John Steele Gordon's out of his depth here.
But he's out of his depth here. He also wears his bias on his sleeve. E.g. this commentary of his in the WSJ - http://online.wsj.co...530070436823.html
Tanta of Calculated Risk was a mortgage banker with lots and lots of experience with mortgages. She lived the stuff, and saw the problems before many of the "masters of the universe". (She died of ovarian cancer in December 2008.)
From July 2008:
http://www.calculate...gman-on-gses.html
[...]
I think we can give Fannie and Freddie their due share of responsibility for the mess we're in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren't the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box. But Krugman is right to focus on the fact that it was the regulatory and charter constraints of the GSEs that kept that box closed. In the schizoid reality of the GSEs, when they had their "shareholder-owned private company" hats on they did plenty of envelope-pushing. When they had their "affordable housing" hats on, they rationalized dubious theories of credit quality--like the fervent belief that low or no down payment can be fully offset by a pretty FICO score--to beef up their affordable housing goals, often at the expense not of the poor put-upon "private sector" but of FHA, whose traditional borrower pool they pretty thoroughly cherry-picked. Nonetheless, the immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum LTV of 80% unless a well-capitalized mortgage insurer took the first loss position, plus all their other regulatory strictures, managed fairly well against the irresistible force of "innovation." If there has ever been an argument for serious regulation of the mortgage markets, the GSEs are it.
[...]
FWIW.
[edit:] typo in Steele's name.
Cheers,
Scott.
