djd09
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HUD Scandals
June 1, 2009
- Tad DeHaven
The Cisneros Years, 1993–1997
In the Clinton administration, a primary mission of HUD was to increase home ownership rates, especially among minorities and low-income families. That mission was carried out through HUD subsidy programs and through the two government-connected mortgage finance giants, Fannie Mae and Freddie Mac. In 1992, HUD was given regulatory authority over these government-sponsored enterprises, and it began pushing the two firms into the subprime lending business. We now know that these political decisions on housing that were made in the 1990s helped fuel the housing bubble and subsequent crash in the early 21st century, so it is worth looking into the leadership of HUD during those years.
Henry Cisneros served as President Bill Clinton's HUD secretary from 1993 to 1997, when he resigned to deal with allegations that he lied to the FBI about payments he made to a former mistress. Cisneros plead guilty in 1999 and was fined $10,000, avoiding a possible prison sentence.
Cisneros oversaw a politicized HUD that mobilized to help fend off the Republicans, who gained a congressional majority in the 1994 election. The resurgent GOP initially sought to eliminate HUD as part of a plan to rein in federal spending and reduce budget deficits. HUD was one of the Republican targets, and department officials fought back in numerous ways to ward off proposed reforms.
HUD held a series of "standing up for communities" rallies, financed by taxpayers, which encouraged local officials and special interest groups to lobby against Republican budget cuts. One piece of propaganda distributed by HUD's New York office warned that the budget cuts "would dramatically expand America's underclass" and that "thousands of families, many with children, would end up homeless."23 HUD also sponsored a National Tenants Organization convention in Puerto Rico to defend the department. But that event was so political that even a HUD translator refused to take part and walked out of the proceedings in protest.24 According to HUD's inspector general, an NTO official responded that "he really didn't care whether HUD translated or not because the point was to get rid of Newt Gingrich."25
When Cisneros left HUD, he was lauded for the increase in homeownership rates that occurred on his watch. Part of his apparently winning strategy, Cisneros noted, was HUD's "ability to convince lenders, builders and real estate agents that there was money to be made in selling housing to low- and moderate-income individuals."26 Part of this "convincing" involved HUD-initiated legal action against mortgage lenders who declined higher percentages of loans for minorities than whites. As a result of such political pressure, lenders begin lowering their lending standards, which was another contributing factor to the housing meltdown in the 2000s.27
A key weapon in the Cisneros arsenal was the Clinton administration's changes to the Community Reinvestment Act. The CRA was passed in 1977 and updated in 1995 to pressure lenders into making more loans to moderate-income borrowers by allowing regulators to deny merger approvals for banks with low CRA ratings. Even complaints brought by activists, such as the leftist group ACORN, were now counted against a bank's CRA rating. The result was that banks began issuing more loans to otherwise uncreditworthy borrowers while purchasing more CRA mortgage-backed securities.28 As housing finance expert Peter Wallison noted, "The most important fact associated with the CRA is the effort to reduce underwriting standards. … Once those standards were relaxed … they spread rapidly to the prime market and to subprime markets where loans were made by lenders other than insured banks."29
The Clinton administration's National Homeownership Strategy, prepared under Cisneros's direction, brought together public and private housing market participants to coordinate plans to achieve record homeownership. This plan advocated "financing strategies, fueled by creativity and resources of the public and private sectors, to help homebuyers that lack cash to buy a home or income to make the payments."30 This is an important point to underline: the Clinton administration pursued a range of policies to put people who could not afford them into homes. Interestingly, HUD removed this Strategy document from its website in 2007 after the housing bubble burst.
Writing about the Clinton plan in 2008, financial expert Joseph R. Mason noted:
Cisneros planted another seed for the housing bubble and its subsequent burst by putting Fannie Mae and Freddie Mac under constant pressure to facilitate more lending to "underserved" markets.32 While Cisneros's own HUD administration acknowledged that mortgages financed by Fannie and Freddie in "underserved" areas have a higher risk of default, it did not see that "there need be any safety and soundness impediment" to the policy.33 It was under Cisneros's direction that HUD agreed to allow Fannie and Freddie credit toward its "affordable housing" targets by buying subprime mortgages.34
After eight years of introducing economic distortions into housing markets, Henry Cisneros spent most of his post-HUD career making money in housing markets, as many ex-HUD officials do. In 2000, Cisneros formed a housing development company in partnership with KB Homes, and he became a KB director. The KB board also included the former CEO of Fannie Mae, James Johnson. The New York Times noted that "it made for a cozy network."35 Indeed, Fannie Mae bought or backed many of the mortgages that were in the developments of KB Homes.
In 2001, Cisneros joined the board of Fannie Mae's biggest client: the now notorious Countrywide Financial, the company that was center stage in the subprime lending scandals of recent years. When the housing bubble was inflating, Countrywide and KB took full advantage of the liberalized lending standards fueled by Cisneros's HUD. In addition to the money he received as a KB director, Cisneros's company, in which he held a 65 percent stake, received $1.24 million in consulting fees from KB in 2002.36
When Cisneros stepped down from Countrywide's board in 2007, he called it a "well-managed company" and said that he had "enormous confidence" in its leadership.37 Clearly, those statements were baloney—Cisneros was trying to escape before the crash. Just days before his resignation, Countrywide announced a $1.2 billion loss, and reported that a third of its borrowers were late on mortgage payments.38 According to SEC records, Cisneros's position at Countrywide had earned him a $360,000 salary in 2006 and $5 million in stock sales since 2001.39
The Cuomo Years, 1997-2001
the dei theory was established long before sniffo...
they don't quote that one...shilly shill
Microsoft Reportedly Lays Off DEI Team with a Brutal Message
DEI is just a long-winded way of promoting discrimination through hiring initiatives and creating a toxic work culture where employees view each other by their race, ethnicity, gender and national origin. It is the antithesis of individuality and a vehicle for identitarianism.
Microsoft’s Entire DEI Team Told They’re ‘No Longer Business Critical,’ Must Begin Looking for New Jobs: Report
Microsoft said goodbye to its "diversity, equity and inclusion" team as it realized these initiatives are useless and divisive.
www.thegatewaypundit.com
the times be changing...
