Interestingly, on June 25, the City Council released a joint report — “Thousands of Homeowners Still Drowning in Underwater Mortgages” — which found that private-labeled securitized mortgages, like high-interest and subprime, that contributed to the bursting housing bubble and economic collapse of 2008 are disproportionately high in African-American and Latino neighborhoods of New York City.
Now, liberal Council members, such as Jumaane Williams (D-Brooklyn) and I. Daneek Miller (D-Jamaica), are proposing that the city use eminent domain to seize the mortgages and reduce the owed principal.
But which social engineers were responsible for the 2008 housing bubble and the present mortgage debt crisis in the first place?
From 1997-2001, Gov. Andrew Cuomo was the U.S. Department of Housing and Urban Development secretary and Mayor Bill de Blasio was the HUD regional director HUD for New York and New Jersey in 1997, during President Bill Clinton’s administration.
Embracing hook, line and sinker, the Community Reinvestment Act of 1977 and amendments thereof in the 1990s required federal bank regulatory authorities to encourage banks to lend to poor credit risks, especially blacks and Latinos, and other laws encouraged Fannie Mae and Freddie Mac, federally sponsored owners and insurers of mortgages, to increase mortgage loan guarantees to low- and middle-income families.
Cuomo pushed Fannie and Freddie to buy more home loans issued to poor minority homeowners and issue lower-grade, mortgage-backed securities as part of his social engineering attempt to integrate minorities into homeownership, all of which led to corporate collapse in September 2008 (Richard A. Posner, “A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression,” Harvard University Press, 2009, pages 240-42).
Banks were pressured, wrote Posner, by federal bureaucrats then, as well as presently under the Obama administration, “to relax mortgage standards in order to expand homeownership.”
Now we see the Council interfering with the threat of eminent domain if lenders do not reduce the principal on these subprime mortgages, which are the result of the liberal, public policies of Cuomo and de Blasio at HUD more than a decade ago.
They contributed to the economic crisis of 2008 due to their egalitarian, socially engineered interventions into the American free market economy. Now we see the same liberals arguing for further intervention through eminent domain under the guise of protecting the interests of racial minorities allegedly victimized by the white banking hegemony.
The criminal culprits are in Albany and City Hall, not Wall Street.