Monday, September 28, 2009
The warning signs were there, nearly 10 years before the housing crash, but officials at the Federal Reserve ignored them. In Chicago, where subprime mortgages were handed out to minority communities on the city’s south and west side, community groups regularly met with the Fed beginning in 1999 and told them to do something about the predatory lending by banks like Wells Fargo and Citigroup. Instead of acting, the Fed maintained a hands-off policy of not forcing banks to comply with federal laws protecting borrowers.
Because of the Fed’s failure to head off the housing disaster, President Barack Obama is pushing for legislation that would give the national bank’s consumer protection duties to a new government watchdog. Banking lobbyists and supporters intend a vigorous fight in Congress to keep the powers of the ineffectual Federal Reserve intact.
-Noel Brinkerhoff
(by Binyamin Appelbaum, Washington Post)
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