As Doug Ross writes, “I’m truly shocked that CNBC reported and publicized this story:”
New York Attorney General Andrew Cuomo is the “father of the subprime crisis” and his aggressive attacks on Wall Street could make him dangerous to the banking sector if he becomes the next governor of New York, well-known banking analyst Dick Bove told CNBC.
“One of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today, and why the government is spending hundreds of millions of dollars in supporting them, is because of the edicts pushed through by Mr. Cuomo,” said Bove, of Rochdale Securities, in a live interview.
“It’s also thought by many that the hundreds of thousands of people who are losing their homes, are [doing so] to a great degree because of the actions taken by Mr. Cuomo at HUD,” Bove added.
Cuomo, who was secretary of Housing and Urban Development from 1997 to 2001, has been blamed in some quarters for helping to trigger the financial crisis by pushing Fannie and Freddie to buy more subprime mortgages to increase home ownership among the poor. Many of those homeowners eventually defaulted, and the mortgage-backed securities market later collapsed.
For a quick overview of what happened, and the media’s initial tentative reporting on the story in the 1990s, it’s worth revisiting this video from the fall of 2008:
embedded by Embedded Video
YouTube Direkt
And Janet Reno, whose DoJ brought numerous suits against lenders, on the most bogus premises, for “discrimination”.
The bank crisis was a downstream CONSEQUENCE of the dam bursting under CRA and the Clintoon push.
Before anyone jumps up and says, “I blame Bush.” I said it first.
Silly me, I thought Fannie & Freddie were mandated by law to increase subprime lending (see B Frank and C Dodd with regards to expanding the Community Redevelopment Act with this mandate). One way they did this was to have Fannie & Freddie guarantee a market for subprimes, which means lenders had no risk; if they could make a loan they could offload it on Fannie or Freddie at any time.
The federal gov’t needs to get out of the business world and divest itself of Fannie & Freddie. It’s no good at it and it shifts tax money to pay off political contributors, which explains why we’ve bailed out Wall Street.
Not that Cumo doesn’t deserve his share of the blame, but I’m guessing that this means he has been designated the scapegoat, to protect Reno, Frank, Dodd et al.
Duke is right, we need to get the government out of housing, it has only made things worse.
The whole sub-prime thing needs to stop immediately, Fannie and Freddie should then buy back all of the toxic assets they sold, de-tranche them, and then sell off the performing mortgages. Then we can liquidate Fannie and Feddie.
While the government is getting out of business, they can get out of the insurance business (social security, medicare) the delivery business(post office) and the private security businesss (Transportation security administration)
Really, they do nothing that Travellers, Blue Cross, FedEx/UPS, and Pinkerton can’t do and do better.