From the author of “Investigating the Nation’s Exploding Credit Squeeze.” Feb 2006.
I really like this portion where Sn Sarbanes asked these direct questions.
Portion of Article copied with permission from www.economyincrisis.org
“It came in November 2005, toward the end of his all-day Senate confirmation hearing, when Senator Paul Sarbanes brought up the mortgage business. Mr. Sarbanes, the ranking Democrat on the Banking Committee then, pointed out that the number of people taking out adjustable-rate mortgages soared in 2004. ‘Are you concerned about the potential for a bubble in the housing market?’ the senator asked Mr. Bernanke. ‘And specifically, does the drastic increase in the use of risky financing schemes, including interest-only and even negative amortization mortgages, concern you?’
Mr. Bernanke replied that the Fed was reviewing its guidelines for these loans and planned to issue new ones soon. The guidelines, he added,‘would have on the margin some beneficial effects in reducing speculative activity in some local markets.’ At no point, though, did Mr. Bernanke suggest that he was concerned.”
And what about the larger media? Where was their concern? Back in the spring of 2006, I published an article in Nieman Reports, the journalism review published at Harvard and read by top editors. I specifically lambasted the lack of reporting on the issue. It was titled,“Investigating the Nation’s Exploding Credit Squeeze.”