Warnings of Mortgage Meltdown Were Ignored

According to a review of regulatory documents by the Associated Press, the Bush administration ignored multiple warnings of impending financial meltdown during the last five years and didn’t follow through on federal regulator’s proposals for tighter regulations.

In 2005, federal bank regulators proposed new guidelines for banks writing risky loans. They proposed a cap on the number of exotic mortgages and sought to make banks that bundled and sold mortgages inform buyers about their risks. The proposal also would have required banks to better vet potential borrowers and clearly inform them of the potential for skyrocketing interest rates.

The proposals didn’t require congressional action or a presidential signature, but the banking industry lobbied heavily against the proposals and administration urged regulators to drop them.

Diane Casey-Landry, of the American Bankers Association, said industry opposition was based on the banks’ best information. “You’re looking at a decline in real estate values that was never contemplated,” she said.

Source: The Associated Press, Matt Apuzzo (12/01/2008.)

Author: niaknowles

From Native New Yorker (Brooklyn) to Atlanta Realtor, with a love for architecture and design. Atlanta based Real Estate Consultant working to restore and sell Intown Homes; REO,South West (Westside,West End, Westview Communities 30310,30311,30314,30318 zip codes)

2 thoughts on “Warnings of Mortgage Meltdown Were Ignored”

  1. Nia: Do you have a link to the AP source? I saw the citation but no link. This levels blame directly at the feet of the current Administration and I would love to see the sources referenced for more credibility checking. Thanks for sharing such good info about the market and the community.

  2. Nevermind! I found it for others reference, here is a reprint in the Kansas City Star:

    http://www.kansascity.com/438/story/916117.html

    Not a pretty picture and I suppose we have to hold the top watch dog responsible. I wonder, though, what we’d of said if the administration took action that led to less lending to less qualified borrowers.

    Perhaps it is better that we blame them as incompetent rather than heartless rich people or even racists for negatively affecting lower income Americans ability to own a home. Not much of a consolation, eh?

    In any case, good information to share and thank you again!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s