Actually, GW called for regulation in FNM and FRE back in 2003. At least a dozen warnings or more from GW since 2001 to get more insight into at least those two institutions. Some on the other side fought against that because they thought it would make it tougher for low income, bad credit borrowers to get loans.
Of course, was calling for insight better or worse? Maybe GW should have simply sent a memo to the CEO's of these banks with his opinion as to what was going to happen if they kept extending risk into these mortgages. Followed by a note stating that tax payers were NOT going to bail them out.
The Mel Watt's, when fighting against the oversight increases, should have also stated that the government was not going to bail them out. But those same lenders would have, under the Community Reinvestment Act, been blasted for not approving enough loans.
Yup, there's plenty of blame to go around. But I'm tired of hearing about GW taking the hit. This started in 1997, period.
I'm more interested in seeing how the market will react to NOT getting a bail out. I hope it does not happen. A true test in seeing what the free market can accomplish.
Edit - Today, those same institutions can make the decision whether or not to foreclose. They can make the decision whether or not to rewrite the terms so that the subprime folks could get back a reasonable payment/interest rate. They don't need the government.
