Federal affordable housing goals weren’t responsible for the collapse of Fannie Mae and Freddie Mac, Assistant Treasury Secretary Michael Barr said Tuesday in a speech to the Mortgage Bankers Association.
“This claim simply is not supported by the facts,” Barr said.
Instead, Barr said management’s decision to lower standards in order to compete with Wall Street for profitability drove Fannie and Freddie to risk too much on poorly underwritten loans and the sale of questionable securities.
Fannie and Freddie “relaxed standards for the same reasons other market participants relaxed standards: old-fashioned greed and flawed regulation,” Barr said.
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Source: The Wall Street Journal, Nick Timiraos (04/13/2010)
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