Ben Bernanke: Patron Saint of Easy Money & Easy Regulation
Yesterday Ron Paul called the Federal Reserve a "Central Planning Cartel." Today we learn again that their central planning and regulation ain't that good. In fact, it stinks. The Fed was responsible for mortgage oversight, but they did little or no mortgage oversight. This according to John Paulson, who made billions betting against bad mortgages promoted by the Fed.
Paulson Says Fed Gave ‘Little’ Oversight to Subprime --
John Paulson, whose Paulson & Co. hedge fund made $15 billion betting against subprime mortgages in 2007, said better oversight of home loans by the Federal Reserve System would have helped prevent the crisis.
“The Federal Reserve did have oversight for the mortgage area, and there was very little oversight given in the mortgage area,” Paulson said in an October 2010 interview released today by the Financial Crisis Inquiry Commission on its website. “Demanding that proper underwriting guidelines be followed, not allowing ‘no doc’ loans, requiring a down payment, even if it’s just 5 percent,” would have gone a long way toward preventing the crisis.
The lack of underwriting standards, excessive leverage at banks, and financial institutions that sold derivatives without having sufficient equity are among the main reasons for the crisis, he said in the interview with commission, which was charged by Congress with delving into the origins of the 2008 financial collapse...
Mish / Global Economic Analysis:
Calculated Risk vs. Ron Paul on Soviet Style Central Planning --
In Praise of Soviet Central Planning
Bernanke deserves as much praise as Soviet Central planners for being right about something once every 10 years.
After all, the Fed is nothing more than a group of Soviet-style central planners, primarily academic wonks with no real word experience. Those planners (and their supporters) think the Fed can divine where interest rates should be to support dual or triple mandates...