Thursday, June 17, 2010

Press Briefing

Jan 18, 2010

New START and implications for National Security Programs. By Hillary Clinton, Secretary of State. Opening Statement Before the Senate Armed Services Committee Hearing on the New START. Washington, DC

U.S. Assistance in Response to the Current Humanitarian Crisis in the Kyrgyz Republic and Uzbekistan. US State Dept

The Trouble With Teacher Tenure - We can't make progress if bad teachers have jobs for life

Good Jobs and a Level Playing Field in the Next Recovery

The Gulf Spill Record - Here's the rest of the story on USA Today's "Oil spills escalated in this decade."

The White House Blog: A New Process and a New Escrow Account for Gulf Oil Spill Claims from BP

BP at first sounded arrogant and now is so obsequious it won't even stand up for its legal rights

New York and the New England Journal of Medicine. By Peter R. Orszag, Director, OMB

Reforming Main Street - A trial-lawyer bonanza gets air-dropped into the financial bill

Greenspan: U.S. Debt and the Greece Analogy - Don't be fooled by today's low interest rates. The government could very quickly discover the limits of its borrowing capacity.

New York and the New England Journal of Medicine. By Peter R. Orszag, Director, OMB

In Medical Malpractice Reform, States Should Shirk the Washington Way

U.S. Treasury Department Targets Iran's Nuclear and Missile Programs. Bureau of International Security and Nonproliferation

Cisneros Rewriting HUD History

Missile Defense: We've committed to developing proven technologies, and the new START Treaty won't stand in our way. By M Flournoy, Under Sec of Defense for Policy & A Carter, Under Sec of Defense for Acquisition, Technology & Logistics

Rahming Through a Lame Duck Climate Bill?

Expert: Obama speech too 'professorial' for his target audience

An Offer BP Couldn’t Refuse

The Water Cost of Carbon Capture

Cisneros Rewriting HUD History

Cisneros Rewriting HUD History

Posted by Tad DeHaven, Cato, June 17, 2010 @ 1:50 pm

In a recent speech to real estate interests, former Clinton HUD secretary Henry Cisneros preposterously claimed that the recent housing meltdown “occurred not out of a governmental push, but out of a hijacking of the homeownership process by some unscrupulous interests.”
The only criticisms Cisneros could muster for the government’s housing policies over the past 20 years were that regulations weren’t tough enough and it should have focused more on rental subsidies.

The reality is that Cisneros-era HUD regulations and policies directly contributed to the housing bubble and subsequent burst as a Cato essay on HUD scandals illustrates:
  • Cisneros’s HUD pursued legal action against mortgage lenders who supposedly declined higher percentages of loans for minorities than whites. As a result of such political pressure, lenders begin lowering their lending standards.
  • On Cisneros’s watch, the Community Reinvestment Act was used to pressure lenders into making more loans to moderate-income borrowers by allowing regulators to deny merger approvals for banks with low CRA ratings. The result was that banks began issuing more loans to otherwise uncreditworthy borrowers, while purchasing more CRA mortgage-backed securities. More importantly, these lax standards quickly spread to prime and subprime mortgage markets.
  • The Clinton administration’s National Homeownership Strategy, prepared under Cisneros’s direction, 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.” In other words, his policies encouraged the behavior that he now calls “unscrupulous.”
  • Cisneros’s HUD also put Fannie Mae and Freddie Mac under constant pressure to facilitate more lending to “underserved” markets. It was under Cisneros’s direction that HUD agreed to allow Fannie and Freddie credit toward its “affordable housing” targets by buying subprime mortgages. Fannie and Freddie are now under government conservatorship and will cost taxpayers hundreds of billions of dollars.
Cisneros now serves as the executive chairman of an institutional investment company focused on urban real estate. Might that explain why Cisneros is now a fan of subsidizing rental housing?
“Unscrupulous” would be a good word to describe the millions of dollars Cisneros has made in the real estate industry following his exit from government.
From the Cato essay:
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.
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. 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. 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.