During last night's debate, Senator McCain blamed the housing market meltdown on Fannie Mae and Freddie Mac's lending practices. While Fannie and Freddie, as huge actors in the mortgage market, certainly contributed to the bubble, it is absurd to point to them as principle culprits. Their market share actually fell as the bubble grew to ever more dangerous levels, dropping from 50.1 percent in 2002 to just 34.8 percent at the peak of the bubble in 2006. Fannie and Freddie deserve blame for failing to recognize the bubble (this is their job), but clearly they were not the primary cause. The media should have highlighted this major gaffe by Senator McCain. This would be like Obama talking about a border between Iraq and Afghanistan or some other major error on a foreign policy issue.
--Dean Baker
