They were warned

THEY WERE WARNED…. It’s common now to hear Bush administration officials, asked about the financial crisis, insist that they had no idea this meltdown was coming. Unfortunately, they were warned, but ignored the concerns.

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. […]

Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way. […]

The administration’s blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

More than three years ago, bank regulators “proposed new guidelines for banks writing risky loans,” and looking over the proposals — “banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses,” and “regulators proposed a cap on risky mortgages so a string of defaults wouldn’t be crippling” — it’s easy to see how regulations could have prevented the worst.

The Bush administration, in other words, was told what it had to do to prevent a disaster. Instead, it eventually issued a “Guidance on Nontraditional Mortgages,” which was little more than a list of suggestions, and left the dangerous practices in place.

Yglesias’ summary was spot-on: “Bush was specifically and repeatedly warned about the need to take regulatory action to avoid a financial system meltdown, and chose to ignore those warnings because he’s a really bad president. Thanks to his indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences.”

Bush’s record when it comes to disregarding warnings is right up there on the list of his most humiliating failures, isn’t it? When warned that bin Laden is “determined to strike” inside the United States, the president humored the intelligence official and told him, “You’ve covered your ass, now.” When warned that a hurricane was poised to destroy New Orleans, the president was satisfied that FEMA would handle the crisis. When warned about a looming financial crisis, Bush’s White House paid more attention to the banks that told the president not to worry.

It’s quite a track record.