The Federal Reserve Has A Movement


The Fed Moved! Freaking amazing when you think about it. The first few words to appear in the first paragraph of an updated New York Times posting are :” The Federal Reserve moved…”

Now this may seem like a fairly benign statement until you consider this: Had the Federal Reserve moved say, six or seven years ago, we might not be in this mortgage/housing/credit/banking crisis that we find ourselves in, along with much of the rest of the developed world.

How do we know this?

According to a Times article from Washington, some seven years ago, Edward Gramlich, then a Federal Reserve governor, warned that “a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.”

Sound familiar? It should. It’s the root cause of the chaotic financial mess that has engulfed us like a mountain lion chomping down on a parakeet. (And no, I don’t know if mountain lions even like parakeets or even know, for that matter, what a parakeet looks like.)

BUT…reportedly, when Gramlich tried to nudge the Fed to move and take a closer look at the developing mortgage lenders/national banks connection, then Fed chairman Alan Greenspan told him to f— off! Okay, maybe Greenspan didn’t actually tell Gramlich to f–off; but, he clearly wanted to because Greenspan sat on his butt and did, hold on to your seats, nothing.

In fairness, which I am not inclined to be, mind you, Greenspan told the august Times that the reason he sat on his butt was because the Fed was “poorly equipped to investigate deceptive lending” and, is “not to blame for the housing bubble and bust.” Poorly equipped? The U.S. government? I mean, could the Fed have at least rounded up a few of those college intern-types to do the heavy lifting and help with the much needed investigations?

The reason, other than spite, for bringing up the non-movement of the Fed seven years ago, is to contrast it with what has apparently just happened as I sat down to write this post. What has happened now is…….The Federal Reserve moved! It came up with some new restrictions to curb unfair and deceptive home-lending practices, reports the Times.

Voting 5-0, the Fed opted to “tighten provisions meant to protect borrowers and apply them to a far larger share of home loans.”

After a period to permit public commenting, the proposed new rules could go into effect next year.

Now then, the Fed is doing all this using its power under the Truth in Lending Act as well as the Home Ownership Equity Protection Act. And, you know when that act went on the books?

All the way back in 1994. Which brings us back to the now very dead Edward Gramlich who wanted his own agency to do something seven years ago when Greenspan now says the Fed lacked the equipment to move. Nonsense. It had all that was needed in 1994.

Gramlich must be turning in his grave, his corpse practically shouting out to Greenspan : “I told you so, you shmuck!” or words to that effect.

But, in the meantime, let us all take solace in the fact that The Fed Has Moved!

About Author

Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.


  1. Steven Boorstein on

    Actually, the Fed has been moving all along… it’s just that, like most “bodies” that embody the government, they moved at glacial speed. Too little too late… maybe it will head off the abuse that occur the NEXT real estate bull market.

    Steven Boorstein
    Landlord Business Insider

  2. I understand the concept of the Fed not having the resources necessary to police the sub-prime market, but why not turn it over to another agency? The lack of regulation and oversight allowed the sub-prime industry to become the wild west of financial services.

  3. Read “The Creature from Jekyll Island” and educate yourselves. The Federal Reserve is NOT, I say again, NOT a part of the Federal Government. It is a PRIVATE bank that is only regulated by the Federal Government.

    Educate yourselves. Many people make the mistake, because the bankers that created the Federal Reserve in the early 1900s used that term, to make it sound like part of the government. But it is not.

    And as far as the government being a well-oiled machine. That is out there too…after 15 years of government service, I can tell you that the military at the lower levels operates efficiently, but as you get higher, it becomes VERY inefficient.

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