Bank regulators not only ignored the group’s warnings, top Fed officials said the economy was building on a sturdy foundation – a housing crash was unlikely.
Palm Coast, FL – February 2, 2010 –
By Elizabeth MacDonald: Fox Business
One of the nation’s biggest mortgage industry players repeatedly warned the Federal Reserve, the Federal Deposit Insurance Corp. and other bank regulators during the housing bubble that the U.S. faced an imminent housing crash.
The trade group also mapped out the 15 states which faced "sudden increases in foreclosures" and "a downward spiral," including California, Florida and Nevada.
But bank regulators not only ignored the group’s warnings, top Fed officials also went on the airwaves to say the economy was "building on a sturdy foundation" and a housing crash was "unlikely."
The letters, obtained by Fox Business, were sent in 2005 and 2006 before the housing bubble burst.
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.
The new revelations also may make it harder for Federal Reserve chairman Ben Bernanke to battle Congressional curbs on the Fed’s authority over the banking system, and moves by members of Congress to have the Fed’s monetary policies audited.
Toby’s Commentary: My earlier stories about nobody watching were sadly prophetic.