fannie, Freddie and the CRA then Republicans' Wall Street buddies are off the hook and they can insist legislation like the Dodd-Frank Wall Street Reform and Consumer Protection Act which imposes some sanity on Wall Street is unwarranted.

Need more proof? Recall House Financial Services Committee Chair Spencer Bachus', R-Al., telling admission: "Washington and the regulators are there to serve the (Wall Street) banks."