Monday, October 20, 2008

An Avoidable Collapse

"Subprime lenders made irresponsible loans that they knew most families could never pay back and would need to refinance, generating more fee income for brokers and mortgage companies. Now-bankrupt mortgage lenders and Wall Street investment banks put large fees ahead of prudence, and instead of demanding sound lending practices, chose to look the other way."

The cockroachs who created the subprime mortgage mess have pointed fingers at others as they scurry out sight, but Martin Eakes lays the blame for the subprime mortgage mess exactly where it belongs in Sunday's Durham Herald-Sun.

"Wall Street was the engine; lax supervision from government regulators -- particularly the Alan Greenspan-led Federal Reserve -- greased the wheels. Most subprime lenders were subject to far less regulation and oversight than traditional banks and credit unions."

This mess was avoidable. Martin told Congress almost two years ago that the loss of homes to subprimes would dwarf the loss from Hurricane Katrina, and he advised them of several steps they could take to blunt the effects.

Too bad no one listened.


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