And Horwitz picks apart the arguments of Oonagh McDonald, an ex-MP whose book blames Clinton’s housing policy for the crisis:
Yet for someone with such an excellent recollection of history, McDonald appeared to botch some extraordinarily basic elements of GSE securitization in her speech. How did the U.S. housing decline touch off a worldwide financial crisis, for example?
“Well, because Fannie and Freddie, having bought all these loans, packaged them into mortgage-backed securities, retained too many of them in their own portfolio, sold the rest to banks and mortgage banks, who packaged and repackaged them and sold them throughout the world,” she told the AEI gathering.
(Readers of American Banker probably don’t need to have the numerous errors in the sentence above corrected. For one thing, Fannie and Freddie never sold whole loans to banks. More broadly, investors in GSE-guaranteed securities never lost a penny on credit; it was the implosion of private-label MBS - packaged and sold by securities firms, diversified large banks and finance companies like Countrywide - that precipitated the crisis.)