Senate Study Slams OTS, Wall Street, and Lenders

HousingWire says the U.S. Senate Permanent Subcommittee on Investigations released a report about the recent financial crisis targeting the Office of Thrift Supervision (OTS) for regulatory failures, conflicts of interest and lack of oversight regarding risky financial products.  Senators Carl Levin (D-Mich.) and Tom Coburn (R-Okla.) released the report, which notes that Washington Mutual had 500 serious deficiencies documented by OTS from 2004 to 2008 and the agency did nothing to address the problems.  The government seized Washington Mutual, the largest bank failure in U.S. history, on Sept. 5, 2008.  The study also blamed lenders for issuing large loans to high-risk borrowers, and criticized Goldman Sacks (NYSE: GS) for using net short positions to profit from the spiraling mortgage market on the very products they sold.  Sen. Coburn said, “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight.” The report suggests OTS should be dismantled.

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