Myth: Fannie Mae and Freddie Mac caused the financial crisis by giving mortgages to poor people. (Bonus points for highlighting Democratic support of Fannie and Freddie or insinuating minorities caused the calamity).
Truth: The vast majority of subprime loans were made by private companies and repackaged by investment banks. Fannie and Freddie were minor players in the subprime loan market that entered very late, after most damage had begun.
Federal Reserve Board data show that:
- More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
- Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
(Fun fact: Subprime actually originally meant a loan not up to the strict regulations of Fannie or Freddie) Source: Federal Reserve data in a McClatchy news article
Myth: We need to cut corporate tax rates in bad economic times to create jobs because our corporations pay the highest tax rates in the industrialized world.
Truth: Over 2/3 of all US corporations paid ZERO income taxes between 1998 and 2005. Source is an Associated Press story citing the Government Accountability Office
(more editions of economic Myth Busters to come as I get time)
Tags: corporate tax rates, economic meltdown, Fannie Mae, Freddie Mac, mortgage, Myth Busters, MythBusters, subprime
October 15, 2008 at 10:53 pm
great post.
http://culturedecoded.wordpress.com/2008/10/15/analysis-the-third-and-final-presidential-debate/
October 16, 2008 at 9:01 am
Pacer, is a spammer. First off. He never has more to say than “great post” and always leaves his blog link.
Second, couldn’t agree more, and I wish you hadn’t stolen the idea because i have some things to say about Neo-Hooverism. If you ever want to do a joint article, let me know.
December 2, 2008 at 9:07 pm
Hey, it’s December….when you gonna write something new?
October 5, 2009 at 8:08 pm
pffcyyjnypic