[brewer12345]

Quote:

Originally Posted by Retire Soon Hillary is right on one count: where were federal regulators when all of these home loans with ridiculous underwriting requirements written? The answer is they handled the situation in the same manner as they dealt with the 12,000,000 illegal aliens that crossed our borders-they simply looked the other way. Sorry folks, Washington has once again failed to protect its citizens.

I suppose I might as well be throwing meringues into a black hole trying to talk about facts on this subject, but one more try:

The federal regulators were doing what they were supposed to be doing: they were regulating and restraining the banks in their lending. If you look at the last two years worth of "proposed guidance open for comment" (i.e. this is what we will force you to do shortly, so stop doing it now) that the bank regulators issued, you will see: restrictions on subprime lending, restrictions on construction lending, resquirements to qualify borrowers for loans based on verifiable income, etc. The real problem is that a lot of lending was done outside the banking system. So while actual FDIC-backed banks were kept from doing the really stupid loans (mostly), non-bank lenders could do whatever the ultimate buyers of the paper would put up with. In an era of loose credit, dumb things were done but the federal regulators (mostly) kept it out of the banking system.

The problem now is that the non-bank lenders (who were regulated by the states if at all) have pissed in the punch bowl. Want a cup?

But it isn't the bank regulators' fault.