Monday, February 08, 2010

The massive hypocrisy of Andrew Cuomo

The Wall Street Journal reminds us that the likely next governor of New York, Andrew Cuomo, was the Secretary of HUD during the late 1990s. Now Cuomo is grand-standing by charging Bank of America with fraud for doing what the federal government pressed them to do. But, as WSJ reminds us, Cuomo was one of the prime culprits for pressing Fannie and Freddy to expand its purchase of loans to low-income people who couldn't really afford those mortgages.
Before he pursued statewide office in New York, Andrew Cuomo was Secretary of Housing and Urban Development during Bill Clinton's second term. And lest you think his tenure is forgotten, the HUD Web site has an instructive item in its Archives section.

Entitled, "Highlights of HUD Accomplishments 1997-1999," the document chronicles the "accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997."

HUD's Web visitors learn that in 1999 "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac—two government sponsored enterprises involved in housing finance—to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent—a 19 percent increase—in the year 2001."

It's a sign of Washington's continuing failure to examine its own failures that HUD still views such a policy as an "accomplishment." It's as if the Pentagon described Pearl Harbor as a victory.

We know that in the wake of Mr. Cuomo's agitation, Fannie and Freddie's purchases of subprime loans skyrocketed. Subprime and "liar" loans became loss leaders that eventually caused the two mortgage giants to fail—with taxpayers so far on the hook for $111 billion in losses and perhaps hundreds of billions more to come.
Many experts agree that the policies that Cuomo pursued as HUD Secretary played a major role in today's financial disasters. New York voters should ponder his financial history before they put him in the governor's office. He has a lot to answer for and the answer is not a grandstanding suit against Bank of America.