Predatory financing: ten years of warnings

Predatory financing: ten years of warnings

Congress, Fed fiddled as subprime crisis spread

Introduction

A bit more than about ten years ago, William Brennan foresaw the economic collapse of 2008.

As manager of the house Defense Program during the Atlanta Legal help Society, he viewed as subprime lenders received enormous profits making mortgages to individuals who demonstrably couldn’t manage them.

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The loans had been harmful to borrowers — Brennan knew that. He additionally knew the loans had been detrimental to the Wall Street investors purchasing up these mortgages that are shaky the thousands. In which he talked up about their fears.

“I think this household of cards may tumble some time, and it’ll suggest great losings for the investors whom possess stock in those companies, ” he told people in the Senate Special Committee on the aging process in 1998.

As it happens that Brennan didn’t discover how right he had been. Not merely did those loans bankrupt investors, they almost took down the whole banking system that is global.

Washington ended up being warned provided that a ten years ago by bank regulators, customer advocates, and a number of lawmakers why these high-cost loans represented a risk that is systemic the economy, yet Congress, the White home, plus the Federal Reserve all dithered as the subprime tragedy spread. Leer más