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Warnings Ignored
Posted by Bigfoot on February 4th, 2010
I have previously run across various articles stating that before the housing crisis hit, a politician such as President Bush or Senator McCain thought that something was wrong at Fannie Mae or Freddie Mac, and that they needed to be reined in. But other than Peter Schiff, I had not heard anyone outside of government saying that anything was wrong with the housing market, the banking industry, or the two government-sponsored enterprises. But now, I’ve learned that repeated warnings came from the Mortgage Insurance Companies of America, and were never taken seriously.
As it pleaded with bank regulators to stop subprime lending abuses, the Mortgage Insurance Companies of America [MICA] pointed out the red flags in analysis from the bank regulators’ own staffers as well as the likes of Bear Stearns and Lehman Brothers, three years before these two Wall Street giants collapsed under the weight of bad mortgage bets.
What did Federal Reserve chairman Benjamin Bernanke have to say while the warnings were coming in?
Despite mounting evidence, Bernanke went on TV in 2005 to say of a housing collapse, “it’s a pretty unlikely possibility,” adding that “fundamentals are strong.” Right before the crash in 2007 the Fed chairman said “the subprime markets seem likely to be contained.”
Bernanke also noted in February 2008: “By later this year, housing will stop being such a big drag directly on GDP” and that “among the largest banks, the capital ratios remain good and I don’t expect any serious problems.”
Didn’t work out that way, did it? Bernanke, who has been appointed to another term, was monumentally wrong, the sad thing being that the warning signs were there, but were not heeded. Read it all.
February 5th, 2010 at 11:15 am
This is what bothers me about all of the people currently in power, who were in power at the time, that are all of a sudden in favor of more regulation of the banking industry. There were no problems and everything was fine while the gravy train was bringing in the big bucks for everyone, don’t want to stop the party don’t ya see! B’ah.
February 5th, 2010 at 11:31 am
Much like that video I posted earlier “Fear the Boom and Bust”. The party’s fun while the party lasts…. that recession/depression hangover is a real beeyatch!
February 5th, 2010 at 12:32 pm
Like any unaccountable government bureaucrat, Bernanke has not, does not and will not suffer for his insufferable hubris and mistakes. What price has he paid for allowing the closest thing to another Great Depression since, well, the Great Depression? Being asked a few softball questions by his supposed masters? Some medium press by the leftist media? Big deal!
Anyone who makes decisions, be it the president, the state parole board or local dogcatcher, should be held responsible for decisions they make that affect the public. I would even go as far as to say that people hired as private advisers to any government-related enterprise (I’m thinking education specifically, but all others, too) should be held to the same standard.
Maybe if people who screw around with other lives in “social experiments” were held accountable financially and socially, they would tend to rein in their wild experiments that cause we, the people, so much grief every day.
February 6th, 2010 at 4:16 pm
As a p.s. to the above, I would include judges in that, too, especially appointed judges.
February 6th, 2010 at 10:03 pm
When banks make loans to people who cannot afford to repay, and the banks know this, banks should be allowed to FAIL. People should not expect their government to intervene…in fact I’d say by the poll numbers that most people were/are against the bailouts. Oh well…we the people are simply peasants now a days.
February 7th, 2010 at 12:32 am
If you’re too big to fail, you’re to big to be in business. Mr. Bernanke should have had enough sense to know that (after all, it doesn’t take a genius to figure that out) and, because he didn’t, has no more business being in charge of the Fed than Tiny Timmy has being in charge of the IRS/Treasury.
They are both glad-handing ideologues who would sooner turn a trick for a friend than do what’s right for the country. Little more than Wall Street pimps.