AP IMPACT: US diluted loan rules before crash

[Mark E. Smith]

Source: Associated Press

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, failed 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 any 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.

Read more: http://news.yahoo.com/s/ap/20081201/ap_on_bi_ge/meltdown_ignored_warnings

---

And another chapter in the "George W. Bush, Worst President In U.S. History"
Scroll of Shame was written.

[SpiralHawk]

1. "Ooops, guess we republicons failed again. As usual. Smirk." - Commander AWOL

"We'll have to get our vaunted republicon chickenhawk propaganda corps -- Limbaugh, Hannity, Beck, O'Reilly -- on this right away so we can 'prove' it's all Obama's fault. Smirk."

- Commander AWOL

[Uben]

2. Negligent econocide!

Should be punishable by life in prison.

[Robbien]

3. This is one of the issues that Spitzer was pushing against which caused

the Bush Admin to go after Spitzer.

[Vinca]

4. Translated into Shrubese: he worked the financial markets

to bring home prices down to a level that makes them affordable. (The chapter right after how he says he liberated millions.)

[Kevin Cloyd]

5. Common Sense says

Common sense says that it football, basketball and baseball need rule books, then banking, lending, securities markets and mortgage brokering would also need rule books.

"Deregulation" is just white collar crime code for; "Badges, We don't need no stinking badges."

[Miss Authoritiva]

7. Deregulation = decriminalization

I'd take it even a step further. Lobbyists and lawmakers don't go to Washington to break the law (they're stupid if they do). They go to Washington to change the laws that are getting in their way. "Deregulation" has pretty much become a synonym for "decriminalization."

[bobd0]

6. Someone should point this article out to the MSM

which is largely united in combing through history for any evidence that could spread the blame for The Bush Depression thereby getting George off the hook --- again.

The Bush Depression is the result of eight years of reckless Bush administration economic policies. Period.

[The Backlash Cometh]

8. Free market wins again.

[sinkingfeeling]

9. Surprise, surprise.

[lumberjack_jeff]

10. The problem with sub-sub prime mortgages

... is that they were pushed by the banks to give them more opportunities to write CDS's and CDO's totalling far more than the mortgages themselves were worth.

Most of these "investments" only paid off if the poor chump lost his house.

Mortgage failures are responsible for the economy collapse in the same way that Ms O'Leary's cow is responsible for the Chicago fire. It was only the spark.