Per AP: Bush was warned about mortgage meltdown in 2006.Under pressure from banks halted regulation

[RB TexLa]

AP IMPACT: They warned us, but US eased loan rules

By MATT APUZZO
Associated Press Writer


WASHINGTON (AP) -- 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.

...

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.






http://hosted.ap.org/dynamic/stories/M/MELTDOWN_IGNORED_WARNINGS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

[PetrusMonsFormicarum]

1. Sounds like crime to me

[MichiganVote]

2. He's never cared about America or its citizens. Not to mention the rest of the world.

[Blarch]

3. Dito for the people who voted for him in 2004.

[MichiganVote]

5. The Votes of the Living Dead....

[indepat]

7. Ditto for the people who voted for McSame in 2008 including the 66% of white folk in my native

state who voted. :P

[riqster]

4. Anybody shocked?

Didn't think so.

[regnaD kciN]

6. What was the title of the briefing paper...?

Mortgage Crisis determined to strike U.S.? :grr:

[RB TexLa]

8. That was the first phrase that crossed my mind

[MadMaddie]

9. Again..this administration was given forewarning of a pending

financial disaster....

Sound familiar? 9/11 anyone.....

Absolute deriliction of duty...

[global1]

10. Why Did Regulators Have To Tell The Bankers .....

exotic mortgages were often inappropriate for buyers with bad credit.

or that banks would have to be required to increase efforts to verify that buyers actually had jobs and could afford houses.

or there should be a cap on risky mortgages so a string of defaults wouldn't be crippling.

or that banks that bundled and sold mortgages had to be sure investors knew exactly what they were buying.

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

Isn't all of this common sense? Isn't that the job of banks? If regulators had to tell banks all of this - in the future why should I have any faith in them and trust them with my money?

This is just criminal.

[DeepModem Mom]

11. K&R