Bush administration ignored regulators' warning of mortgage meltdown

[Joanne98]

Experts inside the Bush Administration tried to warn about the mortgage meltdown. They even proposed new regulations to set guidelines for the risky loans written by the banks who now have their hat in hand looking for a bailout. The banks fought these regulations and the Bush administration caved in. Now, we taxpayers are paying for this lapse in judgment in two ways -- an economic meltdown and a huge tax bill. According to an Associated Press report today, regulators warnings to banks in 2005 included:

Banks were warned exotic mortgages were often inappropriate for buyers with bad credit. Anyone surprised about that?
Banks that bundled and sold mortgages were told to be sure investors know what they were buying. We know that's not true. AAA ratings were given to much of this debt that proved to be of much lower quality and much more risky.

Regulators urged banks to help buyers make responsible decisions and clearly advise people that interest rates might skyrocket and huge payments might be due sooner than expected. Do you believe that mortgage brokers or banks clearly warned people about the dangers of the loans they were taking? I don't.

None of these warnings made it into the final rules that were released in late 2006. The Bush Administration bowed to aggressive lobbying from the same banks that are now getting bailed out. The banks didn't want these rules, but now that their aggressive lending tactics have led to massive losses they do want a government handout.

Continued>>>
http://www.bloggingstocks.com/2008/12/01/bush-administration-ignored-regulators-warning-of-mortgage-melt/

[Enthusiast]

1. To hear Republican zealots talk

the meltdown was due to Barney Frank's lack of oversight and Clinton telling banks that they "had" to lend to poor people that had no collateral or down payment. Funny how Clinton was sooo powerful, there. :sarcasm: