James Kwak published a brief comment on The Baseline Scenario Blog about the fallacy of blaming the mortgage meltdown on Fannie Mae, Freddie Mac, or the Community Reinvestment Act.

Kwak  talks about a frequently referenced article by Edward Pinto and an analysis of that article by David Min.

As for Fannie and Freddie, Kwak says:

… Min shows ( p. 8 ) that prime loans to <660 borrowers had a delinquency rate of 10 percent, compared to 7 percent for conforming loans and 28 percent for subprime loans, implying that calling them the moral equivalent of subprime is a bit of a stretch.  Min also shows that most of the Fannie/Freddie loans that Pinto classifies as subprime or high-risk didn’t meet the Fannie/Freddie affordable housing goals anyway — so to the extent that Fannie/Freddie were investing in riskier mortgages, it was because of the profit motive, not because of the affordable housing mandate imposed by the government.

As for the Community Reinvestment Act, Kwak says:

… only banks are subject to the CRA (not nonbank mortgages originators) and most risky loans were made in middle-income areas where the CRA is essentially irrelevant.

A commenter on The Baseline Scenario Blog has posted a link to David Min’s article Faulty Conclusions Based on Shoddy Foundations.

Based on work done by his AEI colleague Edward Pinto, Peter Wallison, minority member of the Financial Crisis Inquiry Commission, concludes federal affordable housing policies were the driving cause behind the financial crisis, causing a decline in underwriting standards that triggered the U.S. housing bubble. Unfortunately, Pinto’s research findings relied upon so heavily by Wallison and others are false.