Monday, December 13, 2010

That Nasty Old Red Tape, June 3, 2003

[The crises] "springs from a predatory attack on the safeguards that had for decades kept housing finance safe and stable. In the early 2000's the Bush administration sent clear signals that regulations on mortgages would not be enforced. The signals were not subtle: on one occasion the Director of Thrift Supervision came to a press conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting -- 'liars' loans,' 'no doc loans,' and 'neutron loans' were terms of the art in the business -- bundled together, rated and securitized, then spread through the world and left to fester until rising interest rates and crashing prices wrecked the system."
- James K. Galbraith
from the May 18, 2009 foreword to
John Kenneth Galbraith's The Great Crash 1929