One of the "masterminds" who served a critical -- yet largely unpublicized -- role in the recent economic meltdown is a man named Andrew Cuomo.
Curiously, not only is this man not a laughingstock (or, better yet, serving in federal lockup), he's a mainstream Democrat politician running for the governorship of New York.
Flashback to 1997, when President Bill Clinton named Andrew Cuomo, a man without any significant real estate or financial experience, the youngest head of Housing and Urban Development (HUD) in history.
As HUD's chief, he had complete regulatory control of home finance, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) -- also known as Fannie Mae and Freddie Mac.
Cuomo, an outspoken liberal Democrat, immediately began implementing plans for "change". These plans were outright social engineering programs, designed to -- in his words -- improve "GSE presence in the subprime market [which] could be of significant benefit to lower-income families, minorities, and families living in underserved areas."
In 1998, HUD proclaimed a $2.1 billion settlement with AccuBanc for "alleged discrimination against minority loan applicants". Cuomo proudly announced that the funds would be used to let poor families with no down payments buy homes with low interest rate mortgages. Cuomo candidly stated the effort was "affirmative action" lending and it would necessarily result in a "higher default rate."
By 2000, Cuomo had engineered massive new loan programs for the poor, raising the requirement for Fannie Mae and Freddie Mac to purchase half of all of their loans from low-income borrowers with little or no documentation required. 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."
Earlier, Cuomo had also issued 187 pages of rules for Fannie and Freddie. These rules "explicitly rejected the idea of imposing any new reporting requirements on the GSEs... [this resulted in HUD having] no way of telling how abusive the low-income mortgages it was mandating might be."
It had no idea the amount of fraud it was supporting with an implicit taxpayer backstop.
When the housing price bubble finally popped, after skyrocketing under the insane social engineering programs created by Cuomo, Fannie Mae and Freddie Mac were bankrupted, leaving the taxpayers with a bill that could reach $1 trillion.
WARN your friends and family who live in New York. Andrew Cuomo is a disgrace and a menace.
Putting Andrew Cuomo, the Architect of Ruin, in charge of New York state is tantamount to wearing a fiscal suicide belt. His social engineering ideas are not just crazy -- they're dangerous.
• The Fannie Mae testimony that will make you scream in anger
• What really happened in the mortgage world
• 'Institutionalized discrimination hidden behind a smiling face'