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Ignoring the Warnings

Published 12/01/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

The Bush administration ignored numerous warnings that a financial crisis would be in the near future if action was not taken to more closely regulate the subprime mortgage industry, according to CNNMoney.com

"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006.

Regulators had warned that the exotic mortgage products should not be given to customers with bad credit, proposed caps on subprime mortgages and called for more disclosure of terms - all of which were ignored by the administration.

"In hindsight, it was spot on," said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.

The administration’s free-market fundamentalism prevented the government from intervening in the crisis before it was too late. Now, the government has become thede facto emergency lender for troubled banks and other financial institutions.

"We expect to see a huge increase in defaults, delinquencies and foreclosures as a result of the over selling of these products," Kevin Stein, associate director of the California Reinvestment Coalition, wrote to regulators in 2006.


Source CNNMoney.com:

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

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Article Comments From Readers

guest says "both are lieing" on 12/02/08
The truth is everyone knew, everyone wanted to look like they were in the right. Both CNN & FOX cannot be right, yet somehow they are. It makes you wonder what is really going on.

guest says "Too bad it's a lie....." on 12/01/08
http://www.youtube.com/watch?v=LPSDnGMzIdo

Misinformation is FUN, GO CNN!!!!!

And please don't tell me Fox is lieing, unless they dressed people up like Frank and the other congress members OR hired actors that look a lot like them and filmed it in the White House I think it's safe to say the video footage is real.

Funny how I hear all the time that Bush administration wanted to deregulate it more when the exact opposite is true!
This is straight from the Book of Revelations when it says at the end there will be no such thing as truth.