Streams

30 Issues: The Government's Role in Home Ownership

True/False: Andrew Cuomo Helped Cause The Housing Bubble

Monday, September 27, 2010

housing, house, foreclosure, foreclosing House in foreclosure. (Respres/flickr)

The sub-prime mortgage crisis and the ensuing debate over the proper role of government in promoting home ownership raise questions about the involvement Democratic gubernatorial candidate Andrew Cuomo may have had, as Secretary of Housing and Urban Development under President Clinton, in getting the bubble going.  Dean Baker, co-director of the Center for Economic and Policy Research, Wayne Barrett, senior editor at The Village Voice, and Peter Wallison, Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, look at various aspects of the issue.

Guests:

Dean Baker, Wayne Barrett and Peter Wallison
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Comments [27]

Jennifer

A closer look at Paladino's policy proposals...

http://www.newsday.com/news/region-state/paladino-takes-aim-at-school-officials-1.2319566

Republican gubernatorial candidate Carl Paladino said Monday he would create a team of advisers to help local governments consolidate special districts and town services and reduce the number of school district administrators - the main effort involved in his plan to reduce suburban property tax burdens.

In a wide-ranging interview with Newsday in Manhattan, Paladino also said he would use the threat of a government shutdown as a cudgel against lawmakers, warned the media to stay away from his child and his former paramour, and claimed he would defeat Democratic Attorney General Andrew Cuomo by a landslide, with more than 60 percent of the vote.

Sep. 27 2010 08:27 PM
g.e.Taylor from Bklyn., NY

Treasury stumbles selling CITI shares...

http://www.ft.com/cms/s/0/bccb89c6-c995-11df-b3d6-00144feab49a.html

(We are in the very best of hands.)
[Please avoid provoking applause!]

Sep. 27 2010 04:19 PM
g.e.Taylor from Bklyn., NY

@Eugenia Renskoff:

The "mortgage people and the "bank guys" will never need you as long as they own your elected representatives and system regulators; and as long as you desire something (even the most righteous result, for the most vulnerable and deserving) for nothing.

Sep. 27 2010 04:13 PM
Eugenia Renskoff from Brooklyn

Brian, I have a question: Couldn't the subprime mortgage people (the bank guys who knew a subprime from a regular mortgage) and who also knew subprimes are bad and toxic, couldn't they think of ways to make money being more honest with borrowers and not look out for themselves, me and me all the time? After all, what would they do without borrowers, also known as customers? They would be out of business, out of money. Eugenia Renskoff

Sep. 27 2010 03:52 PM
g.e.Taylor from Bklyn., NY

@superf88:

No honest person objects to a fairly regulated market.
No such "fairly" regulated market can allow a participant to be designated "too big to fail";
such participants will have no reason to remain responsive to the regulations as their political benefactors and their dependents (often the same people) will argue that the inevitable actual failure must be avoided or cushioned by the honestly earned resources of others to avoid the "bogeyman" of "systematic failure".
Notwithstanding the promise of future responsible action ("We will not bailout [name your villain] again!") such special pleaders always want a bailout now. oh yes - it's always going to be different.

Sep. 27 2010 03:47 PM
amalgam from Manhattan by day, NJ by night

@ Hugh - You got Dean Baker on WNYC!

Sep. 27 2010 02:13 PM
Eugenia Renskoff from Brooklyn

Hi, Brian, Home ownership is, and always will be, extremely important to me. This is so even after my condo in GA foreclosed almost 5 years ago due to mortgage fraud. Having your own home gave me a feeling of security and well being. Now, I feel lost and rootless. No bail out to the banks can help the person who has lost their home. If anybody should have been bailed out, it is we, the people who got scammed. Eugenia Renskoff

Sep. 27 2010 12:52 PM
superf88

(meant to write "probably under/less than 5 rules")

Sep. 27 2010 12:46 PM
superf88

@ g.e. taylor --

good point... when i say free i mean lack of government BUT governed by sensible regulations that keep order in a transparent and fair way. (probably under rules, such as the one for both buyer and bank that goes, "prove you have the money or are a good risk")

but the present situation, between tax $, semi-governmental authorities (fed, freddie, fdic, etc.), & fetid pools of tax breaks and incentives, etc., i honestly have no sense of the "true" market.

same can be said for health care, although sadly in that area it will be infinitely more complicated and ridiculous. by contrast the financial mess would have been exquisitely simple to fix.

Sep. 27 2010 12:45 PM
Frank from Middletown

I don't feel any better informed about any issue you've discussed. Wouldn't one issue in 30 days be more helpful?

Sep. 27 2010 12:27 PM
Michael Elliot from Brooklyn

I listened to this conversation and i was just floored. I'm a lifelong liberal with a real belief in the politics of compassion. Cuomo's involvement with HUD looks good on the surface but if you dig just a bit deeper, suddenly you start to see who was benefiting, and in the end it wasn't the working poor. But in a bigger way, a policy of making home ownership possible, fails in the most spectacular way. Each side, private and public, failed us, and just like the Savings and Loan debacle, we end up shouldering the burden of our good intentions.

Sep. 27 2010 12:23 PM
drdave from Lower East Side

Why give 800 Billion dollars to banks? For NO return.

Why didn't US Govmt just purchase the 20 million homes outright?

And allow the tenants remain there at a lower monthly payments ..gradually leading to private home ownership over many more years.

And over time, SELL the properties that do not work out to BANKS for a price.

And every family saved greatly reduces Govt expense on what are now homeless / displaced families.

A real American tragedy could have been avoided.

Sep. 27 2010 11:47 AM
g.e.Taylor from Bklyn., NY

@superf88:

Do you mean how much would it cost on the market without a government guarantee?
[As we are about to discover in the medical industry, there is no "free" vs. "government" market]

Sep. 27 2010 11:38 AM
artista from greenpoint

oh der the right wing talking points dominate the discourse, as usual.
Please ask guests about BRITAIN and its fall. (Remember Northern Rock?)
Because of HUD, hmmm?

Sep. 27 2010 11:37 AM
Coach Rich from Murray Hill

Why can't the government backed 30 year mortgage morph to a 50 year mortgage so that payments could be lower without asking the lender to reduce principal, assuming lowest interest rate available as well?
The old model is based in post WWII thinking. Today few mortgages are paid off, homes are traded, so if monthly payments were lowered by adding 20 years to maturation, the market will have time to come back and homes could be saved from foreclosure. And others could afford to buy for first time as well. Let the government lead the way for positive change.

Sep. 27 2010 11:37 AM
superf88

(market collapse without frannie and freddie? tired old bs -- the chinese, just for a start, would replace them in a ny second -- the risk is still so low compared to any other country... chinese national individuals and companies would/will probably be good for some millions of homes themselves)

Sep. 27 2010 11:30 AM
superf88

does anybody have any idea of the cost of homes on a free market? (ie no govt) i would find that interesting.

Sep. 27 2010 11:27 AM
g,e.Taylor from Bklyn., NY

Cuomo is not the only, and not the primary, responsible "malfeasant" in the destruction of the financial system.
I'm sure that his friends were not benefited any more than Senator Dodd's, Timothy Geitner's, or Bernard Bernake.
But if Mr. Cuomo has "learned his lesson", I'd be happy to read his statement about it.

His shameless posturing as the "fire department" for an arson he aided and abetted is what I expect from a "professional" politician - from a growing class that is claiming hereditary rights to public office.

Sep. 27 2010 11:27 AM
Bobby G from East Village

Wasn't the real estate bubble bust caused mostly by bad mortgages being securitized and derived and swapped to an out of control level by the big banks rather than Fannie and Freddie buying them?

Sep. 27 2010 11:25 AM

was the problem all the house flipping for quick profit?

Sep. 27 2010 11:22 AM
mc from Brooklyn

attorneys general. Please. Not "attorney generals."

Sep. 27 2010 11:21 AM

There may be merit in discussing the origins of the housing bubble -- but focusing on Andrew Cuomo alone makes no sense. The entire attitude was different back in the 90s. So what does that say about Cuomo today -- and what he would do. Can't wait to see if Palladino uses some of this to his advantage.

Sep. 27 2010 11:18 AM
David from Queens

Yup - it's poor people that caused the mortgage bubble - not unregulated hedge funds passing bundling mortgages around. Wall street caused the bubble - did you sleep through the past ten years.

Poor people trying not to be poor didn't cause this - rich people trying to get filthy rich or filthier rich caused it. Wake up!

Sep. 27 2010 11:16 AM
superf88

is the point of this conversation to see where cuomo stands now, what he would do differently, perhaps prompt a mea culpa?

all the actors supported this scheme. nobody was jumping up and down.

Sep. 27 2010 11:13 AM
Amy from Manhattan

Isn't the key word here "affordable"? The mortgages that caused the real estate market to collapse weren't affordable (or started out that way & then increased to the point that they weren't).

Sep. 27 2010 11:13 AM
g,e.Taylor from Bklyn., NY

Wish that the City Council Slush Fund aftermath was covered as well.

http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/

http://blogs.villagevoice.com/runninscared/archives/2010/05/when_rick_lazio.php

Sep. 27 2010 11:10 AM

shhh. as much as i'm not in love with cuomo, let's not say bad things about him right now cause the option of "governor paladino" is far too frightening to consider anything put fiction.

Sep. 27 2010 11:09 AM

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