Again... there is ZERO evidence of "insufficient oversight". Where do you even come up with that? Have you look at how many regulations there are on banks? What bank anywhere, didn't have oversight? We have more controls and regulations on our banks than anywhere else in the world.
It comes from Bush, for one, who started asking Congress around 2003 to add oversight of the GSEs to prevent the meltdown we incurred by not having such oversight.
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
You appear to me, to be contradicting your previous post. Maybe I'm misunderstanding.
In this one you seem to be saying we need more control over GSEs to prevent a future crash... implication... the GSEs caused the prior crash (which I agree with).
Yet in the prior post, you indicated that the GSEs were not the cause. That it was 'greed' that caused the problem.
Perhaps you should clarify your position.
That said, the problem the Bush proposal was designed to deal with, had nothing to do with sub-prime mortgages, or a melt down, and nor could it anyway.
Once a bubble is created, there is no other outcome, but a crash. There is no way to 'deflate' the bubble and prevent a 'pop'.
As the data from the Yale Economist shows, the Bubble started in 1997. By 2003, it was way way way way too late to do anything about it. It was going to grow, and pop, and crash. There is no policy, or alternative regulation that could be created at that point to stop the inevitable.
The problem that the 2003 Bush proposal was supposed to deal with, was something far simpler. Fannie and Freddie were fudging their accounting numbers to trigger bonuses for their management. OFHEO, is the regulatory agency that was designed to do oversight on Freddie and Fannie.
Now there is a question as to whether (depending on what source you believe), the accounting scandal was discovered by the SEC or OFHEO. Regardless the scandal was in fact caught. Suggesting again, that there in fact WAS regulation over the GSEs.
The issue was that OFHEO couldn't do anything without congressional help, which wasn't fourth coming until the congressional investigation of 2004. And the reason of course, was that Franklin Raines, was appointed by Clinton over Fannie, and the Democrats were avid supporters (and profit takers from Fannie), and defended Fannie until the bitter end. To that end, they hindered OFHEO at every turn.
Bush wanted a more powerful oversight on the GSEs. But the key there is, this oversight wasn't over the rest of the entire banking system, just as OFHEO wasn't over the rest of the banks either. It was just a regulatory agency over only the two GSEs, Freddie and Fannie.
My point to you is this... More regulations, more oversight, would not have stopped anything, and nor will it in the future.
Why? Because Freddie and Fannie were specifically directed to promote more home ownership, by lowering their standards. The scandal, and congressional investigation of 2004, didn't even mention the increase in defaulting loans, or the sub-prime loans, or the Alt-A loans, or the AAA rated bad loans. Their issue was the accounting errors and cooked numbers, that gave Raines and other executives big bonuses.
Again, if there was a lack of oversight, then how did they find those cooked books and bad accounting? Because there was oversight. There was always oversight.
