Wednesday, September 8, 2010

How much of this mess is Cuomo's fault?

From the NY Times:

Mr. Cuomo was housing secretary at a critical moment for the nation, just as its subprime mortgage fever was beginning to spike. It was during his tenure that the banking industry began to embrace predatory loans, and these creations led to a housing bubble that badly damaged America’s banks and nearly toppled its financial system.

An examination of Mr. Cuomo’s tenure atop the agency shows he was quick to warn about Wall Street’s dangerous hunger for predatory subprime loans — generally more expensive mortgages sold to people with poor credit. He counseled caution when many influential players, including the Federal Reserve and Congress, resisted any suggestion that they slow the country’s stampede to home ownership.

He also called attention to a pernicious mortgage-broker incentive payment that drove up interest rates for borrowers — secretly, in many cases — and that helped put many home buyers into loans they later found they could not afford.

And, in an effort to reverse decades of discrimination against blacks and Latinos, Mr. Cuomo pushed the government-sponsored banks, Fannie Mae and Freddie Mac, to buy more home loans taken out by poor and working-class borrowers.

But when presented with chances to throttle back on the exploding subprime market, guard against predatory lending and reel in mortgage brokers and lenders, Mr. Cuomo several times faltered and backed down, interviews and records show.

He did not heed local officials and others who wanted him to make Fannie and Freddie publicly report details about the loans they bought.

And he chose not to impose penalties and other deterrents to ensure that the giant public banks did not promote dangerous lending.

He also reversed himself, under heavy lobbying pressure from mortgage brokers and bankers, on the arcane but costly mortgage-broker payments known as yield spread premiums. These were lucrative bounties that banks paid to brokers who found new clients; the unwitting borrowers paid higher-than-market interest rates as a result.

Yield spread premiums fueled the subprime frenzy, according to official post-mortems on the crisis.


georgetheatheist said...

Wayne Barrett of the Village Voice, over 2 years ago, had Cuomo's number:

(Grandpa Cuomo to the young Mario when the tree in the back yard fell over: "Hey, we pusha her back up!". . . That's right Folks, the vaunted Cuomo liberalism is based on a tree that the wind blew over in the Cuomo's back yard. Hey, let me frame that vignette for my wall!)

Anonymous said...

I have sat at closing tables so many times where I knew the purchasers had no business buying a home. The government was complicit in encouraging unqualified people to buy homes. 100% financing? 110% financing? For people with a 620 credit score?

The biggest proponent of this ruse was Cuomo.

Anonymous said...

Please say NO to Cuomo II!

Anonymous said...

Where is LINO to defend Cuomo? Isn't this all W's fault? Isn't everything W's fault!

Anonymous said...

as bob grant would say in Italian "MARIO,TESE PROVENO---------!!!!!

and that goes for Andrew also.

will george the A help me out?

georgetheatheist said...


Senta mi! Tu sei proprio un sfacim.

Anonymous said...

Andrew slapped around the banks when they resisted extending loans to the NIJA's (no income, no job, no assets) and later after the government made itself the prime lender to NIJA's but used the banks for cover. Now he gets to slap around the banks again while avoiding criticism of Fannie, Freddie, and HUD.