FLASHBACK: Ben Bernanke Blew Off Warnings About Housing Crisis
source: http://thinkprogress.org/2009/12/21/bernanke-warnings/
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In the Washington Post, Binyam Applebaum and David Cho took a long look at the Federal Reserve’s complete failure to take note of the subprime housing bubble. “The Fed’s failure to foresee the crisis or to require adequate safeguards happened in part because it did not understand the risks that banks were taking,” they wrote. “[R]ather than looking for warning signs, the Fed had joined — and at times defined — the mainstream consensus among policymakers that financial innovations had made banking safer.”
Of course, much of the focus — and the blame — falls to current Federal Reserve Chairman Ben Bernanke, and Applebaum and Cho rightly remind readers of Bernanke’s 2007 declaration that “we see no serious broad spillover to banks or thrift institutions from the problems in the subprime market.”
And it’s not like there was a shortage of warnings given directly to the Fed regarding the housing market’s problems. In one of many such instances, National City bank’s chief economist told the Fed in January 2005 that “an increasingly overvalued housing market posed a threat to the broader economy.” But “the message wasn’t well received” :
"One board member expressed particular skepticism — Ben Bernanke. “Where do you think it will be the worst?” Bernanke asked, according to people who attended the meeting, one in a series of sessions the Fed holds with economists. “I would have to say California,” said the economist, Richard Dekaser. “They have been saying that about California since I bought my first house in 1979,” Bernanke replied."
As it turns out, 9 of the top 10 subprime lenders were based in California, “including all of the top five — Countrywide Financial Corp., Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp., and Long Beach Mortgage Co.”
More @ link
Of course, much of the focus — and the blame — falls to current Federal Reserve Chairman Ben Bernanke, and Applebaum and Cho rightly remind readers of Bernanke’s 2007 declaration that “we see no serious broad spillover to banks or thrift institutions from the problems in the subprime market.”
And it’s not like there was a shortage of warnings given directly to the Fed regarding the housing market’s problems. In one of many such instances, National City bank’s chief economist told the Fed in January 2005 that “an increasingly overvalued housing market posed a threat to the broader economy.” But “the message wasn’t well received” :
"One board member expressed particular skepticism — Ben Bernanke. “Where do you think it will be the worst?” Bernanke asked, according to people who attended the meeting, one in a series of sessions the Fed holds with economists. “I would have to say California,” said the economist, Richard Dekaser. “They have been saying that about California since I bought my first house in 1979,” Bernanke replied."
As it turns out, 9 of the top 10 subprime lenders were based in California, “including all of the top five — Countrywide Financial Corp., Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp., and Long Beach Mortgage Co.”
More @ link
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thewallisgirl
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Of course Bernanke blew off warnings about housing crisis.. the fed itself was instated to consolidate wealth and to make sure tax paying citizens couldn't repay the debts. So basically the fed = one big ponzi scheme.
- 2 years ago
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thewallisgirl
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Dagum
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Its stunning that Ben Bernake, "Bush's little pocket book" got reappointed by Obama and confirmed by the Senate for anothor term at the federal reserve.
- 2 years ago
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Dagum
