Passing of a Prescient Mind

A lot could have been done to prevent the widespread sale of subprime mortgages during the housing boom and the credit crisis that has subsequently inflicted the global economy. Perhaps no one was more certain of that than Edward Gramlich, who died this week at the age of 68, according to Bloomberg News.

Gramlich, who served as a Federal Reserve governor between 1997 and 2005, said he unsuccessfully pushed former chairman Alan Greenspan for more oversight of banks' policies regarding subprime mortgage sales practices long before the housing boom earlier this decade. Current Fed chairman Ben Bernanke and other prominent economists have acknowledged that many lenders had lax standards in place, which led to many risky borrowers having access to too much credit.

In 2000, Gramlich tried to get the Fed to examine the predatory lending practices at the commercial banks it oversees, but Greenspan didn't bite. " He was opposed to it, so I didn't really pursue it, '' Gramlich told the Wall Street Journal in June. "I was hoping that the Fed would be a leader.'' The proposal never made it to the board of governors for consideration.

Gramlich was finally heard earlier this year, with the publication of his book, Subprime Mortgages: America's Latest Boom and Bust. The book was published by the Urban Institute, where Gramlich was a senior fellow until his death.

As for Greenspan, he did not remember Gramlich's call for more oversight, but he admitted he would have opposed it. Greenspan did express his sympathies in a statement emailed to Bloomberg. "I am deeply saddened by the passing of Ned Gramlich, one of the most decent people I have ever encountered. His wit and insights will be missed.''

by Megan Barnett