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Monday, July 21, 2008
Has the Fed responded well to the mortgage mess?
The Atlanta Journal-Constitution
Ted. W. Lieu, a member of the California State Assembly, writes in an editorial column:
“Two years after the mortgage meltdown started, the Federal Reserve finally released updates to its mortgage regulations last week, replacing rules that were so lax and ineffective that the Fed bears significant responsibility for the mortgage debacle and the larger financial fallout.”
He continues, “Unfortunately, the Fed still hasn’t gotten at many of the root causes of the problem. In the face of the collapse of IndyMac —- the second-largest thrift failure in U.S. history —- and the foundering of Fannie Mae and Freddie Mac, one expected more.
“The new rules are heavy on regulating mortgage advertising and require income verification for subprime borrowers. The rules also place some restrictions on when lenders can charge prepayment penalties and require escrow accounts for property taxes and homeowner’s insurance on some loans,” Lieu wrotes in part.
“But the Fed failed to tackle one of the most important players in the subprime market: mortgage brokers.”
Has the Fed responded well to the mortgage mess? What else can be done?
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