In the early and mid-2000s, the Bush administration called numerous times  for investigation into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages. On September 10, 2003, the House Financial Services Committee held a hearing at the urging of the administration to assess safety and soundness issues and to review a recent report by the Office of Federal Housing Enterprise Oversight (OFHEO) that had uncovered accounting discrepancies within the two entities.  The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.  Some believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the US financial system that went unheeded. 
By Jesse Colombo
All great bubbles start out as legitimate and compelling economic growth booms. The .’ Roaring Twenties bubble started as a growth boom based on the commercialization of radio, automobiles and mass production. Japan’s 1980s bubble grew out of their post-war economic miracle that was spurred by ground-breaking advances in electronic technology and manufacturing. The Dot-com bubble evolved out of the Information Age boom that revolutionized society in an incomprehensible number of ways. The fact that all of these booms started out legitimately didn’t prevent them from developing into bubbles that popped disastrously in the end. The China Bubble is no exception to this pattern, starting out as a boom based on successful economic reforms and modernization that helped to lift hundreds of millions out of poverty, while eventually devolving into an orgy of wild real estate speculation, reckless construction of empty cities to create economic growth and materialism mania. Even if China’s long-term growth thesis remains intact, the same was also true of the US in 1929; China could conceivably experience a Great Depression of its very own when its bubble pops.
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