In the typical “James Bond” movie, the villain’s attempt to start some doomsday machine is always thwarted – just in the nick of time – by James Bond. Unfortunately life doesn’t always imitate art. In the example provided by the housing bubble and ensuing financial crisis, no one was able to prevent Andrew Cuomo – aka Dr. No(-Talent Ass-Clown) - from pressing the US economy’s self-destruct button. The self-destruct button at issue here was Cuomo’s decision to increase the GSE’s affordable housing mandate from the already risky 42% established by Secretary Cisneros to the completely irresponsible level of 50%. Here is Secretary Cuomo at his central planning best boating about increasing the affordable housing mandate to 50%;
"Even with a record high homeownership rate of 67.7 percent, there is still much more to be done. These new regulations will greatly enhance access to affordable housing for minorities, urban residents, new immigrants and others left behind, giving millions of families the opportunity to buy homes or to move into apartments with rents that they can afford. We acknowledge and appreciate that Fannie Mae and Freddie Mac have accepted this challenge."
As far as having the GSE’s issue 50% of their mortgages to low and moderate income borrowers, “challenge” was an optimistic choice of words. Perhaps “recklessly foolish undertaking” might have been more realistic. According to Franklin Raines (#40), the 50% affordable housing mandate goal would require the GSEs to greatly increase their presence in the sub-prime market. As indicated above, when Cuomo increased the GSE’s affordable housing mandate to 50%, President Clinton’s “goal” of 67.5% homeownership had already been achieved! This isn’t to say that President Clinton’s homeownership goal wasn’t fraught with enormous economic risk – it was. However, if Cuomo had simply been willing to rest on the Clinton administration’s temporary and completely illusory housing laurels, the resulting housing bubble would have certainly been much smaller than it actually was. However, as a professional politician and megalomaniac – Andrew Cuomo is completely incapable of either restraint or humility. As further evidence of his total lack of restraint and humility, as attorney general for New York, Cuomo would sue many of the banks he had worked hand-in-hand with as housing secretary.
See Kit Bond (#6) for background into the affordable housing mandate. See Henry Cisneros (#11) for more details on the affordable housing mandate. See Bill Clinton (#12) for the “strategy” – read “central plan” - to increase homeownership levels to all-time highs. See Jamie Gorelick (#26) and Franklin Raines (#40) for the role of the GSEs in causing the financial crisis. For the most zealous congressional supporters and defenders of the GSEs and the affordable housing mandate, see Barney Frank (#21), Gregory Meeks (#35) and Maxine Waters (#47).