One of the mantras we keep hearing about the credit crisis is "Who could have known?"  Who SHOULD have known is the current administration:

The Bush administration ignored early warnings about the potential of the collapse of the banking system. That’s the finding of The Associated Press’ review of regulatory documents it has obtained.

If true, then it nullifies, at least in part, some of the explanation — and blame — that has been a part of the dialogue since the Wall Street market began its meltdown.

As early as January 2006, according to records, several mortgage experts, including California mortgage lender Paris Welch, had warned about the potential trouble.

"Expect fallout, expect foreclosures, expect horror stories," Ms. Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her her job, according to paperwork obtained by the AP.

Conventional wisdom has been that the blame for the meltdown is solely the fault of low-income Americans who either didn’t care or were duped into obtaining shaky mortgages on homes they could not afford.

But if the AP report is correct — and there is at this point no reason to doubt it — then the Bush administration deserves a great deal of the fault because it failed to act on warnings that mortgage lenders were engaged in risky behavior. The administration is said to have been warned that new regulations were needed to rein in banks and companies that were pushing no-money-down, interest-only mortgages years before the economy collapsed.

Some of those same lenders who are believed to have pressured the administration to look the other way have now failed.

The administration "ignored remarkably prescient warnings that foretold the financial meltdown," according to an ASSOCIATED PRESS review of regulatory documents.

The question is why.

According to the AP, the administration buckled under pressure from "aggressive lobbying," and accepted "assurances from banks" that the troubled mortgages were no problem, which delayed any action on possible tighter restrictions by regulators for more than a year.

By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

"These mortgages have been considered more safe and sound for portfolio lenders than many fixed-rate mortgages," David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

In other words, the report implies, the Bush administration turning a blind eye to the facts had a great deal to do with the mess with which the country is now having to grapple.

Who could have known?  Anyone who was bothering to pay attention.