Bush administration ignored clear warnings

Under pressure from banking industry, U.S. government eased lending rules



WASHINGTON - SEPTEMBER 19: U.S. President George W. Bush (C), flanked by U.S. Treasury Secretary Henry Paulson (R) and Federal Reserve Chairman Ben Bernanke (L) and also followed by SEC Chairman Christopher Cox, arrive for a statement in the Rose Garden at the White House for an announcement on a federal government plan to try and shore up failing financial markets September 19, 2008 in Washington, DC. The plan would attempt to stabilize money market mutual funds, absorb bad debt held by mortgage companies, and ban short selling of financial company stocks. (Photo by Win McNamee/Getty Images)
5:17 p.m. ET, 12/1/08

updated 5:43 p.m. ET, Mon., Dec. 1, 2008
WASHINGTON - The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

“Expect fallout, expect foreclosures, expect horror stories,â€