This Bloomberg article is simply astonishing:
The U.S. Securities and Exchange Commission, criticized by lawmakers for failing to stop practices that fueled the financial crisis, raised concerns as early as 2006 about the risks of Wall Street’s appetite for packaging mortgages into bonds.
Officials in the SEC’s division of trading and markets wrote that collateralized debt obligations tied to home loans exposed banks to writedowns if the assets weren’t immediately sold, according to documents released yesterday by a federal panel investigating the crisis.
“This risk is difficult to measure and hence to manage,” said the memo dated Feb. 1, 2006.”
This is the end result of an ideology that believes all regulation is unwanted, corporations should be unfettered, and that the SEC should be starved of funding and personnel. It is not an accident, but it reflects a goal achieved, desired results.
SEC: Defective by Design? (March 18th, 2010)
SEC: Regulatory Capture Hard at Work (March 18th, 2010)
SEC Didn’t Act After Spotting Wall Street Risks, Documents Show
Bloomberg, May 6 2010