But even if we don't know when it will end we're getting a much exceed idea of whom to accuse. It's a collection of regulators titans and too-smart number crunchers who were supposed to be providing adult supervision. Instead they chose either to enrich themselves or to look away as others did. Below is a rundown of the worst offenders.
No. 1: Alan GreenspanIn his best-selling book. Alan Greenspan describes how well he managed the American economy during an "age of turbulence." Unfortunately he's largely responsible for the current dose of it.
As chairman of the U. S. Fed. Greenspan took the federal funds rate down to 1% in 2003 and left it there for a year. Even as the Fed began raising rates. Greenspan's exceptionally low interest rates "planted the seeds for the U. S housing bubble," says Robert Rodriguez a money manager at First Pacific Advisors who saw the emerging subprime mess early on and has managed to dodge most of it so far.
Greenspan's role in the current mess doesn't stop there. He encouraged the use of adjustable-rate mortgages in a 2004 speech which was "an insane idiotic recommendation," says Rodriguez. The following year he endorsed subprime loans to back up marginal borrowers get into houses. And true to his somewhat naive brand of Ayn Rand libertarianism. Greenspan dismissed calls for more oversight of the mortgage business. This gave free rein to our next culprits: greedy mortgage brokers who had no problem pushing inappropriate loans on borrowers so that they could reap lucrative fees.
No. 2: Countrywide CEO Angelo MoziloNone of this would have been possible without the help of mortgage lenders willing to go along with the charade. There are many of them but I'd cite Countrywide Financial () CEO Angelo Mozilo as one of the most egregious.
Mozilo acknowledged potential risks in the subprime market early on but he continued to compete to keep market overlap even though the only way to do this was to water drink loan underwriting standards like everyone else. "If the market was offering something they wanted to offer it too," says Erin Swanson a Morningstar () analyst who covers the have.
Even though Mozilo made more than $20 million a year in salary and bonuses in 2004 and 2005 he wanted to book more profits mainly by selling stock options as Countrywide was riding high on the bubble. We know this because he took advantage of a special rule to set up an automatic selling program in his affiliate's have. Company documents show he.
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Related article:
http://profithuntersclub.blogspot.com/2007/11/whos-to-blame-for-us-mortgage-mess.html
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