Wednesday, September 24, 2008
By Leon Louw
For nearly a century, the supposed citadel of capitalism, America, harboured a dark socialist secret. The US government created Fannie Mae, Freddie Mac and other GSEs with the sole purpose of flooding housing markets with subprime (low-return, high-risk) credit. GSEs are ‘Government Sponsored Enterprises’. That they extended credit recklessly on an unimaginable scale is a consequence not a cause of the subprime problem.