Greenspan ignored subprime lending crisis

[OzarkDem]

Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.

http://www.nytimes.com/2007/12/18/business/18subprime.html?_r=1&th&emc=th&oref=slogin

[irish.lambchop]

1. It wasn't a sub-prime lending crisis -

it was fraud - what the lenders, mortgage companies, and hedge funds all did was criminal and for nothing more than greed. Forgot where I read the article online, but "A Massive Bank Fraud that Calls for Jail Terms" by Jim Freeman explains exactly what it was. Greenspan, Paulson and now Bernanke are all complicit.

[OzarkDem]

2. It was also GOP campaign money laundering

In Ohio, Dems tried from the beginning to shut the predatory lenders down, but the GOP in the GA along with Boob Taft staunchly beat back reforms. They were hauling in campaign contributions.

Anyone with a brain knew where this would end up - messing up the entire economy, banks and the housing market. What kind of criminal political party deliberately screws up the economy, hurting themselves in the process, just to raise money for campaigns? Capitalism to them means nothing more than an opportunity to exploit others for their personal gain - even if they end up screwing up the game for everyone.

Capitalism to these folks is like having a gambling addiction. They'll keep rigging the system for personal profit until the roof falls down on their head.