The problem with many of you conservative republican supporters is that you are not able to actually look at the history of the US.

For starters Keith, on Freddie and Fannie here are a couple of links:

http://hnn.us/articles/1849.html

http://en.wikipedia.org/wiki/Freddie_Mac

What some of you have to face up to is that the US has been governed since 1969 (Nixon) mainly by Republican presidents. Jimmy Carter, between Ford and Reagan, had one term and Clinton two between the Bushes. Beginning with Nixon Republican presidents have not been shy to bail out big business.

It is becoming incredibly boring to read the cliche ridden knee jerk reactions from some of you when there are posters who are not so bent on unquestioning guru worship and are able and willing to probe.

Keith and Col, ridiculing and sneering do not make for a convincing argument, but shows that either you cannot countenance or fear questioning of your dearly held beliefs or you do not understand the issues sufficiently to be able to explain in decent language why corporations were blameless and it was all due to some people who had no business thinking that they could live in their own house.

Col,you liken housing to a mere commodity, like food. There is a wide range in housing and food. From second beach front holiday homes to caviar. There was a French queen who lost her head making some snide comment about cake. There is quite a way to go before seeing cake as a staple part of one's diet.

Paul, Col and Keith

Thanks for the history lessons, but I'm afraid nothing you've said changes my view that Fannie Mae and Freddie Mac are the scapegoats here, not the villains.

Their conduct was certainly no better than that of any of the others caught up in this mess, but they were the followers not the leaders. It was the banks that initiated the predatory lending to people they knew couldn't repay the loans, as they automatically reset to rates beyong their means, with the intention all along of offloading them onto others before the housing bubble burst. Fannie Mae and Freddie Mac's big mistake was to buy into these subprime mortgages and then get caught with them.

In the words of the co-director of the US Center for Economic and Policy Research, Fannie and Freddie's crime was to go along for the ride. They should be blamed for following the herd off the cliff. They stand out as especially big sheep, but they are not the real villains in this story.

Maybe the following offers a "history lesson" Bronwyn...

Under extreme pressure and duress in 1999, Clinton signed off on repealing FDR's Glass-Steagall act, which hitherto forbade commercial banks from acting like investment banks. There is photographic evidence of the jubilation among usurers when Clinton put pen to paper there.

Once they got rid of Glass-Steagall, banks had to chase that funny money out of the monopoly box: debt became the hottest commodity, although a fake and destructive commodity nonetheless. Any US commercial bank that instead chose to keep playing sensibly would find itself smashed out of the market fast. The decision's flow-on to Australia (and elsewhere) was rapid and influential - the yen carry trade became a crucial development, for example.

Of course, some free-market faith healers tried to justify that junking of Glass-Steagall as a way out of the impending bubble pop from the "tech wreck" (if not also some hiatus left from '97). In a limited, simpleton's way such free-market swindlers were correct: how else could they pump up another bubble to keep Sir Greenspan's derivatives scam alive?

The problem is that such reasoning misses the root problem, exacerbates risk, delays any effort at solution, and makes a real solution more difficult to implement. It is as if they confronted a war and could only decide on how to make the war last longer, threatening yet more horrendous casualties.

I don't know which can of glue keith's been sniffing, but it's obviously dangerous stuff. "Do gooders" had nothing to do with masses of Americans (and great numbers of Australians too) getting drowned in debt and booted out of house and home.

What's going on keith? Been sacrificing goats and chickens again with Prince Philip or someone like that?

Bronwyn,

You are faced with the evidence and you just pretend it doesn't exist.

1) Fannie Mae and Freddie Mac owned or guaranteed HALF of ALL mortgages in America. THEY were the BIGGEST players in the market.

2) They were INSTRUCTED to give loans to poor people by the GOVT.

3) Fannie Mae and Freddie Mac were among the FIRST to be affected by this crisis.

Where do you get the idea that Fannie Mae and Freddie Mac were following the crowd? I've shown you where the GOVT directed these GSE's to lend money to low income people. How do you reconcile this?

My concern is neither ideological nor financial. I decided to simply ask you all to see past your prejudices and seek all the truth. I have found that often owning just part of the truth often obscures the whole truth.
I’ll quote a few examples here and I don’t mean to be harsh.
Bromwyn and PaulL you are both technically correct with regard to the involvement of Fannie Mae. However you both only have part of the truth. The Banks were the first to issue sub-prime loans but Fannie May was the largest dealer in them and never issued any.
However it is clear neither of you understand how Fannie Mae operated. It was formed, and up until the early 2000’s, to only buy mortgages that had been executed between Banks and borrowers.
The Steagall-Glass Act effectively prevented the trade in mortgages that was repealed in 1999 after bi-partisan approval in the Republican Congress and approval by Clinton. Clinton could have vetoed it, but didn’t.
As a trade off the Democrats gained a strengthening of the Community Reinvestment Act. This proposed financial institutions provide loans to people who wouldn’t ordinarily gain home loan approval. It was directed towards minorities and the poor. It had punitive provisions. Clinton also approved this Act.
The specific effects were: Clinton pressured the banks to initiate these altruistic CRA loans and Fannie Mae accommodated them. Fannie Mae under Franklin Raines was the first financial institution to parcel and on sell them as derivatives. That enabled refinancing as the loans defaulted. As the banks realised they had no liability for these bad loans naturally they embraced the process with gusto. They were getting great fees with no liability. Daniel Mudd, Franklin Raines successor at Fannie Mae, oversaw the massive expansion of the parcelling and selling of the derivatives and naturally trading in them on Wall Street was raised to a fine art and exploded across the world.
Now do you see how you are both right but each of your positions obscures the whole truth?

Mil-Observer,
because I address all the truth I will not be drawn into one of your abusive ideological exchanges . That’s what I’m on, truth.
As we see you, are right that the ogre was out of the box with the repeal of the Glass Steagall Act but as I have shown above , that is only part of the truth. I agree such greed and stupidity saw the bad debts spread right across the world’s economies. But you’ve overlooked the influence from the Community Reinvestment Act. Your post therefore doesn’t address the social engineering that undermined prudent banking process and how repeal of Glass-Steagall allowed ‘pass the parcel’
By addressing Alan Greenspan’s action, which btw I agree with your position, you show you haven’t any understanding of the operation of the Federal Reserve. It is in every ones interest to understand this beast and its operation. It is the key player and hugely influenced by the Banks who own it.
Briefly it has huge power for it pulls all the levers in the US economy. It sets economic policy and is supposed along with Congress to oversee the operation of the Banking system in the US.
No US President has influence over its day to day, week to week, month to month nor year to year operation.
The US President’s influence is limited to appointing 7 of the 12 members (He must appoint one of those from the NY Federal Reserve) of its Board of Governors, its Chair and vice Chair. Greenspan was appointed by Ronnie Raegan in 1987, reappointed by George Bush Snr, and reappointed by Clinton ... twice.
Do you see how your views are also correct but it is only parts of the truth and obscures the whole truth?
Capitalism has served us well for nearly 80 years. It has been undone by the stupidities of the ideologues of the extremes, the no –regulation laissez- faire mob and the meddling do-gooder socialists.
We need to return to the sound banking and economic practises of the past.