The Post has a good article today reporting on how HUD encouraged Fannie Mae and Freddie Mac to buy up mortgage backed securities that were comprised largely of subprime loans. However, the article never mentioned that the primary problem was not the nature of the loans, but the fact that people were buying homes at bubble-inflated prices. If house prices had risen with inflation (as they typically do), we would not be facing a mortgage crisis. This should be obvious, but there is no evidence that the Post recognizes the bubble was the problem.
--Dean Baker
