Obama pays back housing bubble creators

Barack Obama has a long history of rewarding failure. One of the most spectacular failures in our nation's history was the collapse of the housing market that triggered the current recession. As Pajamas Media reports, one of the architects of that recession is a close Obama ally: Andrew Cuomo.

But catching up with Cuomo is his relationship with the mortgage meltdown that nearly destroyed the American economy. Appointed by Bill Clinton as secretary of the U.S. Department for Housing and Urban Development (HUD), Andrew Cuomo has been called “the father of the subprime crisis” for the policies he orchestrated.

It was Cuomo’s directives that mandated HUD to vastly increase the amount of risky home loans bought by quasi-governmental housing giants Fannie Mae and Freddie Mac. Now, Cuomo may be haunted by his tenure as HUD secretary, where he planted the seeds for the nation’s housing collapse.

Though America’s financial fortunes suffered after Cuomo’s time at HUD, his own personal fortune soared. The bulk of this financial “windfall” came courtesy of Andrew Farkas, the billionaire real estate developer who helped Cuomo amass his wealth as a business partner and campaign fundraiser. Farkas — now Cuomo’s financial chairman as he circles the governorship — has personally given Cuomo at least $1.8 million in cash.

As New Yorkers are beginning to discover, Andrew Cuomo personifies the long reach of many at the top of the Democratic Party who built their fortunes on the mortgage bubble and the sub-prime collapse, but have yet to be tarred and feathered as architects of the nation’s worst housing crisis.

It was Cuomo's HUD that, in 1996, issued a directive that 42% of loans from Fannie Mae and Freddie Mac had to be to individuals with a lower income than the median in their area. This began pumping air into the housing bubble and it never stopped. As PJM points out, Cuomo also appointed another Obama friend, Rahm Emanuel, to the board of directors at Freddie Mac. Emanuel reportedly earned at least $320,000 during his disastrous tenure.

Cuomo is currently running for governor of New York and is the White House's undisputed choice for the position. Obama is such a fan of Cuomo that key Democrats have gone to great lengths to kneecap the current governor, David Paterson, in order to clear Cuomo's path.

It's not just Cuomo and Rahm. Shaun Donovan, the current Secretary of HUD, was a deputy assistant secretary at HUD under Clinton where he helped carry out Cuomo's catastrophic policies. Donovan later moved on to head up the New York City Department of Housing Preservation and Development during the Bush Administration. There he worked with Mayor Michael Bloomberg to open up an unprecedented amount of new cheap housing to low-income families -- the same housing being offered with HUD's subprime mortgages.

In New York, Donovan was closely tied to perhaps the biggest villain of the housing crisis: ACORN. From the New York Times:

A complex of 125 apartments had fallen into such disrepair that Bush administration housing officials had foreclosed on the building and transferred it to a group they and Mr. Donovan had come to trust: the New York Acorn Housing Company.

“These renovations will transform this once-troubled property into a remarkable asset,” Mr. Donovan declared in a city news release trumpeting the apartments’ “rescue” by Acorn and its development partners.

Donovan has since disavowed his connections with ACORN, but his close work with them in the Bronx speaks volumes. Since its foundation, ACORN has spent its time shaking down mortgage companies and enforcing the Community Reinvestment Act of 1977. The group, since revealed to be a criminal organization, enacted a spate of activism that pushed the CRA farther and farther down the mortgage industry's throat. Fannie Mae and Freddie Mac were particularly compliant. In 2001, Fannie Mae announced it had rushed to make over $10 billion in CRA loans, but that was just the beginning. The government mortgage lender wanted $500 billion in CRA loans by 2010, more than one-third of the total loans it made. Fannie Mae collapsed under the weight of those junk loans two years before its deadline.

And of course, Barack Obama himself fought with ACORN as a community activist in Chicago for fair housing. One of his closest political advisors, Valerie Jarrett, was a Chicago slumlord.