Tuesday, December 18, 2007

Subprime Crisis: Washington fiddles while homeowners & the economy go up in flames

By Diane Silver

What happens when the presidency is controlled by people who don't believe in protecting the little guy? (Policing business is always bad, you know, no matter what fraud some executives commit.) What you get is the fox guarding the hen house, and a whole lot of financial blood on the ground.

In the case of the subprime mortgage crisis, millions of people are losing their homes and the economy could slip into recession -- in large part because President Bush and friends have never met a regulation they liked.

That's the picture painted by a New York Times article. Reporter Edmund L. Andrews shows how federal regulators turned aside numerous warnings of fraud and impending crisis.

Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?

An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry’s excesses. Both the Fed and the Bush administration placed a higher priority on promoting “financial innovation” and what President Bush has called the “ownership society.”

On top of that, many Fed officials counted on the housing boom to prop up the economy after the stock market collapsed in 2000.

This is definitely today's must read.

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