Incompetence will be the hallmark of the Bush presidency.
Many have tried to blame the mortgage meltdwn on efforts started in the 1990s to encourage banks to make home loans to poor people. This ignores, however, the responsibility of the current administration to do its job of providing regulatory oversight.
It was apparant to many experts and ordinary citizens in 2005 that the housing bubble and easy loan standards could lead to disaster. We now know that the Bush administration was warned about this, and that regulations were proposed that wuld have eased the crisis. Naturally, the Bush administration dithered and left us with this mess.
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.
The administration’s blind eye to the impending crisis is emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.
Many people share the blame for this crisis, but in the end we need a president and an administration that can act when problems arise. This isn’t a conservative or liberal issue. It’s a matter of competence.
With the Bush administration, the pattern was clear. With Katrina, the Iraq War and the mortgage crisis, we see a president and an administration that consistently made matters worse. Good riddance.