Federal Reserve: Yes, We Made These Huge Mistakes in 2007

Crystal BallTop Federal Reserve policymakers believed, in the months leading up to the recession, that problems with the housing industry in 2007 were isolated and non-threatening to the U.S. economy.

New reports issued this week show U.S. Treasury Secretary Timothy Geithner, then-president of the New York Federal Reserve Bank, believed the symptoms banks were showing, such as lack of funds, were normal and that Wall Street was still doing fine.

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“We have no indication that the major, more diversified institutions are facing any funding pressure,” Geithner said according to the transcripts. “In fact, some of them report what we classically see in a context like this, which is that money is flowing to them.”

Fed Chairman Ben Bernanke had…