Thomas Jefferson on the Financial Meltdown

27 Mar 2009 /

ALBANY, N.Y. (AP) — If anyone could emerge from the AIG bonus debacle looking good, it could be New York Attorney General Andrew Cuomo.

Thomas Jefferson

Cuomo. KWOH-moh. Italian, I suppose.

I have no personal animosity toward Mr. Cuomo, but despite his favorable write-ups in the press, he is certainly no hero in these matters.

Americans have short memories. Even members of the press — or “the media,” as you now call them — who should provide context and perspective, have short memories.

Set the Wayback Machine to 1995. Bill Clinton is president and Henry Cisneros, the Housing and Urban Development (HUD) secretary, institutes a requirement that 42 percent of the mortgages financed by government-sponsored entities (GSEs) Fannie Mae and Freddie Mac serve low- and moderate-income families.

Things only got worse under Cisneros’ successor, Andrew Cuomo:

Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the “very-low-income.” Part of the pitch was racial, with Cuomo contending that Fannie and Freddie weren’t granting mortgages to minorities at the same rate as the private market. William Apgar, Cuomo’s top aide, told The Washington Post: “We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible.”

Hey, I’ve got an idea! Let’s put half of the GSE money into mortgages for very low income black people! And let’s not trouble them for a down payment either:

Fannie also developed a “flexible” product line, providing up to 100 percent financing and requiring borrowers to make as little as a $500 contribution, and bought $13.7 billion of those loans in 2003.

And yet I often hear the ensuing financial meltdown being blamed on “greed” and “the evils of capitalism.”

That was not capitalism; that was government manipulation of the housing market.

Americans have very short memories . . .


One Comment on Thomas Jefferson on the Financial Meltdown »

  1. 3 Apr 2009 @ 2:08 pm


    So true. We need another Jefferson today, or at least a Reagan.

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