There’s a bigger picture here guys, and I think it was wise to keep your comments more general, b/c it’s so complicated. The whole thing started in past administrations with former Fed Chairman in charge.

The explanation I got was that the Mortgage Lender’s game was changed with deregulation that allowed “Mortgage Brokers’, or independent entrepreneurs to write contracts, promise the customer the moon, collect the fees and sell them off to underwriters and then to Wall St. investors. So the mortage industry became controlled by Wall Street, rather than your local bank or credit union. What that meant was a total lack of accountability and diligence in writing home mortgages. Fannie and Freddie simply stepped into the action later as a way to try and recoup the large amount of market share they were losing in this new game and bought the risky bonds that mortgages were being bundled into and sold off to investors. Because of the reckless way the mortgages were being marketed and sold, when the housing bubble crashed the whole mess came tumbling down, and still is.

I hope my laymen explanation was understandable. It’s fascinating and I wish these types of conversations will come up in the debates b/c it would be interesting to see how they handle the topic. It’s not so much how they master the math, but who they put in charge of the whole thing is crucial to how we get out of trouble.