This is a very clear explanation of what went wrong with the US Housing market over a very long time.

Big problems rarely appear from nowhere….this piece from the American Interest  jives with many other articles, puts it in a longer context.

Fannie, Freddie and the House of Cards

By Mary Martell

“Fannie Mae and Freddie Mac (collectively the two largest “GSEs”, or government-sponsored enterprises) have engaged in a broad range of residential mortgage activities for many years.1 The economic disaster of recent times has drawn considerable attention to Freddie and Fannie, which is not surprising considering the role that the mortgage sector of the U.S. banking system played in that debacle. Together the two institutions hold or pool about $5 trillion worth of mortgages, and so sketchy were their operations that in September 2008 the U.S. government had to bail them out and place them in conservatorship to keep the entire mortgage market from imploding. While the U.S. government has by now been made whole by TARP-assisted banks, it is not clear whether the billions of dollars provided to keep Fannie Mae and Freddie Mac afloat will ever be returned to the U.S. Treasury.”

Read the whole thing

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