AP: Bank Lobbyists Had Big Role In Fallout

U.S. Futures Down In Asian Trading

POSTED: 5:01 am MST Nov 29, 2008

WASHINGTON -- An Associated Press review of regulatory documents finds that the George W. Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed.

The review shows the government buckling to pressure from some of the same banks that have now failed and ignoring warnings that foretold the financial meltdown.

California mortgage lender Paris Welch wrote to U.S. regulators in January 2006 warning of foreclosures and other horror stories. She lost her job about a year later in the housing implosion.

The aggressive lobbying by banks included assurances that the now troubled mortgages were OK. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone.

The administration belief in market forces and reluctance to intervene has, ironically, ushered in the most massive government intervention since the 1930s.

The meltdown made for a rough November for investors, but the month ended on a positive note. The key average logged gains last week of between nearly 10 to 12 percent.

The Dow stands at 8,829 after rising 102 points in the latest session.

The S&P is at 896, having surged 8 and a-half points Friday.

The Nasdaq is at 1, 535 after a gain of 3 and a-half points.

This is a busy week for economic data, beginning with reports today on October construction spending. Also due Monday is the Institute for Supply Management’s reading on manufacturing, seen continuing to slow contraction.