Letter to the Editor: Fannie Mae, Freddie Mac, and the Financial Crisis

I found Joe Nocera’s attempt to minimize the role of Fannie Mae and Freddie Mac in the financial crisis unconvincing (“The Big Lie,” column, Dec. 24).

These two government-sponsored enterprises went broke and ended up being bailed out by taxpayers at cost of more than $170 billion — a cost that has never been repaid and continues to increase. By contrast, the private banks repaid their bailouts. Fannie and Freddie, not the banks, imposed the bigger burden on taxpayers.

That enormous burden is in no way alleviated if, as Mr. Nocera claims, Fannie and Freddie bought up risky subprime mortgages to maintain their market share, rather than to satisfy affordable-housing mandates. That simply underscores their shortsighted greed and complicity in the financial crisis.

Given their thin capitalization and what is effectively a taxpayer guarantee, Fannie and Freddie had no business dabbling in risky subprime loans in the first place.