Fannie, Freddie, Phony

Paul Krugman points out that the noise coming from the Republican's and the conservative (bowel) movement (Fannie Freddie Phony) is mostly an alternative reality coming from the usual suspects (ready Limbaugh, Hannity and the rest) and couldn't be further from the truth (again).

Conservatives are screaming today that our current fiscal and monetary crisis's are the result of Congress having forced private banks to make sub-standard loans. The act did nothing of the kind. The act made the practice of "red-lining" illegal and forced lenders to standardize requirements across an entire community.

The cause of our current troubles are described by Paul Volcker today in an article in the Telegraph:

"There has been leveraging in the economy beyond imagination, and nobody was saying we need to do something," he said. "There are cycles in human nature and it is up to regulators to moderate these excesses. Alan was not a big regulator."

Even so, he said the arch-culprit was the bonus system that allowed bankers to draw forward "tremendous rewards" before the disastrous consequences of their actions became clear, as well as the new means of credit alchemy that let them slice and dice mortgage debt into packages that disguised risk."