Monday, January 11, 2010

The biggest stretch I have yet seen for blaming Fannie for the world's problem

Micky Kaus, who seems to have trouble sleeping at night for fear that some below median income person somewhere might actually benefit from government, attacks Jim Johnson, former CEO of Fannie Mae, for contributing to our current woes.

The problem is that Johnson ran the company from 1991-1998; I am guessing that few mortgages from his tenure are even around anymore, and if any are, their balance is so much lower than the value of the house supporting them (house prices are still nuch higher than in 1998, and the loan would have amortized a lot), that the incentive to default is non-existent.

Of course, in the piece he approvingly quotes Peter Wallison, an AEI "scholar" who never met a bank he didn't like.

Over the years, Fannie has done plenty of things not to like. But jeez!