Before he pursued statewide office in New York, Andrew Cuomo was Secretary of Housing and Urban Development during Bill Clinton's second term. And lest you think his tenure is forgotten, the HUD Web site has an instructive item in its Archives section.

Entitled, "Highlights of HUD Accomplishments 1997-1999," the document chronicles the "accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997."

HUD's Web visitors learn that in 1999 "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac—two government sponsored enterprises involved in housing finance—to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent—a 19 percent increase—in the year 2001."

It's a sign of Washington's continuing failure to examine its own failures that HUD still views such a policy as an "accomplishment." It's as if the Pentagon described Pearl Harbor as a victory.

We know that in the wake of Mr. Cuomo's agitation, Fannie and Freddie's purchases of subprime loans skyrocketed. Subprime and "liar" loans became loss leaders that eventually caused the two mortgage giants to fail—with taxpayers so far on the hook for $111 billion in losses and perhaps hundreds of billions more to come.

The problem wasn't merely that HUD under Mr. Cuomo was raising the volume of risky loans for which taxpayers were guaranteeing. HUD was also encouraging a dangerous decline in underwriting standards at these government-sponsored enterprises (GSEs). Says former Fannie Mae chief credit officer Edward Pinto, "HUD commissioned much research aimed at forcing the adoption of more flexible lending standards by the GSEs."

In 1999, the Urban Institute published a HUD-commissioned study of Fannie and Freddie's credit guidelines. Among its findings: "Almost all the informants said their opinion of the GSEs has changed for the better since both Fannie Mae and Freddie Mac made substantive alterations to their guidelines and developed new affordable loan products with more flexible underwriting guidelines."

Keep in mind that Mr. Cuomo was doing this Fan and Fred cheerleading even as his colleagues in the Clinton Treasury were publicly raising red flags about their too-rapid expansion. Had Larry Summers, who was then Treasury Secretary, and Republican Paul Ryan, prevailed in their reform attempts, Fan and Fred wouldn't have been able to pile up so much rotten debt and turbocharge the housing boom.

In 2008, Wayne Barrett wrote in detail in the Village Voice about the changes Mr. Cuomo also wrought at the Federal Housing Administration, encouraging bigger loans with smaller down payments.

Mr. Barrett wrote that Mr. Cuomo "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down . . . ."

Mr. Barrett summed up Mr. Cuomo's tenure in the Clinton cabinet by noting that "the country will be living with his HUD mistakes, ill- or well-intended, for a long time to come."

The man writes...

More Failed Airthmetic [sic] at the WSJ

It's often said that everyone in Washington is so smart that they skipped directly from 2nd grade to 4th grade. This explains why so many people in top positions don't know third grade arithmetic.

The WSJ gave us another example of this lack of knowledge when it listed Medicare and Social Security as "the U.S.'s biggest budget busters." In fact, those of us who did sit through third grade know that Social Security actually is running an annual surplus. The amount of money it takes in each year on the designated Social Security tax and the interest it collects on its bonds exceeds what it pays out in benefits.

... Social Security is a money loser in the same way as IPOD is for Apple.

First, having looked at the offending WSJ piece -- always the responsible thing to do when one person is ranting about what another supposedly "said" -- we see something strange. The "failed arithmetic" Dean is ranting against is the Administration's, not the WSJ's. Here it is from the story...

Interest payments devour nearly one-tenth of federal revenues ... Spending on Social Security, Medicare and Medicaid consumes an additional 57%. The administration projects that those entitlement programs, as they are known, plus interest on the debt, will absorb 80% of all federal revenues by 2020.

So Dean seems really peeved that the Administration's arithmetic projects these as "budget busters" -- and the WSJ dared report it.

Moreover the year referenced is 2020, not today. Dean didn't notice?

And there are more strange things in this one little post:

..."those of us who did sit through third grade know that Social Security actually is running an annual surplus".

Well, no. Those of us who are alert to facts know that Social Security actually is incurring a shortfall right now. Back when Dean was in third grade they may have projected we'd be running a surplus today, but events have happened since then.

Let’s admit it’s fun to toss a few clever barbs at opponents. May I proceed?

Over at Daily Kos, they seem to have missed the memo that independent voters these days are attracted only to candidates who will deliver on their fiscal conservative promises once in office. On spending issues, you lie, you die.

Carly Fiorina can beat Barbara Boxer. She first needs to take out her Republican primary rival, Tom Campbell. She’s now running this ad.

Daily Kos calls the video “strikingly bizarre.”

Well, more like “strikingly effective” at inventing an acronym for Campbell -- FCINO, a Fiscal Conservative In Name Only — which puts him in a weak position on the biggest (maybe only) issue out there: government spending is completely out of control because incumbent politicians can’t say no. The only solution is to replace the incumbents. The voters are saying, “This time, no pretenders.”

OK, the ad also flubs its attempt to be artsy. Who cares, the message will break through. Like a bullet.

The Daily Kos piles on Carly’s Mad Men:

It's as if a very expensive Senate campaign for an incredibly wealthy woman in the biggest, richest state in the United States of America collectively dropped acid and decided to make an art school, prog rock "concept commercial." Tom Campbell's "pedestal" might be "so high," but not as high as Carlyfornia's new media team.

What’s the thinking behind the bombastic populist pie-throwing at this “incredibly wealthy woman”? Does the left still have that hangover from the ‘60’s, thinking the country wants to eat the rich? Not in this country. Here, the voters (increasingly, all but the leftists, die-hard liberals and celebrities) are positively starving for people who know how to manage money. Most voters don’t have any real money and that’s exactly why fiscal conservatism is so prevalent. The peeps are pissed at having to pick up the tab because Ted Stevens or Barbara Boxer has some cool new project.

Moreover, this ad by Carly sets a new record in the age-old battle of the sexes. It shows she knows how to manhandle her male opponent, Barack Obama.

Yes, indeed, I mean the President. Want proof? In this item on her campaign website, Carly attacks the President on the budget because it’s his power the voters want to check. Get very nervous, Barbara. Oops, I meant to use that title you’ve earned. The ones your colleagues use: Senator Bitch.

Was that use of the B word over the line? My bad, I guess I got a little Kos-tic.

Senator Boxer, Carly Fiorina will draw you out, wait for you to boil over and then she’ll pause, smile and talk to the voters.

Carly's campaign now being run by Mike Murphy and the stuff so far is classic Mike.

Not sure it is also Carly "stuff", but who cares if BB goes down?

I too thought it was a great ad. Ads are not supposed to be logical, to reason people into a p.o.v. Most ads would flunk sixth grade logic, if sixth grade logic, the basic fallacies were taught anywhere. They are impressionistic, aimed at the heart, the gut and the posterior ... only when absolutely necessary at the head.

President Obama loves a stage, teleprompter and a crowd.

Questions? Depends upon who’s asking, I guess.

See this gem from today’s Politico:

Q&A WITH DEMOCRATS: President Obama will speak to Senate Democrats on Wednesday morning, and will take their questions as the cameras roll as he did with House Republicans on Friday, Majority Leader Harry Reid's office announced. But unlike at the rumble with the GOP, Obama is expected to take only a handful of questions.

Posted by Donald L. Luskin at 4:42 PM | link  

Monday, February 01, 2010