The Federal Reserve is effectively buying all newly issued mortgages. This is a complete takeover of the mortgage market to artificially depress interest rates, and the actions are outside the Fed's charter because the loans do not have the full faith and backing of the government.
As Subprime Lending Crisis Unfolded, Watchdog Fed Didn't Bother Barking
The Fed may lose its consumer protection duties to a proposed new agency.
By Binyamin Appelbaum
Washington Post Staff Writer
Sunday, September 27, 2009
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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.
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