Fannie Mae and Freddie Mac deliberately entered subprime no-doc lending in a big way in 2004 over the explicit objections of their own credit-risk managers (who knew from late-1980s experiments that not verifying borrowers attracts bad credit risks like a magnet); as the dominant 800-pound gorillas, their decision to 'make markets' caused subprime no-doc volumes to triple in 2004.

causalpending

Speaker

Charles Calomiris

Evidence Quote

they tripled in 2004 because... Fannie and Freddie the 800-pound gorillas in the room if they decide to make markets as they put it in those emails make markets in these securities those securities are going to take off

Source

Charles Calomiris on the Financial Crisis 10/26/2009EconTalk
Created: 6/15/2026, 9:20:15 AM

My Notes

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