They warned us, but US eased loan rules

by: Tom B

Tue Dec 02, 2008 at 13:06:22 PM CST

| More

Of course it's total bullshit in that it totally ignores the fact that the Republicans were in control of congress from 1994 to 2006 and of the executive branch from 2000 until the present and had all that time to undo any "harm" the Democrats might have done. It turns out that there were certain other contributing factors that haven't been talked about much. Until now, anyway.  A lot of people would prefer that they NEVER be talked about.

They warned us, but US eased loan rules

WASHINGTON - 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.

Bowing to aggressive lobbying - along with assurances from banks that the troubled mortgages were OK - regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

Had the media cared to find out what was going on it would have been easy.  You want to know what's going on with the economy you look at the bottom where the effects of any sea changes are felt first and where they have the most impact.  You don't ask the bastards who are making money by bringing that economy down if they're screwing it up.

In fact as recently as the Friday before the Tuesday when the debacle hit the front pages due to the Bear Stearns fiasco, our president, utilizing the same MSM that he and his all profess to hate, was assuring us that it was a "minor turndown" and a "normal market adjustment" and that he was on top of it and there was nothing to worry about.

The administration's blind eye to the impending crisis is emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

And I myself wouldn't bet what's left of the farm that that's not what the big banks had in mind all along.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

When there are no consequences for one's failure or major malfunctions, there's no incentive not to keep doing the same things over and over.  that's what these guys did until it was too damned late for ANYTHING to have worked and our President and his hand picked crew of deregulators did more than their share.  

In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:
_Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

_Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

_Regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling.

_Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

_Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Those proposals all were stripped from the final rules. None required congressional approval or the president's signature.

Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn't have to double-check the brokers.

The government's banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision - agencies that sometimes don't agree.

The Fed, for instance, was reluctant under Alan Greenspan to heavily regulate lending. Similarly, the Office of Thrift Supervision, an arm of the Treasury Department that regulated many in the subprime mortgage market, worried that restricting certain mortgages would hurt banks and consumers.

Nobody was EVER thinking about protecting the consumer at any time.  They still aren't.  And now let's hear from Mr. Ultimate Stupidity himself:

Marc Savitt, president of the National Association of Mortgage Brokers, said regulators were afraid of stopping a good thing.

"If it seems to be working, if it's not broken don't fix it, if everybody's making money, then the good times are rolling and nobody wants to be the one guy to put the brakes on," he said.

Dumbass!