RED-LINING RESTRICTIONS, FANNIE MAE & THE WINGNUTS

Jason Lewis was the substitute host on Fats' show on Monday and was trying to blame the collapse of Fannie Mae and Freddie Mac on the Democrat's policy of forcing each to help put an end to red-lining. IF these measures lead to an increase in sub-prime mortgages, it still wouldn't have affected Fannie Mae because it was prohibited from purchasing sub-prime mortgages. From Barry Ritholtz at The Big Picture:

Mortgages: held by FNM/FRE would be guaranteed by taxpayers. This is approximately $5+ trillion dollars, the vast majority of which are sound. (Remember, Fannie was not allowed to buy sub-prime). If 3% of these go bad -- a historically high estimate -- that would amount to ~$150 billion dollars;

Freddie Mac did buy sub-prime crap but even so the amount was a fraction of its total portfolio, which in 2006 was about $700 billion.

Freddie Mac subprime twist fuels credit crunch talk
Wed Feb 28, 2007 7:14am EST

By Al Yoon - Analysis

NEW YORK (Reuters) - The planned boycott of some of the most popular subprime mortgages by No. 2 mortgage buyer Freddie Mac is the latest sign of a broad risk-aversion trade spreading across financial markets.

Investors are taking the move by Freddie Mac -- one of the biggest buyers of subprime debt with $180 billion held -- on Tuesday as a no-confidence vote on so-called 2-28 mortgages that comprise three-quarters of the industry.

I have the suspicion that lurking in the background of the wingnuts claim is a bit of racism because many non-whites live in what were called "red-lined" areas.