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CREDIT EXPANSION 

COMMISSION CONCLUSIONS ON CHAPTER 6

The Commission concludes that there was untrammeled growth in risky mort-
gages. Unsustainable, toxic loans polluted the financial system and fueled the
housing bubble.
Subprime lending was supported in significant ways by major financial insti-
tutions. Some firms, such as Citigroup, Lehman Brothers, and Morgan Stanley,
acquired subprime lenders. In addition, major financial institutions facilitated the
growth in subprime mortgage–lending companies with lines of credit, securitiza-
tion, purchase guarantees and other mechanisms.
Regulators failed to rein in risky home mortgage lending. In particular, the
Federal Reserve failed to meet its statutory obligation to establish and maintain
prudent mortgage lending standards and to protect against predatory lending.