Mortgage Crisis Was Avoidable
The Financial Crisis Inquiry Commission, a group of financial experts convened to get to the bottom of the causes of the recent recession, found the Federal Reserve Board did not do enough to set mortgage lending standards as the housing bubble grew, according to a report from The New York Times. However, the Fed, under then-chairman Alan Greenspan, showed it wanted to deregulate the lending industry.
The fallout from the housing crisis caused many consumers to be unable to pay their mortgage, leading to a large amount of foreclosures and, as a result, lower property values across the country.
"The Federal Reserve was clearly the steward of lending standards in this country," commission member John Thompson, a technology executive, told the newspaper. "They chose not to act."
Meanwhile, Representative Spencer Bachus, chairman of the House Financial Services Committee, said the FCIC's report was occasionally at odds with itself and did little to highlight the role of Fannie Mae and Freddie Mac in the meltdown.
Source: Informa Research Services