Congress, Fed fiddled as subprime crisis spread
A bit more than about ten years ago, William Brennan foresaw the economic collapse of 2008.
As manager of the house Defense Program during the Atlanta Legal help Society, he watched as subprime lenders received profits that are enormous mortgages to individuals who plainly couldn’t manage them.
The loans had been harmful to borrowers — Brennan knew that. He additionally knew the loans had been detrimental to the Wall Street investors purchasing up these mortgages that are shaky the thousands. And then he talked up about their fears.
“I think this home of cards may tumble some time, and it’ll suggest losses that are great the investors whom possess stock in those companies, ” he told people in the Senate Special Committee on the aging process in 1998.
As it happens that Brennan did know how right n’t he had been. Not merely did those loans bankrupt investors, they almost took along the whole worldwide bank operating system.
Washington had been warned so long as about ten years ago by bank regulators, customer advocates, and a number of lawmakers why these high-cost loans represented a risk that is systemic the economy, yet Congress, the White home, therefore the Federal Reserve all dithered as the subprime tragedy spread. [Read more…] about Predatory financing: A decade of warnings