Dogged by Leading Role in Mortgage Meltdown, Andrew Cuomo Personifies Democrats’ Reversal of Fortune
With despair gripping New York Democrats over ethical scandals claiming Governor David Patterson, Rep. Charlie Rangel (D-NY), and Rep. Eric Massa (D-NY), New York’s Attorney General Andrew Cuomo cuts a heroic figure as the presumptive heir to the governorship.
But catching up with Cuomo is his relationship with the mortgage meltdown that nearly destroyed the American economy. Appointed by Bill Clinton as secretary of the U.S. Department for Housing and Urban Development (HUD), Andrew Cuomo has been called “the father of the subprime crisis” for the policies he orchestrated.
It was Cuomo’s directives that mandated HUD to vastly increase the amount of risky home loans bought by quasi-governmental housing giants Fannie Mae and Freddie Mac. Now, Cuomo may be haunted by his tenure as HUD secretary, where he planted the seeds for the nation’s housing collapse.
Though America’s financial fortunes suffered after Cuomo’s time at HUD, his own personal fortune soared. The bulk of this financial “windfall” came courtesy of Andrew Farkas, the billionaire real estate developer who helped Cuomo amass his wealth as a business partner and campaign fundraiser. Farkas — now Cuomo’s financial chairman as he circles the governorship — has personally given Cuomo at least $1.8 million in cash.
As New Yorkers are beginning to discover, Andrew Cuomo personifies the long reach of many at the top of the Democratic Party who built their fortunes on the mortgage bubble and the sub-prime collapse, but have yet to be tarred and feathered as architects of the nation’s worst housing crisis....
...Notably, another recipient of largess while Cuomo was HUD secretary is current White House Chief of Staff Rahm Emanuel. Clinton appointed Emanuel to the board of Freddie Mac while Cuomo headed HUD. Both Cuomo and Emanuel turned their privileged positions atop the nation’s mortgage finance system into opportunities for quickly amassing personal wealth, which they then leveraged into greater political power....
...Richard Bové, financial analyst at Rochdale Securities, agrees. In a March 3 interview with CNBC’s Maria Bartiromo, Bové charged that Cuomo’s irresponsible stewardship at HUD was a key cause of Fannie and Freddie’s bankruptcy and still-deepening bailout.
Speaking by telephone, Bové echoed Barrett’s claim that Cuomo was “the father of the subprime crisis,” an appointee out of his depth who imposed negligent and irresponsible risks on Fannie and Freddie in an apparent crusade to get the “underprivileged” into homes. Cuomo “was not as concerned about the audits or the types of loans that Fannie and Freddie were making,” Bové said, “as long as there was an expansion of mortgage services to that segment of the population.”..
...Bové chalked up Cuomo’s disastrous HUD performance to a “total lack of knowledge of economics, finance, and …what companies like Fannie Mae and Freddie Mac could endure.” But he underscored that every board member overseeing Fannie and Freddie shares responsibility for the mortgage crisis. Their responsibility, he said, was to protect, at the most basic level, the health and stability of the corporation. “It is clear that the boards of directors of Fannie Mae and Freddie Mac did not do that, because those companies are bankrupt.”
Worse, said Bové, “the American taxpayer is on the hook for more money in these two companies than anything else the government may be doing to assist AIG or General Motors.”...
Real Estate Interests Help Cuomo Gain a Big Edge in Cash
As Attorney General Andrew M. Cuomo readies his candidacy for governor, one industry is helping him amass a huge fund-raising advantage: real estate.
New records show that even as the industry has confronted its worst crisis in decades, developers, construction executives and real estate lobbyists have given millions of dollars to Mr. Cuomo, providing one in every five dollars over the past six months. ...
...And in his role as attorney general, Mr. Cuomo has responsibility over the offering plans of condominium and cooperative apartments, real estate investments, mortgage fraud cases and complaints about construction flaws that violate what developers originally promised. Nearly all plans for new residential development must be approved through his office...
NY's Cuomo Is 'Father of Subprime Crisis:' Bove
New York Attorney General Andrew Cuomo is the "father of the subprime crisis" and his aggressive attacks on Wall Street could make him dangerous to the banking sector if he becomes the next governor of New York, well-known banking analyst Dick Bove told CNBC.
"One of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today, and why the government is spending hundreds of millions of dollars in supporting them, is because of the edicts pushed through by Mr. Cuomo," said Bove, of Rochdale Securities, in a live interview.
"It's also thought by many that the hundreds of thousands of people who are losing their homes, are [doing so] to a great degree because of the actions taken by Mr. Cuomo at HUD," Bove added.
Cuomo, who was secretary of Housing and Urban Development from 1997 to 2001, has been blamed in some quarters for helping to trigger the financial crisis by pushing Fannie and Freddie to buy more subprime mortgages to increase home ownership among the poor. Many of those homeowners eventually defaulted, and the mortgage-backed securities market later collapsed....
