Karl Rove today wrote in the Wall Street Journal that “Mythmaking is in full swing as the Bush administration prepares to leave town.” He claims that the Bush Administration tried to rein in Fannie Mae and Freddie Mac and that these two government sponsored enterprises were responsible for the housing bubble. Further, Rove says “[t]he housing meltdown is largely a story of greed and irresponsibility made possible by government privilege.” He’s right, but almost everything you need to know about who’s making myths here and who was the benefit of government privilege can be said with two numbers:
|Fannie/Freddie Bailout Amount||TARP Bailout Amount1|
|1Troubled Asset Relief Program, the bailout program for all the other financial bodies who supported the bubble.|
In words, Fannie and Freddie were given only 22% of the $900 billion housing bubble bailout to date, meaning that the other 78% of the bailout isn’t Fannie or Freddie’s fault. Apparently $200 billion is more than $700 billion in Rove-land – and the sky is a beautiful shade of paisley too.
If you want a graphical representation of what really happened that’s an excellent antidote to Rove’s truthiness, I recommend this image that shows how, in 2003, “asset backed securities issuers” (cyan line) took market share from Fannie and Freddie (light pink line, the “agency- and government-sponsored enterprise-backed mortgage pools”) and the article that discusses it.