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CU System
Eakes criticizes Feds late subprime action in INY TimesI
NEW YORK (12/20/07)--The Federal Reserve Board could have stopped the subprime mortgage crisis earlier, Martin Eakes, CEO of the Center for Responsible Learning, told The New York Times Tuesday. The Times reported that several people tried to warn federal banking officials that the subprime mortgages were risky for borrowers. Among the clues of potential problems was a report by the center, which analyzed records nationwide and found default rates on subprime loans rose to 20% in cities where home prices stopped rising or started to drop. Eakes is quoted as saying, "The Federal Reserve could have stopped this problem dead in its tracks," and adding, "If the Fed had done its job, we would not have had the abusive lending and we would not have a foreclosure crisis in virtually every community across America." Former Fed Chairman Alan Greenspan told the Times the Fed was poorly equipped to investigate deceptive lending and that its policymaking was not to blame for the housing bubble or bust. The Center for Responsible Lending is a nonprofit group based in North Carolina. Eakes is a former CEO of the Center for Community Self-Help and CEO of Self-Help CU in Durham. The Center for Community Self-Help works with the credit union to provide affordable home loans, small-business loans, and loans to people who might have trouble obtaining credit (News Now July 13, 2005).
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