Obama sounded the alarm on subprimes

As the U.S. and world economic systems continue to falter, both Sens. John McCain and Barack Obama claim to have seen the crisis coming to some degree, and tried to head it off.

McCain has cited his endorsement of legislation in 2006 that would have reined in Fannie Mae and Freddie Mac somewhat. And at the second presidential debate, Obama cited a letter he wrote to federal officials "two years ago."

"Understand that the biggest problem in this whole process was the deregulation of the financial system," Obama said during the Oct. 7, 2008 debate. "Senator McCain, as recently as March, bragged about the fact that he is a deregulator. On the other hand, two years ago, I said that we've got a subprime lending crisis that has to be dealt with.

"I wrote to (Treasury) Secretary (Henry) Paulson, I wrote to Federal Reserve Chairman (Ben) Bernanke, and told them this is something we have to deal with, and nobody did anything about it."

The last sentence appeared to refer to this letter that Obama sent to Paulson and Bernanke on March 22, 2007.

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Obama's comments in the debate suggest the letter warned about the then-looming subprime lending crisis and its potential impact on the wider economy.

So let's check the text.

"There is grave concern in low-income communities about a potential coming wave of foreclosures," he wrote. "We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes."

He went on to suggest the two officials convene a homeownership-preservation summit where banks, investors, regulators and consumers could forge a plan to stave off foreclosures.

"Rampant foreclosures are in nobody’s interest... There is an opportunity here to bring different interests together in the best interests of American homeowners and the American economy," he wrote.

So yes, Obama characterized the letter accurately. In it, he not only called for action to head off the unraveling of the subprime mortgage market, but also warned about its impact on the nation's economy. He sent the letter about 18 months ago, a time frame for which "two years" is a fair estimate. We find his claim to be True.