In this Sept. 26, 2008 file photo, a woman passes a branch entrance near the headquarters of Washington Mutual Inc., in downtown Seattle. WaMu, one of the nation's largest banks, was seized by the Federal Deposit Insurance Corp. Thursday, and then sold to JPMorgan Chase & Co. (AP Photo/Ted S. Warren, File)
Bush Administration Weakened Lending Rules Before Crash
MATT APUZZO | December 1, 2008 10:23 AM EST | 
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.
“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.
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.
“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.
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.
“We’re going to be feeling the effects of the regulators’ failure to address these mortgages for the next several years,” said Kevin Stein of the California Reinvestment Coalition, who warned regulators to tighten lending rules before it was too late.
Another Bush failure… just add it to the list.
Oh, you mean like the failure of Dodd, and Barney Frank to rein in Freddie and Fannie, or perhaps you mean the overall stupidity of the Dems pushing the CRA and Glass-Stegal Act eh?
Apportion blame accordingly, else you’re just another partisan hack.