Subprime Mortgage Standards Loosened in 2004

The New York Times has published an article about the Federal Reserve's responsibility, particularly that of Chairman Alan Greenspan, for encouraging the sub-prime mortgage lending bubble that is bringing our economy to the brink of disaster.

Am I the only one who finds it more than coincidental that the worst offenses began in the midst of a national presidential election? Here's a quote:

The drop in lending standards became unmistakable in 2004, as lenders approved a flood of shaky new products: "stated-income" loans, which do not require borrowers to document their incomes; "piggyback" loans, which allow people to buy a home without making a down payment; and "option ARMs," which allowed people to make less than the minimum payment but added the unpaid amount to their total mortgage.

Fed officials noticed the drop in standards as well. The Fed's survey of bank lenders showed a steep plunge in standards that began in 2004 and continued until the housing boom fizzled in 2006.