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originally posted by: AboveBoard
But it is hardly the sole factor in the meltdown.
I would say this is proof that some regulations are good. Banks should be regulated to prevent human greed and avarice from trumping sound business decision-making.
This was but one of many instances of state posses sounding early alarms about the irresponsible lending at the heart of the current financial crisis. Federal officials brushed aside their concerns. The OCC and its sister agency, the Office of Thrift Supervision (OTS), instead sided with lenders. The beneficiaries ranged from now-defunct subprime factories, such as First Franklin Financial, to a savings and loan owned by Lehman Brothers, the collapsed investment bank.
Some states, including North Carolina and Georgia, passed laws aimed at deterring rash loans only to have federal authorities undercut them. In Iowa and other states, mortgage mills arranged to be acquired by nationally regulated banks and in the process fended off more-assertive state supervision. In Ohio the story took a different twist: State lawmakers acting at the behest of lenders squelched an attempt by the Cleveland City Council to slow the subprime frenzy.
A number of factors contributed to the mortgage disaster and credit crunch. Interest rate cuts and unprecedented foreign capital infusions fueled thoughtless lending on Main Street and arrogant gambling on Wall Street. The trading of esoteric derivatives amplified risks it was supposed to mute.
One cause, though, has been largely overlooked: the stifling of prescient state enforcers and legislators who tried to contain the greed and foolishness. They were thwarted in many cases by Washington officials hostile to regulation and a financial industry adept at exploiting this ideology.
We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004.
originally posted by: enlightenedservant
a reply to: xuenchen
Wait a second. You know that Clinton left office in January of 2001, right? So if the 2008 financial crisis is somehow the result of Pres Clinton's actions, why didn't Bush and the Republican controlled Congress do anything to undo Clinton's work? Or are we supposed to forget that Republicans controlled both Chambers of Congress for most of Bush's presidency and for the last 4 years of Clinton's presidency?