In fact, the mortgage meltdown was allowed to happen by the Federal Reserve, FDIC, OCC and other banking regulators. They are at least 1/3rd guilty for permitting banks to make loans without verifying income.
The lending practice they turned a blind or dumb eye to is a blatant violation of “safe and sound” lending practices. Imagine taking the borrower’s or broker’s word for a FICO score or appraised value? What could be worse? Not verifying that the borrower can make even the first payment. Duh.
If the bank regulators are only 1/3 guilty, where’s the rest of the blame go? 1/3 to borrowers who signed a false mortgage ap. 1/3 to the lenders who institutionalized the practice of inflating income on a mortgage ap to get approved.
Congress could levy a consumer recovery tax on the banks for their 1/3rd, and distribute it as a tax credit to those whose credit reports indicate a causal relationship.
As for getting Greenspan to account and the gov’t to pay 1/3rd back to consumers…”forget it”, I’m told.
— Michael G. Nathans