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In depth story about the Federal Reserve failure to act as an unregulated subprime mortgage industry raced out of control, and major banking and financial institutions bought into the wild wild west of high interest rate - predatory lending.

excerpt:  during the years of the housing boom, pleas from consumer advocate groups failed to move the Fed, the sole federal regulator with authority over subprime mortgage businesses. Under a policy quietly formalized in 1998, the Fed refused to police lenders' compliance with federal laws protecting borrowers, despite repeated urging by consumer advocates across the country and even by other government agencies.

The hands-off policy, which the Fed reversed earlier this month, created a double standard. Banks and their subprime affiliates made loans under the same laws, but only the banks faced regular federal scrutiny. Under the policy, the Fed did not even investigate consumer complaints against the affiliates.

www.washingtonpost.com/...AR2009092602706.html - Preview

financial-crisis subprime federal-reserve