“In hindsight, it was spot on.”

-Jeffrey Brown, former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.


A brutally damning article about the warnings the Bush administration received and ignored was published this morning by the Associated Press. The AP summed up the philosophy of the Bush White House, writing: “The administration’s blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.”


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.

Bank regulators had proposed new guidelines for writing risky loans in 2005, but were rebuffed by the White House. The proposed regulations might have avoided the worst fo the housing and credit crisis, had they been enacted.

What was so especially damning was these proposals were all stripped from the final Administrative rules by the Bush White House. None required congressional approval or even the president’s signature:

• Before banks could purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes.

• Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

• Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

• Regulators proposed a cap on risky mortgages so a string of defaults wouldn’t be crippling.

• Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

• Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

The banks that lobbied most aggressively against the rules reads like a who’s who of bankruptcy and FDIC conservatorship: IndyMac, Countrywide Financial, Washington Mutual, Lehman Brothers, and Downey Savings.


US diluted loan rules before crash
AP, December 1, 2008


Government warned of mortgage meltdown
Regulators ignored warnings about risky mortgages, delayed regulations on the industry.
December 1, 2008: 6:38 AM ET


Category: Bailouts, Credit, Finance, Legal, Real Estate, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

98 Responses to “Bush WH Ignored Mortgage Meltdown Warnings”

  1. Mannwich says:

    Barry, Barry, Barry – but we all know it was the CRA and Fannie/Freddie (and by extension, Barney Frank and the Dems) who are to blame here. Stop sticking to the facts and telling the truth. The ideologues will be very disappointed in you.

  2. KJ Foehr says:

    Re: Ben’s announcement today.

    I have read that when the Federal Reserve buys Treasuries it is, almost by definition, “printing money”. Is this correct or not?


  3. willid3 says:

    and mannwich can’t forget those equally culpable home buyers! after if they hadn’t forced the mortgage companies to make those loans we wouldn’t be here right?

  4. Mannwich says:

    @willid3: Agree with you to some extent. The responsibility is shared but at the end of the day most of the responsibility resides with the business if they care about staying in business to ensure the borrower can repay the loan. If a business wants to give someone essentially free money and do the due diligence to ensure that it gets paid back because they’re stupid and greedy (and criminally negligent), then they deserve to go out of business and probably go to jail.

    My wife and I bought in ’05 but put 20% down and didn’t stretch to buy our house, so I’m not in that camp.

  5. Mannwich says:

    @willid3: Sorry, just re-read your post. My snark detector is apparently broken today……It’s a Monday after a long weekend, so cut me a break!

  6. leftback says:

    @Mannwich: you also missed my “Master of Beta” joke… what were you drinking last night??

    Rally coming. I am right at least 50% of the time. :-)

  7. John Borchers says:

    Get ready to bust a move to the long side if you like risk.

    KJ my understanding is Fed taking treasuries gives back cash. (Printing)

  8. TrickStar says:

    The GWB administration sickens me. Absolutely sickening.

    What will its legacy be?

    a) unjustified war (based on fictions)
    b) blind eye to risk management (facilitating global economic crisis)
    c) depletion of global political goodwill
    d) botched rescue of Katrina victims
    e) further deterioration of the US dollar thanks to rising twin deficits
    f) further deterioration of school systems
    g) no progress at all in healthcare
    h) record setting profits from oil companies

    The administration had 8 years. That’s a long time. What will we point to other than the disasters?

  9. Mannwich says:

    @lb: No, I caught that one but am just a little crankier than normal today. Any mention of the nasally, under-eye bagalicious, overrated Maria B. only tends exacerbate that mood.

    Call it the “Monday Blues, Time to Face Reality After Long Weekend” phenomenon. Sorry for my lack of humor. I’m slowly coming around today. What’s weird is I’m up 25%+ over the past couple of weeks but this market still makes me cranky, probably because I know it won’t last.

  10. Mannwich says:

    @TrickStar: Is that all? That’s quite a list. Heck of a job, Bushie!

  11. SaneInSF says:

    Not impressed by the AP “report” — seems to be an awful lot of interpretation there:

    “The administration’s blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.”

    Where did this come from?

    Of course, the real problem is tucked away at the bottom of the story:

    “The government’s banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision — agencies that sometimes don’t agree.”

    But, why let the facts keep you from a juicy lede?

    BR: Are you suggesting the President has no control over those agencies whatsoever?
    He appoints most of their top administrators.

    Indeed, these were admin rules the white House could have ordered:

    What was so especially damning was these proposals were all stripped from the final Administrative rules by the Bush White House. None required congressional approval or even the president’s signature.

    If the president wanted these rules passed, they would have been passed.

    But why let the cognitive bias keep you from recognizing reality?

  12. Mannwich says:

    @SaneInSF: So that means the Bush admin is NOT culpable at all? You don’t think that Bush as president of the country could have shown some leadership on this issue to force the banking agencies to comply? Not sure I understand your point.

  13. Mannwich says:

    Me-thinks the crux of Bush’s problem (aside from his rigid, dogmatic right-wing de-regulated free market ideology) was that he constantly listened to all of the wrong people in his administration on just about every issue. He’s further proof that ideology of all stripes needs to die a quick death so that we can get on with solving real problems facing this country.

  14. KJ Foehr says:

    @ John Borchers

    I traded in my SRS for a smaller portion of URE earlier today, but that isn’t working out very well. I am surprised by the extent of the selling today, and now am wondering if I should reverse my positions once again!

    And thanks for your answer to my question. I can’t grasp how it works; I guess it depends on where the Fed gets the cash from. If they create the dollars and then throw the Treasury bond in the trash after they buy it then they would very clearly be creating new money, but I have no idea how it actually works.

  15. Mannwich says:

    @karen: Every time Hanky P. talks, the market plunges. He needs to stop talking and the rally will commence…..

    Kidding of course, but it does seem like the market tanks every time he’s on TV talking.

  16. John Borchers says:

    I don’t play the funds. They lose too easily. Never liked em.

    Bought GRMN long. Closed GLW put. Waiting for ERTS put to work and have to sell quick.

  17. DKTrader says:

    If this 840 doesn’t hold, watch out! It’s going to be painful.

  18. Mannwich says:

    @karen: Looks 0% is just fine right now with most.

    Rally coming, no doubt, but not today.

  19. batmando says:

    @ karen & lb
    So as lb’s “rally” proceeds apace into the close, are we loading up on SSO? and PST for when (tomorrow?) the shorts jump out of 10-yrs to get back in to equities?

  20. patient renter says:

    governing philosophy, which trusted market forces and discounted the value of government intervention in the economy

    I didn’t realize that the FHA and GSEs were “market forces”.

  21. Mannwich says:

    Love live SRS, EEV and QID. A gift from the Gods last week.

  22. leftback says:

    Blech, huey… and a series of other onomatopoeia that denote vomiting. Did I spell that right?

    I guess it was always going to be ugly. All you have to do is look at USD:JPY in the morning to know what kind of day it is going to be.

    Once the selling starts in the Treasury market those tools who are buying here will be making a lot less than 0%….. Sold my SRS too early…. Grrrr.

    F*** it. Tomorrow is another day.

  23. Aristotle says:

    OT – I just heard that the recession “officially” started in December 2007. BR, you are offically vindicated!


  24. leftback says:

    @ batmando Says: December 1st, 2008 at 3:52 pm

    “So as lb’s “rally” proceeds apace into the close”

    It’s DEFINITELY a rally in SRS….

    Nice one. Be careful, though, what goes around, comes around.

  25. The Curmudgeon says:

    Of course the Bush White House ignored the warning signs. Duh. So did everyone else, including Timothy Gerthner (sp?), Robert Rubin (in his private role on Citigroup’s board), et al.

    Playing the blame game on the politico’s is fruitless and ignores the real source of the problem. It was all about the Benjamins: Too much money being printed by a feckless Federal Reserve. But for the Greenspan Fed, none of this would have happened.

    But that’s okay. The Fed can fix it now, right? The solution to the problem of too much money as reflected in ridiculously low interest rates leading to ridiculously high home prices is…wait for it…more money to push down residential mortgage interest rates! The latest economic policy de jure (to the tune of $800 billion for consumer credit) is designed to do, in part, just that. Sadly enough, it’s working. Rates have gone down about 50 basis points in the last week or so. Still, too many houses at still artificially inflated prices. When will this all end?

    BR: Blame game? Its called accountability.

    Even OJ’s lawyers didnt try using that line . . .

  26. Mannwich says:

    Don’t want to get cocky but SRS at 121 was a gift. Don’t have the cojones of Steve Barry but I’ll keep playing that one until it no longer “works”. Commercial Real Estate in the early innings of this mess, so this gift should keep on giving well into ’09.

  27. Winston Munn says:

    We are saved!

    Hank Paulson just said the problem was housing and he thinks we need to fix it. Thank goodness we have professionals like Paulson on top of things like this or we could be in for some nasty surprises.

  28. Mannwich says:

    @Curmudgeon: “When will this all end?”

    2010 or 2011.

    Or if that fails, 2012. 2013?

  29. batmando says:

    @ leftback

    Following karen’s @ 3:25 pm, I was just saying, mostly tongue in cheek (though usually I’m more foot-in-mouth).

    I did nibble at SSO into the close, against a bounce off ~800 tomorrow?

  30. Bruce N Tennessee says:

    I see Barry pulled his money out of stocks again today….oh, well…….

  31. batmando says:

    oh, forgot to say, into SSO only with a close stop in case the bounce is off ~700

  32. Mannwich says:

    DOW 7,000, S&P 700 or bust.

  33. HelicopterBen says:

    (See this also: http://www.ritholtz.com/blog/tag/an-appraiser-receives-an-order-from-a-real-estate-agent/)


    Appraisers Petition 2002
    Concerned Real Estate Appraisers from across America
    Submit the attached petition (Which was posted on appraisersforum.com):

    To: Mr. Ben Henson – Executive Director Appraisal Subcommittee (ASC) Federal Financial Institutions Examination Council email: benh1@asc.gov

    cc: Other state or federal agencies with authority in the following matter

    “The ASC’s mission is to ensure that real estate appraisers, who perform appraisals in real estate transactions that could expose the United States government to financial loss, are sufficiently trained and tested to assure competency and independent judgment according to uniform high professional standards and ethics.” From the ASC website.

    The concern of this petition has to do with our “independent judgment” in performing real estate appraisals. We, the undersigned, represent a large number of licensed and certified real estate appraisers in the United States, who seek your assistance in solving a problem facing us on a daily basis. Lenders (meaning any and all of the following: banks, savings and loans, mortgage brokers, credit unions and loan officers in general; not to mention real estate agents) have individuals within their ranks, who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value.

    This pressure comes in many forms and includes the following:
    the withholding of business if we refuse to inflate values,
    the withholding of business if we refuse to guarantee a predetermined value,
    the withholding of business if we refuse to ignore deficiencies in the property,
    refusing to pay for an appraisal that does not give them what they want,
    black listing honest appraisers in order to use “rubber stamp” appraisers, etc.

    We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.

    We thank you for your cooperation and assistance.

    Sign this Petition Your name and any comments you make will be added to those below:

    Signed by:…..

  34. leftback says:

    SRS is a beauty isn’t it? The real beauty of SRS is there can be no interference, because nobody in Washington cares about, or backstops the REITs. The only buyers are shorts covering. It’s like a free market. Cool, huh?

    I have some cash on the sidelines in case we visit the 740-750 area again. The buyers will be out tomorrow, but perhaps not first thing – a few panic birds may be unloading at the open.

    Bruce – if you see any toes laying around, one of them might be mine. :-(

  35. RobG says:

    what did Barney Frank and Chris Dodd do? Look the other way when they received their donations and preferred rate mortgages from Countrywide? I like Barry’s site but he certainly looks the other way when others blame the Dems and highlights anything negative about Bush…since when does the WH control free market economies?

    BR: You may have missed it, but over the weekend, I trashed Rubin. Not the first Dem, won’t be the last one.

    As I’ve written countless times, there is plenty of blame to go around. And many of the problems predated W. But to say he wasn’t a major factor is to be deaf, dumb and blind. Bush has been the President over the past 8 years, and he had a GOP Congress for 6 of those 8. In fact, Congress has been GOP for 12 of the past 14 years.

    Now with that control of Congress from 1194- to 2006, who do really want to blame?

    See this for more
    The Ongoing Impact of the Housing Sector

  36. cttf says:


    Having read you over an extended time, it’s pretty clear your far to the left politically. You worship the NY Times. Do you honestly think that the AP, which is even further to the left than the Times is objective on anything relating to Bush???


    BR: I would rather analyze your comments, which are 1) ad hominem; 2) lacking any form of data to back up what you say 3) false.

    And, i don’t believe you (or your Hotmail address) have been reading me for a long time. That’s just troll speak.

    I know that Bush still has a 20% approval rating, but I didnt know you dead-enders were out of the closet

  37. DeDude says:

    RobG; Although it is congress that makes laws about what type of robbery is legal and what type of robbery is illegal, the white house has a lot of power to control action in the free market economies if they want to. They also happens to have a lot more detailed information about the economy -so it is their obligation to keep an eye on things and warn congress when new laws are needed.

    cttf; Both NY Times and AP are right wing corporate tools. But that is kind of irrelevant. The question in each and every case is if what they are stating is correct or incorrect. The facts may have a liberal bias, but they are also the only thing you can use to make good decisions with.

  38. ButtoMcFarty says:

    How could anyone be objective to anything relating to Bush??


  39. RobG says:

    NYT and AP are right wing corp tools? Since when??? that is laughable…

  40. RobG says:

    in a free market economy, the market corrects – politicians should not correct free markets…let the market correct itself…

  41. DeDude says:

    RobG; I guess that if you can’t disprove you can always call the facts laughable. If you ever want to get some real information about media bias (rather than the standard Fox postulates) you can try this site: http://mediamatters.org/

  42. DeDude says:

    “Let the market correct itself” – that one has worked really well lately :-)
    Do not let the facts interfere with your ideology – it has been known to cause brain fry in certain species :-)

  43. The Curmudgeon says:

    @Mannwich…I don’t know when it’ll end, but it won’t even have a chance to start getting better until the Fed quits trying to fix it.

  44. kirslis says:

    The Credit Freeze Scam and Financial Vampires

    The greatest bank robbery in history has now occurred 3 times and counting! The first theft was rating trillions of BBB mortgage bank securities as AAA CDO’s, out doing alchemists with the stroke of a pen! The second theft is now asking for trillions of federal bailouts for the financial institutions they destroyed. Not to be outdone, the third theft of trillions is short sellers destroying the very institutions tax dollars are bailing out! How many more times will these financial criminals rob us before we put them in jail? Capitalism cannot be allowed to pocket irresponsible profits while tax payers bailout their blatant failures. Consider it a certainty that these economic thieves will continue to rape and pillage our economy until they are stopped.

    The New York Times last week have three great revealing article by Krugman, Friedman, and David Barstow this Sunday defining the economic thievery occurring as we sit and watch our economy being raped and pillaged. All three articles gave thieves a free pass to continue economic rape and pillage. The articles failed reasoning ignores the rampant greed and corruption capitalism bred in every branch of government and industry to exploit the economy. Krugman’s “Lest We Forget” article pails to the thievery explaining that party poopers are not liked and success distracted us. Friedman’s “All Fall Down” article dismisses the thieves as “overrated dopes” that thieves love to hear as they plunder more. Barstow’s “One Man’s Military-Industrial Complex” comes closest of the three articles to defining the greed, corruption, and continuing failure of government to regulate our economy. We must not fail again to allow this economic exploitation to continue. These economist thieves are best considered economic terrorists and must be stopped.

  45. gz says:

    subprime is a code name for latino and black lending, look at the numbers here, both Bush and the Dem were pushing for it, a Karl Rove strategy and the old minority discrimination ideolog, how could have they stoppped something they were actively promoting ?

    Civil rights complaint targets Wall Street rating firms
    Moody’s and Fitch’s high ratings of subprime mortgage bonds disproportionately harmed black and Latino home buyers, the National Community Reinvestment Coalition alleges.
    By Kenneth R. Harney
    November 30, 2008
    In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street rating firms, charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African American and Latino home buyers across the country.

    The complaint, filed by the National Community Reinvestment Coalition, alleges that Moody’s Investors Service and Fitch Ratings enriched themselves by assigning high ratings to bonds backed by mortgages “that were designed to fail” because of “unfair payment terms and insufficient borrower income levels.”

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    The firms “knew or should have known” that subprime loans disproportionately were marketed to minority consumers — a process known as “reverse redlining” — and that those borrowers would ultimately default and go into foreclosure at high rates, according to the coalition’s complaint.

    Fitch Managing Director David Weinfurter said the NCRC’s filing “is fully without merit, and Fitch intends to defend itself vigorously.” Moody’s had no immediate comment.

    The filing cites multiple studies that found that African Americans and Latinos received a disproportionate share of subprime loans during the housing boom years. A Federal Reserve study in 2006 estimated that 45% of mortgages extended to Latinos and 55% of loans to African Americans were subprime — a utilization rate “three to four times that of non-Hispanic whites.”

    Because the loans themselves often came with terms that increased borrowers’ probability of default — upfront teaser rates followed by unaffordable reset payment adjustments, no required documentation of applicants’ incomes or assets, plus hefty prepayment penalties — African Americans with subprime mortgages are projected to lose $71 billion to $92 billion through foreclosures, while Latinos are projected to lose $75 billion to $98 billion, according to one study cited in the complaint.

    “Had subprime loans been distributed equitably,” the complaint estimates, “losses for whites would be 44.5% higher and losses for people of color would be about 24% lower.”

  46. DeDude says:

    Gz; this is rich; hand the subprime to blacks and latinos, and Bush/Rove to the Dems. I guess you did get something more than unproductive smoke inhalation out of that last KKK meeting.

    All of that junk you are pedling above has long ago been repudiated by Barry and others here at this site. But I guess you are just one of those 14 a dozen right wing trools that run around copy pasting your stupidities on as many sites as you can, in a desperate attempt to find new followers for a failed ideology. Reminds me of an old Stalinist I know.

  47. Mannwich says:

    The AP is NOT left wing. Maybe it used to be a long time ago but please wake up. They haven’t been “left wing” for years now…….

  48. Mannwich says:

    @Curmudgeon: I agree but we both know that the Fed is too far in the soup to NOT keep tinkering. Will only prolong and worsen the agony for most of the country (guess which part?).

  49. cttf says:

    Barry – I didn’t vote for Bush and have no vested interest in defending him. I find it more curious why you feel the need to continually bash the man. The election is over – please move on. Anyone with half a brain knows the mortgage mess was caused by many factors dating back to the 1990s. To blame Bush is insane.


    BR: Its called accountability.

  50. larster says:

    cttf- The only people that call someone liberal are died in the wool conservatives. If you are not a died in the wool consertvative and do not bash Bush, you are an idiot. Take your pick but own up to it. Bush’s record speaks for itself.

  51. Scott F says:

    Bush sorry economic crisis has cut jobs, 401 (k)s http://news.yahoo.com/s/ap/20081202/ap_on_go_pr_wh/bush_interview

    President George W. Bush expressed remorse that the global financial crisis has cost jobs and harmed retirement accounts and said he’ll back more government intervention if needed to ease the recession.
    “I’m sorry it’s happening, of course,” Bush said in a wide-ranging interview with ABC’s “World News,” which was airing Monday. “Obviously I don’t like the idea of people losing jobs, or being worried about their 401(k)s. On the other hand, the American people got to know that we will safeguard the system. I mean, we’re in. And if we need to be in more, we will.”

    The U.S. economy fell into a recession in December 2007, the National Bureau of Economic Research reported on Monday. Many economists believe the current downturn will last until the middle of 2009 and will be the most severe slump since the 1981-82 recession.

    On the war in Iraq, Bush said the biggest regret of his presidency was the “intelligence failure” regarding the extent of the Saddam Hussein threat to the United States. With the support of Congress, Bush ordered the U.S.-led invasion of Iraq in March 2003 — a decision largely justified on grounds — later proved false — that Saddam was building weapons of mass destruction.

    more here

  52. VoiceFromTheWilderness says:

    I wonder if the AP realizes that by publishing this they are declaring in no uncertain terms how utterly foolish anyone is to read them for anything other than entertainment purposes.

    The AP has been a subtle but persistent pusher of right wing lies for some time now. But don’t worry, if being 3-5 years out of date doesn’t bother you, then go ahead, keep reading.

    Me, I’m sticking with Blogs!

    oh and if there’s anyone out there from the New Yorker reading, that doesn’t include you.

  53. Patrick Neid says:

    ” Its called accountability.”

    or validation for some….

  54. hswalj says:

    Does not matter who is in office. Man is corruptible and foolish. My solution: never, ever vote for an incumbent.

  55. cttf says:

    Why is it that liberals who claim to welcome diversity are SO intolerant of opinions that conflict with their own??!!

  56. wunsacon says:

    >> I didn’t realize that the FHA and GSEs were “market forces”.

    A word on this, if I may…

    Had Caesar not crossed the Rubicon, probably none of this would’ve happened. We can go back in time to find many people who were a “cause in fact”. But, as for “proximate cause”, surely other people in much more recent memory had the opportunity to shape the present than Caesar, FDR, and Clinton.

    The agencies and other government housing market interferences have been in place for years. Therefore, *if* that was indeed a house of cards, then blame should be assigned to the regulators who toppled it over either thru acts of commission (e.g., authorizing bank consolidation, leverage increases, securitization, repeal of prior anti-depressants) or omission (e.g., not responding to appraisal fraud and other warnings or not dismantling/winding-down the GSE’s).

    In other words, the people who controlled the government for 12 of the past 14 years are the “proximate cause” of this mess, regardless of what went on before.

  57. DenverDoyle says:

    Ignored….they facilitated the collapse. The confluence of: (1) the cosmetic regulation that is Sarbanes-Oxley Act (2002) after the World.com and Enron debacles and the Marked-to-Market “fair-value” requirements are reducing not just assets but whole companies to fire-sale status; (2) Bankruptcy Reform Act of 2005 has made it impossible for the over-consuming subprime participants to stay in their homes. No consumers can declare chap 7 any longer which was a guard against against massive foreclosures in debtor sustained economy. Sure subprime low income people qualify, but because the fees have been increased 2 or 3 fold, very few people are able to do so. (3) the repeal of Glass-Steagall in 1999 by the Republican congress and Lawrence Summers enabled these companies to become “too big to fail.” Commercial and investment banking activities have different and very specific purposes; that is why they were regulated separately for some 70+ years. Leave to Obama’s team of Timmy G, Bob Rubin, and Summers to fix a problem they were instrumental in creating…I call this Hope-nosis…look into my eyes…deep…deep into my eyes….

    What about usury laws!? Credit cards charge 25% interest rates to people incapable of paying it back. 25-30% apr, thats like a Brox booky with a baseball bat, not a legal business. Now we are discussing a $800 billion dollar infusion into the credit card companies……there isn’t even close to that amount of total accrued consumer credit card debt!!!! We in America are truly being robed of every single penny we have! How could we even begin to project an end to this when the policy makers are complicate in this unprecedented, unequivocal, and a short time ago, unimaginable scandal? The world has never seen a scandal of this magnitude…Will there be any more congressional hearings when lawmakers consider handing this money over, even if they are just dog and pony shows? Why aren’t the Banks grilled like the auto industry??

  58. wunsacon says:

    Tens of thousands of Willie Sutton proteges live on as bank executives.

  59. flipspiceland says:

    So many words to say what the entire world knows: Bush is a puppet.

    As is Obama with his “new” clinton administration. With bright boy Rubin in the background. Soon we’ll see Vernon Jordan and all the usual suspects from 8 years back, popping up like boils on our backs.

    Nothing ever changes in this ever chang………

  60. RobG says:

    deDude: Show me one positive article about Bush that hit PAGE ONE of the NYT or one positive article about Bush on op-ed pages of the New York Slime??? I wont hold my breath…


    BR: What do you think he did, in all of 8 years, that was worthy of a complimentary article?
    I am not being sarcastic, I am asking:

    What were Bush’s achievements as a two term President?

  61. olemissreb says:

    Ironically, the genius David Schneider, who is so wonderfully quoted above and did such a good job with WaMu Home Loans has been chosen by Chase to head up what’s left of WaMu’s Retail business. I guess the fact that Schneider who was directly responsible for the Cuomo and OTS issues doesn’t bother Jamie Dimon much.

  62. DeDude says:

    RobG you misunderstand the role of the press. They are not there to “balance” their facts regardless of the truth, they are there to report the truth regardless of its “balance”. If the fact is that Bush is a moron who has run the country into the ground, then unbiased reporting require that they say that. You remind me of this ridiculos “study” that found the press to have had an Obama bias because there were a better positive/negaitve stories ratio for Obama than for McCain. It turns out that they counted as negative about McCain and positive about Obama any reporting of the fact that Obama was ahead in the pools.

  63. RobG says:

    BR – there are some which I am sure you will debate:

    1. Lowered taxes which helped the economy create jobs and grow from 2003-2007
    2. Despite the Iraq war not going very well – freed Iraq of an evil dictator much like we did with Milosevic
    3. Gave Iraqi’s freedom they have never possessed in the last 50 years.
    4. Protected Americans from terrorists via Patriot Act since 9/11
    5. Libya getting rid of WMD program
    6. Surge iin Iraq has indeed been very positive

    These are some that come to mind but the NYT is so biased in their reporting they they do not out anything favorable to Bush on page one – only blood in streets and negative economic news under Bush on poage one but Clinton positive economic news hit page one – no debating these facts

    Dedude: keep sipping that kool-aid…you must watch Olberman for your news!


    BR: Your wish has been granted:

    TAX CUTS: Milton Friedman notably said that Tax cuts without offsetting spending cuts are not tax cuts at all — they are tax hikes on your children.

    IRAQ: That is not the reason her gave to the American people to go into Iraq. In a Democracy, you must have the consent of the governed before you declare war. The public was not llied into a War in Croatia.

    LIBYA: was de-weaponizing for years . . .

    TERROR: You are going “Ex” on me? As in, his track record – EX-SEPTEMBER 11TH — has been good? But for that one little snafu . . .

  64. Edward Lim says:

    Every time I try to recall… I am still wondering why Americans would vote twice for Bush… can someone please enlighten me?

  65. DeDude says:

    RobG, if you want information about the right wing bias of NY times here is a link to a list of over 500 documented incidents http://mediamatters.org/issues_topics/tags/the_new_york_times

    If you want to see some hard core “positive-for-Bush-government” spin in NY Times go back and read their “weapons of mass destruction” and “winning the war on terrorism” and “Irak will pay for itself” BS from a few years ago. Nothing but rambling out the talking points that Karl Rove gave them. And that huge front page “Mission Accomplished” picture and story was that also anti-Bush? Today read any of Bill Kristols idiotic right wing dribel to confirm their bias is not just a thing of the past.

  66. imahippi says:

    What do you think of the points from the Dec. 2nd IBD article “Don’t Blame Bush for Subprime Mess”
    I know IBD is right right right but as a Canadian just watching from afar it seemed to make sense to me.
    IBD states that Bush’s first budget (2001) warned of “potential problems . . . . . (and) strong repercussions in the financial markets”
    The article goes on to state that in ’03 Bush’s Treasury Secretary proposed what the NYT’s quoted as “the most significant regulatory overhaul in the housing industry since the savings and loan crisis”.
    The article then quotes several Dems in congress who stated they did not see any kind of crisis looming and “if it ain’t broke why fix it”.
    Reforms were proposed left, right and center—according to the IBD article.
    The reason these reforms did not become law was Democrats opposed them on a party line vote (?).
    I don’t know much about politics period but are you saying that Bush should have just forced it through the senate?
    Thanks for clarifying!

  67. DeDude says:


    IBD http://www.ibdeditorials.com/IBDArticles.aspx?id=313027333411197 is talking about “fixing” the GSE (Fannie & Freddie). And yes Bush and the GOP certainly were trying to “fix” those entities (basically closing them down). However, as clearly documented here by Barry and his commentators in lots of articles, the GSE’s were only a minor part of the problem. As a matter of fact if they had succeeded in their “fixings” we would have been a lot worse off since F&F currently are pretty much the only entity that functions in the secondary mortgage marked.

    By “cleaning” your citations of the clear references to the GSE’s and using extremely selected citations you appear not just to be a Canadian from afar but one from far right (might also explain why you read such obvious BS sites as IBD). This site has way to many smart people for you to get away with pulling such a prank on us and our host.


  68. RobG says:


    1. I respect Milton Friedman and agree there should have been spending cuts but with a war? The tax cuts did help create jobs.
    2. Are you blaming Bush for 9/11? Really? I can debate this all night with everything Clinton Admin did NOT do after FOUR terrorists attacks against the US embassies abroad…
    3. Libya – not aware of that fact…thanks
    4. As I remember Bush did have consent then the Dems siad they did not read the US resolation 1441…lame political excuse…all politics to try to win in 2004 and they still lost…

    Dedude: where was the positive Iraq news and positive economic news from 2003-2007? Buried on pages 13-18!!!!

  69. DeDude says:

    RobG no they are not on page 13-18, look at the front pages from that time – starting with the big ugly “Mission Accomplished” story.

  70. weinerdog43 says:

    “Are you blaming Bush for 9/11?”

    Yes, are you thick?

    Also, Barry, you’re forgetting about the anthrax terrorism incidents that happened AFTER Sept. 11th. People are no longer debating whether or not Bush was a terrible president, the real question is he the “Worst Preznit Ever”?

  71. Rayg says:

    Why don’t we place some balame on Wall Street for the mess we are in? aren;t they the ones packaging the worthless CDO tranches in securities that were rated AAA? What about all the naked short sellers selling shares they haven’t borrowed, and the resulting failed trades. how about the SEC for looking the other way at the naked short sellers? talk to me.

  72. olemissreb says:

    How about blaming the piss poor management of these banks. Even now we watch as they continue to cut costs with total disregard to the fact they’re killing their internal business processes and any semblance of risk management.

    Bottom line, it’s worth keeping a few hundred staff or even a few thousand, if it saves you from having to write down billions in loans. However since it takes some brain power to make the connection and doesn’t display well on a PowerPoint slide in an investor meeting this fact is being overlooked. Greed fueled the collapse, but ignorance is going to fuel the second one.

  73. RobG says:

    Dedude – one time – there were many times the economy was doing well – never on page one…

  74. Rayg says:

    take a look at http://www.deepcapture.com…mark mitchell has several pieces on the naked short sellers…the millions of shares that failed and never delivered….on and on….and the SEC looks the other way…even the regulatory oversight we have in place failed. why? because they are aligned with wall street….but they are supposed to protect the retail investor and they failed.

  75. Rayg says:

    Mitchell ends a post where he pleads for Obama to investigate the naked short selling problem with this:

    One encouraging sign is that former Deputy Secretary of Commerce Robert Shapiro has been named to Obama’s transition team. Shapiro is one of the world’s foremost experts on naked short selling and failures to deliver. He has plowed through the data – he knows all the details – and he understands the seriousness of the problem. Maybe he can make the president understand, too.

    Here is what he says about the DTCC:
    If President-elect Obama is serious about pulling the economy out of its death spiral, he must urgently appoint a task force to investigate our nation’s clearing and settlement system. Specifically, the American people need to know how it has come to be that a black box outfit on Wall Street is empowered to handle (or, rather, completely fumble) securities transactions worth more than $1.5 quadrillion – that’s 30 times the gross product of the entire planet – without any real government oversight.

    This black box organization–the Depository Trust and Clearing Corporation (DTCC)–claims to “centralize, standardize and streamline processes that are critical to the safety and soundness of the capital markets.” In other words, if somebody sells a security, the DTCC is supposed to make sure that a real security is cleared, settled, and delivered to its purchaser.

    But it does not do that.

    Barry-your thoughts?

    Should this guy Shapiro make some waves, we could see one major short squeeze rally.

  76. Locus says:


    You penned an article in May of 2005 for RealMoney.com entitled “Don’t Buy Housing Bubble Propaganda”. In the piece you ridiculed those who were warning of bubbles in debt, credit cards and housing. You claimed that housing prices were being driven primarily by low interest rates, demographic trends and a limited supply of houses. You said that you didn’t see excessive speculation in the housing market. You reassured investors that housing markets are regional and so could not create a bubble on the national level.

    Not once did you mention lax lending standards. Not once did you talk about deregulation. Not once did you suggest that there might be any sort of structural problem with the U.S. housing/mortgage market.

    But now, with the benefit of hindsight you stand on your electronic soapbox and full of righteous indignation you demand accountability. Accountability for a problem you once dismissed as “propaganda”. Maybe President Bush was reading your columns and that’s why he missed the warning signs just like you did.

    It’s called hypocrisy Barry …

  77. RobG says:

    Weiner – are you serious? please explain…do you totally give Clinton a pass like the MSM that Clinton did NADA about FOUR attacks during his tenure on US embassies and USS Cole?

  78. DeDude says:

    RayG, go look up your old NY Times issues (if you read it at all), there are plenty of front-page stories with positive slant for Bush and his policies. Or are you just one of those standard right wing BS artists who pull some crap out of your dum a$$ and then demand that people waste their time disproving it? The economy never did well under Bush so don’t expect them to put a lie on the front pages (they haven’t been totally Foxified, yet).

    Locus, you attack on Barry is increadibly unfair and misleading. Again you do not provide the link so people can see what was actually written http://www.thestreet.com/p/rmoney/barryritholtz/10225437.html WHY NOT? In May 05 Barry suggested that we would be faced with a 25-35% retracement and that it was not (at that time) a bubble (compared to the 80% drop of the Nasdaq). Why don’t you tell us where the prices are today relative to a 35% retracement of the May 05 prives – and then give Barry an apology.

  79. Rayg says:

    DeDude-you have the wrong guy….you must be talking to Robg.
    BUT, the economy never did well under Bush? then how did we reach all time highs in the Dow….DUMB @SS!!!
    I was speaking about the naked shorts…get your facts straight.
    And let’s not pretend the NYT is not slanted…..come out of your cave.

  80. DeDude says:

    Rayg, sorry, I did mean RobG. But since you are raising that issue, a temporary bubble in the Dow does not mean that the economy is doing well. Look for growth in the income of the consumer class (the main driver of economic growth), and the associated true sustainable growth in GDP. I mean even with an enormous growth in debt this moron could not get above average growth of GDP. I agree that NYT is a slanted right wing rag and have previously provided a link to documentation of that postulate http://mediamatters.org/issues_topics/tags/the_new_york_times They are no different from any other type of corporate media, except that they hold a little better on to the traditions of media as providing the facts and speaking truth to power. And yes the facts have a liberal bias because liberals don’t base their opinion on ideology to the extend that neocons do – however, reporting facts is not the same as having a slant, it is the job of a reporter and the mission of a newspaper.

  81. imahippi says:

    Not that it is of any great interest or importance to anyone but that was the first and last post I’ll make here.
    As someone fairly new to the markets, I asked a polite question. I didn’t think I was being graded for notation. I did not “clean” my post to make it come across as something it wasn’t. I don’t think I could,–nor would I care to– mislead Barry??!!
    Anyways, what a rude person you are dedude.

  82. RobG says:

    Dedude – what are your thoughts on the Fariness Doctrine?

  83. DeDude says:

    Imahippi; I am sorry if you truly believe that your posting had no bias to it. Then your biases are so ingrained you can’t even see them.

    RobG; the Fairness Doctrine was removed by the neocons after they felt sure they had sufficient control over the major news outlets, and could allow Fox to mock the concept of fair and balanced. The result is that Dan Rather gets pushed out after 1 minor piece of support for his report on Bush’es military record turns out to be a falsification (given to him by a Karl Rove puppet). In contrast Fox can blast away about Obama being a secret muslim educated in a Madrassa, without as much as an investigation. In todays media a Nixon republican would be called a liberal and the republicans of the 30’ies who demanded that the countries resources should be used for the public benefit (not just handed over to the rich), would be called socialist. I doubt that reinstating the fairness doctrine could completely fix the current problem. We should also prevent media consolidation and demand that cable/satellite companies in their basic packages provide a broad range of stations including progressives such as “Democracy Now” the opportunity to (without charge) present the public with a different point of view.

  84. RobG says:

    Dedude – so do you support the Fariness Doctrine or not? Based n your comments I see that you think that Fox News is bad for TV news but yet do not commnet on how they are up against CNN, CBS, ABC and NBC, MSNBC who are ALL LEFT leaning news organaizations. Who funds mediamatter.com? Do you know?

  85. DeDude says:

    I have no idea who funds mediamatter.com and I don’t care. The only thing that matters is whether the things they are stating are documented facts or I-pulled-this-out-of-my-own-dumb-a$$ Fox style postulates. So far I have not found anything on mediamatters that wasn’t way better quality than the Fox/Rush sh*t.

  86. DeDude says:

    There are no left leaning media in this country. A few European contries have a few left leaning newspapers from the old days of big strong socialist parties. US major media outlets are today only spanning the political spectrum from right wing to extreme right wing. It started with the repeal of the Fairness Doctrine and introduction of Fox “news”. That was used as a platform from where the extreame right wing could releasee a constant cry about liberal media. It’s a tactic called working the refs and repeating a lie enough times. With the help of that, the corporate owners could push editors of previously balanced and fact-based media to the right. And that is where we are today only right wing media and extreame right-wingers crying that rags like NY Times are “liberal” because they are not right wing enough.

  87. DeDude says:

    US major media outlets are today only spanning the political spectrum from right wing to extreme right wing. It started with the repeal of the Fairness Doctrine and introduction of Fox “news”. That was used as a platform from where the extreme right wing could releasee a constant cry about liberal media. It’s a tactic called working the refs and repeating a lie enough times.

  88. DeDude says:

    With the help of a constant false cry of “liberal media”, the corporate owners have pushed editors of previously balanced and fact-based media, to the right. And that is where we today have only right wing media; and extreme right-wingers are crying that rags like NY Times are “liberal” because they are not right wing enough.

    (sorry a about the many posts I am having some kind of filter problem)

  89. DeDude says:

    Yes, we should reinstate the Fairness Doctrine. But that is only one of several steps (as outlined above) needed to reestablish the availability of information that lies outside of the right wings messages of the day.

  90. RobG says:

    yep thought so…please do tell which media outlets are “right wing” media? I HOPE you dont say NYT, NBC CBS etc…the ONLY media outlet close to right wing is Fox news but they are the ONLY one that presents BOTH sides!!

    Fairness Doctrine SUPPRESSES FREE SPEECH! Air America has proven no one wants to listen to Rachel Maddow and others…

  91. DeDude says:

    RobG; I am going to have to stop here because my attempts at having a reality based debate appears to only be meet with a (more or less on-topic) rambling of neo-con talking points. It seems a waste of time for both of us. Take care, and may your life kick a$$ before life kicks you in the a$$.

  92. Locus says:


    I provided sufficient information for anyone to find the article in question in about thirty seconds using Google. I’m sorry if that was a hardship for you.

    Are you honestly contending that we haven’t experienced a bubble because house prices have not fallen by the magic number of eighty percent? Countrywide, Bear Stearns, Lehman Brothers, Citigroup, TARP, AIG, hundreds of billions in writedowns, an avalanche of layoffs and we still can’t call it the housing bubble? Look at the title of the blog entry that created this thread, “Bush WH Ignored Mortgage Meltdown Warnings”. What exactly is the difference between a bubble and a meltdown? If 2000-2002 was a bubble in collapse what would you call the situation today? I would call it a great deal worse that a bubble.

    And that was my point. Ritholtz said that house prices *might* fall by up to 35% but didn’t think that was as serious a situation as the bursting of the Internet bubble. He didn’t forsee that a decline in home prices would trigger a massive crisis. He didn’t call for more regulation to rein in the financial cowboys who were running amuck in the mortgage market. In that regard he was no more prescient than the administration that he now so bitterly condemns. Instead he poked a little fun at the doomsayers who in retrospect understood the danger far better than he did. So please forgive me, but with that article Ritholtz forfeited his right to act holier-than-thou.

  93. RobG says:

    Dedude – keep sipping that koolaid my friend! Take off the blinders…

  94. DeDude says:

    Locus; So you are blaming Barry that he in a May 2005 article did not head the warning that Paris Welch send to US regulators in January 2006? However, Barry was spot on when he said that the May 2005 prices could be as much as 35% overvalued. We are still far from 35% below the 2005 values but we could get there. Barry doesn’t have a million bureaucrats that he can tell to keep a close eye on things that could become a big problem. So I expect a lot more both in early prediction and early intervention (and being more prescient) from the president of this nation than from Barry. We are completely in agreement that a boubble clearly developed after Barry wrote that article in May 2005 and it came to the point where any idiot could see it (although the Bush administration continued to deny it). Look through some of Barry’s postings on real estate from late 2006, then compare what he said about real estate at that time, and what the administration said. It is pathetic that, at a time when even a small fry like Barry can see and predict the s**t that was coming, the administration still had its head in the sand. What Barry didn’t foresee in May 2005 was that the administration could be so mind-numbing incompetent that they would let a 25-35% overvaluation in housing prices and outrageously irresponsible loan practices develop further, without them as much as lifting an eyebrow.

  95. RobG says:

    Dedude – do you believe in free markets? Did Clinton do anything about the Internet bubble? be fair my friend…how can the govt control housing prices and why shoulod they?

  96. Locus says:


    This will be my last post as I cannot afford to waste any more time here.

    By late 2006 subprime lenders were already starting to drop like flies. See http://ml-implode.com and check their time line. So, by the time Ritholtz figured out which way was up the crisis was already underway and it was far too late to start fixing lax lending standards. It is simply hypocritical of him to pontificate about what should have been done when he was equally clueless until it was too late. There were people who did warn about this crisis years ago and they are the ones who have earned the right to say I-told-you-so.

    But check out this week’s Barrons where Ritholtz brags “I’ve been the biggest bear on housing on the Street for four years now”. Late 2006 is two years ago not four years ago. In 2005 Ritholtz was mocking the doomsayers. In 2008 Ritholtz wants us to believe that he *was* one of the doomsayers. B.R. is full of B.S. I’d take handgun safety advice from Plaxico Burress before I’d take economic advice from Barry Ritholtz.

    Good Luck to You

  97. Tulsaboyw says:

    This post is inccorect.

    Bush didnt ignore it …he was among the first to warn congress of fanny/freddy problems that would in turn create the ‘mortgage meltdown mess’…

    So to blame bush for this instead of Franks, is foolish and is against the facts of Franks continued refusal to allow reforms back in 2004/2005 to go ahead whcih would have kept the meltdown from happening.

    Unfortunately too many tend to believe what they want to believe no matter what the facts are.
    And even vote in the very people who cased the current problems by blocking reform efforts.