government admits mistakes real estate crash
Geithner said the government made unnecessary mistakes that could have been avoided. Geithner also stated the lack of regulation and oversight by the government left the tax payers responsible for cleaning up the mess. The government allowed underwriting standards to erode and the industry to take on too much risk and leverage.
Results of the Lack of Proper Oversight
- Underwriting standards were allowed and encouraged to be lowered.
- Buyers were left unprotected from some predatory lending.
- Increasing complex securitization of mortgages lacked accountability and transparency.
- Financial system accepted higher than normal levels of risk and leverage.
Geithner wants to reduce the level of government involvement in the mortgage and housing markets. Along with other reforms, he proposes that Fannie Mae & Freddie Mac are slowly eliminated. The Treasury Secretary said the reforms need to, "restore confidence in the mortgage market among borrowers, lenders and investors," and "our goal is not for every American to become a homeowner."