Posted on 04/07/2010 7:07:47 AM PDT by Oldeconomybuyer
WASHINGTON — The committee examining the causes of the financial crisis was poised Wednesday to focus on the subprime mortgage troubles that contributed to Citigroup’s near-collapse.
In prepared statements, a former Citi mortgage lending officer and whistle-blower, Richard M. Bowen III, testified before the Financial Crisis Inquiry Commission that he had alerted his bosses about problems in the bank’s mortgage portfolio.
Mr. Bowen planned to tell the panel that he alerted top officers that as many as 80 percent of the loans the bank sold to Fannie Mae, Ginnie Mae and other investors were defective.
“Since mid-2006, I have continually identified these breakdowns in processes and internal controls,” Mr. Bowen writes in a detailed November 2007 e-mail memorandum sent to Robert E. Rubin, an influential Citi executive and board member, as well as the bank’s risk and finance chiefs. “I know this will prompt an investigation into the above circumstances, which will hopefully be conducted by the officers outside the consumer lending group.”
It was unclear from Mr. Bowen’s prepared statement whether Citi’s board or executives followed up on his warnings.
Two additional Citigroup officials are scheduled to testify on Thursday. Charles O. Prince III, the former chief executive who presided over the losses, will be questioned alongside Mr. Rubin, an influential adviser and a former Treasury secretary.
(Excerpt) Read more at nytimes.com ...
ANDREW CUOMO AND FREDDIE AND FANNIE
‘How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis’
By Wayne Barrett (8-5-08)
There are as many starting points for the mortgage meltdown as there are fears about how far it has yet to go, but one decisive point of departure is the final years of the Clinton administration, when a kid from Queens without any real banking or real-estate experience was the only man in Washington with the power to regulate the giants of home finance, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), better known as Fannie Mae and Freddie Mac. . .
It infuriates me that the government so obviously caused the mortgage meltdown and then blamed “capitalism” for the problems!!!!!
(Yeah, it's from HuffPost via Yahoo, but I expect other banks are having the same problem.)
"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"
Interesting that the Cuomo piece ran in August 2008.
Thanks. The leftists have become enamored of the fact that derivatives were not well-regulated since Frontline, I think it was, did a piece on Brooksley Born. She garnered attention after received the Profiles in Courage Award last year (along with Sheila Bair) from the Kennedy library folks. Also, Soros people even before the most recent interest were already big-time attackers skeptics of derivatives and critics of the lack of regulation.
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