Friday, November 11, 2011

England and Whelan on FannieFreddie

Who caused the great metldown? There's a school of thought that blames it all on the GSEs--FannieFreddie--and their cockamanie project of providing access to housing for poor people.  Peter Wallison is the prime culprit here, but he gets help from plenty of people who ought to know better, like Gretchen Morgenson and Michael Bloomberg.

 I'm one who has always thought this a vulgar oversimplification: a mean smoke-and-mirrors attempt to deflect attention to more fundamental failures in the banking system. I'm sold on the idea that the GSEs are a mess, but it has seemed to me (I think I have said this before) that the problem is not their "public" role: the problem is that they behave too much like banks. 

 Comes now Robert Stowe England (via Chris Whelan) who seems to me to have it just about right. In Whelan's words (reviewing England's new book) "The housing GSEs and the Wall Street banks are one and the same:" As interpreted by Whelan, the GSEs are best understood as part of the whole complex of banking (or more broadly, "finance"). The GSEs may have been players--perhaps the players--but their role cannot be understood aside from the larger context. This seems about right to me. England (whose name is new to me) goes on the stack (bur wait a minute, why is the Kindle price $38.40?)

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