Did the government-sponsored housing finance companies Fannie Mae and Freddie Mac contribute to the housing crisis? Economist and New York Times columnist Paul Krugman thinks not. According to Krugman, Fannie and Freddie’s role in the housing market collapse was insignificant because “they pulled back sharply after 2003, just when housing really got crazy.” Furthermore, Krugman asserts, Fannie and Freddie “largely faded from the scene during the height of the housing bubble.” Reason columnist Veronique de Rugy explains the truth about Fannie and Freddie’s role in the housing crisis by separating economic myth from economic fact.
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