More on those GSEs

Russ Roberts takes on Barry Riholtz on the notion that Fannie and Freddie had nothing to do with the economic meltdown:

But Ritholtz ignores why subprime was so profitable. And part of the answer is that Fannie and Freddie had been buying up a lot of mortgages made to low-income buyers pushing up the demand for low-income housing. That in turn pushed up the price of houses in low-income areas.

He provides this chart and explanation that shows how aggressive the GSEs came in purchasing low-income loans:

He maintains that as the GSEs pushed into this market, creditors expected to be bailed out as subprime became more profitable.