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Proof that the Fed knew about the rot in the housing/mortgage market even before the bubble burst.

January 22, 2012
Source:  http://www.economonitor.com/lrwray/2012/01/18/mortgage-fraud-revisited-why-did-the-fed-pump-and-dump-us-real-estate-markets/?utm_source=rss&utm_medium=rss&utm_campaign=mortgage-fraud-revisited-why-did-the-fed-pump-and-dump-us-real-estate-markets

MORTGAGE FRAUD REVISITED:
Why Did the Fed Pump and Dump US Real Estate Markets?

Author: L. Randall Wray

My colleague, Bill Black, has been entertaining himself by reading through the transcripts of the Fed’s meetings to find discussions of mortgage fraud. As you probably know, Congressman Henry Gonzalez forced the Fed to release these transcripts after he caught Chairman Greenspan in a white lie. Well, maybe it was not so white—just an outright lie trying to claim that transcripts of Fed meetings did not exist. We now know they did. Greenspan then agreed to release them, with a five year lag. So, joy of joys, you can now read the transcripts from FOMC meetings for 2006, right at the end of the biggest real estate boom in human history. And Bill Black is just the sort of guy who would find this fun…

Many of those involved in promoting the fraud have claimed that “no one could have seen it coming”—meaning the collapse. This is, of course, implausible. The FBI had warned of “an epidemic of fraud” back in 2004—long before the worst abuses became normal bank practice. And from the Fed’s transcripts, there is no doubt at all that the Fed “saw it coming”. Let’s look at a particular report from December 12, 2006. Don’t take my word for it. Read this: http://www.federalreserve.gov/monetarypolicy/files/FOMC20061212meeting.pdf

Here is a relevant portion of the transcript, with a bit of added bold: (read more)

 

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