Wednesday, October 28, 2009
This chart from a paper titled Recent Developments in Mortgage Finance from the San Francisco Federal Reserve has been popping up in a number of places over the last day or two and it's interesting to see how people are reacting to it.
Naturally, those on the left think it's vindication for the GSEs who were almost bit players during the worst of the housing market excess in the middle of the decade.
It's not clear what it might mean to those on the right, but I'll tell you what it means to me, as noted in these pages over the years, for example in this item from last year.
In a follow-up to Jeremy Grantham's comments about the former Fed Chairman whose name graces this blog, the offloading of mortgage securitization from the GSEs to Wall Street was Alan Greenspan's sole accomplishment in minimizing systemic risk during his entire 18 year term. He was instrumental in limiting the size of the GSEs' portfolios and, naturally, all that mortgage securitization had to go somewhere, so it went to Wall Street.
The rest, as they say, is history.