I realize this is a space blog, but I thought I would pause for a little perspective. Sometimes we get so focused on “affordable” $95,000 joyrides into space, and public spats about how much NASA has gone over budget on some Mars probe, that we can lose sight of the bigger picture. It’s going to be a miserable Christmas for far too many people. All because the companies they worked for were so greedy that they managed to lobby themselves right off a cliff with hare-brained lending schemes.
Bush administration ignored clear warnings
Associated Press
“The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.
“’Expect fallout, expect foreclosures, expect horror stories,’ California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.
Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.
“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.
Washington Mutual Layoffs
KMIR-TV
“Out of a job and out of luck! Monday turned out to be ‘layoff day’ at Washington Mutual. In total, 9,200 employees will get pink slips. That’s more than 20% of its workforce. WAMU was once the largest savings and loan in the country. But, its involvement with bad mortgage loans caused it to collapse, making it the largest bank failure in U.S. history.”
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