I have lots of charts to back up the specifics of today’s WP column, but unfortunately, we could not jam them all into the paper.

This run is a supplement to that column.


click on any graphic for a larger chart

1) The housing boom and bust was global


Source: McKinsey Quarterly

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2) Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom

Source: University of North Carolina at Chapel Hill

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3) Subprime Lenders were (Primarily) Private: Only one of the top 25 subprime lenders in 2006 was directly subject to the housing laws overseen by either Fannie Mae, Freddie Mac or the Community Reinvestment Act


Source: McClatchy

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4) Lenders made 12 million subprime mortgages with a value of nearly $2 trillion. Mortgage Companies and Thrifts NOT affiliated with CRA made 75% of Subprime Loans from 2004-07,
cra-chartg1109
Source: Orange County Register

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5) Fannie and Freddie risky loan purchases was dwarfed by Private Label Securitization

Source: University of North Carolina at Chapel Hill

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6)  CRA were less likely to default than Subprime Mortgages


Source: University of North Carolina at Chapel Hill

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7) Suburbs and Exurbs were where the boom & bust occurred — not the CRA regions


Source: Washington Post

Category: Credit, Real Estate, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “Charts for the “Facts of the Economic Crisis” Column”

  1. WhyDoYouSayThat says:

    Here’s one fact I never see you address:

    Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, Md.-based publisher that covers the home loan industry.

    In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

    Any thoughts? As an investor in MBS, they were propping up demand for MBS, regardless of who was packaging them…

  2. Yes — in late 2005, having lost so much marketshare to private lenders, Fannie & Freddie petitioned their regulator, OFHEO, to jump into the subprime mortgage market. That was granted, and they ramped up purchases into the peak of the housing boom.

    But by then, they were following the market, not leading it. The die was already cast. And as several studies have shown, F&F were doing this in pursuit of profits — not because Congress told them to.

    Look at the blue lines (Fannie & Freddie) in Chart #2 above — it shows the GSEs racing into the junk market in 2006-08, just as the market topped and slid — perfect timing !

  3. DeDude says:

    But these are just the facts. In todays world who uses facts to create their opinion? Tell me what the other tribe believe and I will believe the opposite.

  4. BusSchDean says:

    BR….as my son would say “Word up!”

  5. ilsm says:

    @WhyDoYouSayThat,

    Do a little research into why the MBS industry arose, start at the end of the last depression and work forward. Work through the S&L crisis to this current depression scenario.

    Just saying that to quote agitprop from MSM does not make a case.

  6. decius says:

    Suppose they blew this bubble intentionally. Suppose they were trying to soften the landing from the collapse of the run up in equities that occurred in the late 1990′s – what people refer to as the “Dot Com” bubble although obviously it was a broader economic phenomenon than a handful of ill considered retail websites. If you look at Shiller’s data, and you figure the Fed isn’t stupid even though people like to make fun of Helicopter Ben, this hypothesis seems to make some sense. Perhaps things got out of control, but maybe they expected that – maybe it was a lesser evil.

    What caused the late 1990′s runup in equities?

  7. Petey Wheatstraw says:

    At this point, BR has thoroughly and factually refuted the idea that the GSEs or the CRA caused the mortgage crisis. Some might continue to opine to the contrary, but facts are facts.

    OTOH, that the GSEs (including non-mortgage corporations), might be innocent of the specific accusations against them does not make them a virtuous element of our corporatist financial/governmental incest-fest.

    It is by these corporations that privately issued bad debt is transferred to the public ledger (some will argue that the ‘GS’ in GSE amounts to no guarantee by the US government, but what else could those letters possibly mean?). They are a driver of moral hazard, inflation, and debt.

  8. EMichael says:

    WhyDoYouSayThat Says:

    I guess I have to agree with you about the GSEs guilt in propping up the market to a certain extent. And they are certainly responsibe for a lack of due dilgence on their purchases.

    However, there were no lack of buyers of these securities(particularly early on), and I serioulsy doubt they would have not been sold to others.

  9. [...] graphics this week — so I created a run of charts to illustrate the facts in the main article. > click for ginormous version of print [...]

  10. Greg0658 says:

    “Suppose they blew this bubble intentionally.” .. I’ll ditto that .. with this 1 from the “Trades” “break area” “ya gotta make your conditions” .. I think its nothing more than we gotta create a job or starve to death .. thing is its a cancer, a tax, a __ .. a condition of capitalism

  11. Seaton says:

    Thanks, BR, for your columns & all your efforts at finding facts that can stand the tests, of double-blind-fair evaluations, or “fact-checking”. Tedious it is to endure so many rantings from those news sources, individuals, etc., desperate to cling to their single parsings of a connotation of a word, phrase, and push it out as a valid meme.

    Keep up the good work; I tell all I know to consider your point of view, and then to come back to me with the tripe that’s flung into my face in the guise of “conversation” or “discourse.”

  12. Great stuff Barry. Appreciate all your hard work and attention to all topics, especially mortgage and housing, the topic that impacts me most.

  13. zenospinoza says:

    The GSEs bought a substantial amount of MBS in 2004-2006, indirectly contributing to the mortgage bubble. But how much due diligence should they have done when the bank funded rating agencies were stamping AAA on the securities?

  14. skier5150 says:

    @decius , why re the 90′s run-up: the real economy great: : without changes to taxes, we were looking at paying off the Debt entirely, eliminating tax spending on interest, affording SS etc with no changes. Jobs were plentiful, companies were hiring young people, training their employees and giving actual raises (O the horror). The Fed was pumping money for Y2K, and we built the Internet from interesting’ to ‘basic infrastructure’ in 5 years. With high employment and raises, lots more money was being auto-deposited into retirement accounts. Then the usual momentum bubble on top of all that after a 20-year bull. And $1 gas in 1998, how would that do us now?!

  15. beaufou says:

    Just an addition, interesting info.

    “Reuters contributor Felix Salmon wants to make a case against the mortgage industry (supported, of course, by home builders) argument that below-20% down payments have been and can be “safe” vs. “risky” when it comes to predicting the likelihood of a future delinquency and/or default.”

    http://blogs.reuters.com/felix-salmon/2011/07/12/more-data-on-mortgage-delinquency-and-downpayments/

  16. WhyDoYouSayThat says:

    Barry Ritholtz,
    Thanks for your reply, but you are still missing it. You pointed me to your Chart #2, which is how much MBS was *produced* by the GSEs (y-axis is labeled, “MBS Issuance”). I am arguing that the GSEs were *buying* MBS. Investing in it. Propping up the demand for the final MBS product. And they didn’t do this at the end of the bubble. They bought 44% of all subprime MBS sold in 2004 as the article states (the article I quote is from 2006, so it is not an ideological rant from after the crisis). I don’t argue that the GSEs were a primary cause of the crisis, but you never mention how much subprime MBS they purchased, which encouraged the private labels to churn them out. This arguably more important than how much they issued. Any comments on their MBS *purchases*?

    EMichael, I agree there would have been other buyers, but purchasing between 25% and 44% from 2004 to 2006 would have certainly influenced the price and encouraged more MBS creation.

  17. We were short the GSEs for the same reason the people in the article you linked to were short: They were two more crappy banks doing dumb reckless things in pursuit of profits.

    But the argument I was responding to is that crisis was caused by Congress (thru F&F/CRA) forcing banks to make ill advised loans — which the data overwhelmingly disproves.

    Were F&F shitshows? For sure! But were they any more to blame for the collapse than Lehman/Bear Stearns/Citigroup / CountryWide / Bank America /AIG/ Merrill ? Nope!

  18. Frilton Miedman says:

    Barry Ritholtz is in the same category as Dylan Ratigan (an appearance on DR is why I joined here).

    Regardless of potential ostracism from the financial community, truth takes precedence.

    Thank you Barry.

  19. Irwin Fletcher says:

    @Whatdoyousaythat says:

    You are correct and are asking the right questions. I have much data on this but can’t seem to get anyone here to address it. I can’t figure out why. But you are on the right page.
    The facts are:
    The GSE’s got involved as early as 2000, not late 2005.
    They were losing market share and having trouble meeting affordable housing goals.
    They bought large amounts of subprime PLS’s to gain market share and because they were “goals rich”

    If you want to learn more, I can send you some links. Just trying to keep it honest.

  20. Irwin Fletcher says:

    Petey Wheatstraw, you are right on the money. The GSE’s have been the most corrupt, bailed out entity I can think of. Socialize the losses baby. Screw the taxpayers.
    Have you seen the bonuses paid to the GSE executives over the last 10 years? Why aren’t they in jail?
    Where is the outrage? I just don’t get it.
    Obama had a shit fit over the AIG proposed bonuses. Where is he on this? Radio silent.
    Petey, thanks for being consistent.
    You and I don’t agree on much, but your honesty is something I tip my hat to.

  21. Frilton Miedman says:

    Barry Ritholtz Says:
    November 20th, 2011 at 5:08 pm
    ” ….. But the argument I was responding to is that crisis was caused by Congress (thru F&F/CRA) forcing banks to make ill advised loans — which the data overwhelmingly disproves. “

  22. Petey Wheatstraw says:

    Thank you, Irwin.

  23. A7L-B says:

    Under appreciated point:

    1) The housing boom and bust was global

    This fact renders most local nuances largely irrelevant.

  24. [...] On November 19th (Sat) he gave us a followup “Examining the big lie: How the facts of the economic crisis stack up” and a slew of charts. [...]

  25. [...] More on the Big Lie, with charts [...]

  26. [...] The Big Story, November 20th, 2011, Barry Ritholtz Charts for the “Facts of the Economic Crisis” Column [...]