By Dean Baker
September 23, 2008 | Prospect.org
MarketPlace Radio Misleads the Public on the Crisis
Stephen Henn told listeners that free market conservatives "believe" that the financial crisis is attributable to the close government relationship with Fannie Mae and Freddie Mac. Actually, it is extremely unlikely that free market conservatives actually "believe" this assertion because it is so obviously not true.
Fannie and Freddie got into subprime junk and helped fuel the housing bubble, but they were trailing the irrational exuberance of the private sector. They lost market share in the years 2002-2007, as the volume of private issue mortgage backed securities exploded.
In short, while Fannie and Freddie were completely irresponsible in their lending practices, the claim that they were responsible for the financial disaster is absurd on its face -- kind of like the claim that the earth is flat. Free market conservatives know that the claim that Fannie and Freddie were responsible is ridiculous. They just say it because they know that news outlets like Market Place will treat it as a serious proposition and thereby muddy the waters in the mind of the public.
It is bad enough that Market Place repeats such an outlandish claim without giving its listeners any background information. It should not pass along the additional misinformation that conservatives actually believe such nonsense.
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