Andrew Cuomo Owes Us $5 Trillion
It is not easy to engineer the bankrupting of the American middle class and the U.S. government.
Alan Greenspan and the Federal Reserve banks and their members can push all they want, but a destructive housing bubble could not have happened without the federal housing infrastructure at the Department of Housing and Urban Development (HUD) dismantling or ignoring countless laws, financial controls and administrative rules created to prevent disasters, particularly disasters of this magnitude.
Creating a housing bubble and bust that is this harmful requires re-organization of FHA and Ginnie Mae. It requires new rules and changes in the oversight of the mortgage markets, including of Freddie Mac and Fannie Mae. It requires cooking the accounting systems, budgets and books, even refusing to produce financial statements for HUD and FHA as required by law. It also required pushing hundreds of responsible people out of way. It meant manipulating the press and throwing money around in the right places. It was a big, big job. Someone had to do it.
Thanks to a handful of courageous people and reporters, you can understand why it took 232 years for America to accumulate almost $10 trillion in national debt, but only one new bill bailing out Freddie Mac and Fannie Mae to clean up more housing bubble mess to add another $5 trillion overnight.
Among this group of courageous and capable people is investigative reporter Wayne Barrett at the Village Voice. Here is his latest contribution.
How Andrew Cuomo Gave Birth to the Housing Crisis at Freddie and Fannie Mae
For links to more pieces on Cuomo’s role, see:
Unanswered Questions about Andrew Cuomo
Read Parts I, II, III, IV, V , VI, VIII, IX of this commentary >>>
View all parts of the article here >>>
If Fannie Mae’s and Freddie Mac’s problems related to decline in housing prices they would have been able to continue to access finance despite their losses — they would not have needed a bail-out.
So, this is the excuse, not the reason.
These are the opinions of Robert Sheridan, CEO of Sheridan & Partners, a Chicago-area real estate & development company.
Not All Financial Woes Are Created Equal
The failure of Indymac Bank – according to The New York Times the largest lender to fail in more than two decades – can be laid squarely at the feet of the lax (or nearly non-existent) underwriting that is part of (a big part of) the sub-prime mess. The chickens simply came home to roost.
The troubles of Fannie Mae and Freddie Mac are quite different. Freddie and Fannie underwrote loans carefully; their difficulties are a result of the unprecedented decline of home values.
In 2006, going against the conventional wisdom that single-family home prices never decline (they might stop rising for awhile, but they never decline), we predicted that single-family prices could decrease 10 to 20 percent. Painfully, that forecast turned out to be very correct – but also optimistic. We’re in a cycle now in which housing declines already are greater than at any time since the Great Depression of the 30s. And we’re not at the bottom yet.
If you don’t want to be disappointed by housing performance in the near term, disregard forecasts that the bottom is just around the corner – unless that corner is in Timbuktu. The bottom is NOT coming soon. And when it does arrive, it will not be obvious, like the bottom in the chart of the DJIA. The housing “bottom” will become apparent only in the rear-view mirror, when you realize that prices have stopped falling. Don’t expect a sharp rebound.
We will stay at the bottom for quite a while. How long that lasts will vary, as always, market-by-market.