WASHINGTON (MarketWatch) -- Investment professionals' "shortsightedness" led them to make fundamental errors that led to the mortgage crisis and credit meltdown, St. Louis Federal Reserve President William Poole said Wednesday.

In a speech to financial planners, Poole detailed five key mistakes that borrowers and lenders made that have pushed the economy to the brink of recession.

“ 'I can understand the mistakes many financially naïve borrowers made but have a hard time understanding how so many investment professionals could have been so wrong.' ” — William Poole, St. Louis Fed

In brief remarks on the economy, Poole said he believed growth would continue this year, thus avoiding a recession.

"The fundamentals of our economy remain strong ... and 2008 looks to be a year of rising growth," he said in his prepared remarks.

Poole is seen as an influential member of the Federal Open Market Committee, but does not vote on monetary-policy decisions this year. Last year, he voted in favor of all the FOMC's rate cuts.

As Poole spoke, another big Wall Street firm joined the ranks of those forecasting a recession this year.

Jan Hatzius, chief economist at Goldman Sachs, said in a note to clients that he now sees a short, mild recession, with the jobless rate rising to 6.25% and the Federal Reserve forced to cut interest rates to 2.50%, down from 4.25% currently.

The bulk of Poole's speech was devoted to the need for better financial education -- not only for borrowers but also for investment professionals.

Poole said five key mistakes were made, and professionals made four of them.

"I can understand the mistakes many financially naïve borrowers made but have a hard time understanding how so many investment professionals could have been so wrong," he said in the prepared text.

"Many observers point to greed, but I prefer a different explanation. Shortsightedness rather than greed explains actions that led to losses of tens of billions of dollars and the failure of many financial firms."

Poole's list of five key mistakes:

Borrowers took on mortgages they could not afford.

Mortgage brokers put too many people in unsuitable mortgages. They knew, for instance, that adjustable-rate mortgages probably wouldn't be right for many borrowers if interest rates rose as the market expected.

Investment banks jeopardized their reputations by securitizing mortgages without doing due diligence on the underlying assets, many of which were based on "inadequate or spurious information."

Rating agencies put their stamp of approval on securitized mortgages without considering whether AAA ratings could be maintained if house prices fell.

Investors scooped up those securities without doing adequate analysis first. "Investors too readily accepted the AAA ratings at face value," Poole said. "A reach for yield with inadequate attention to risk in another basic lesson that apparently cannot be relearned often enough.

"There are no new lessons here," he said. "The mistakes that brought us to this point have been made before."