Bush’s Bad Neighbor

Among the many things about which Americans might be bitter today (and let’s do remember that 81% of American’s say we’re on the wrong track), one of those things is of course the mortgage crisis. Even I’m getting a little bitter about it at this point, and I rent.

I’m bitter because apparently the housing market doesn’t necessarily adopt the most basic aspects of supply and demand economics. My wife and I have been wanting to buy a home for quite some time now. After almost eleven years of marriage, two kids, and rough patches that would have sunk other marriages, I guess this is permanent, and we’re at a place where we’ll probably stay together long enough to buy a house. The problem for me is that while the mortgage crisis is resulting in lots of foreclosures and people trying to dump their houses because they can no longer afford them, this doesn’t necessarily mean that house prices are going to go down for prospective buyers like me who don’t have exactly a huge chunk of change to throw around.

I learned this listening to NPR not long ago.

You see, this curious phenomenon occurs wherein people will actually list their homes well above their actual worth during times such as these where housing prices should be dropping. I don’t understand much of it, just that it’s a side effect of home sellers trying not to lose too much money in the deal.

The point is, my problem’s pretty light compared to those of others. People who thought they could afford nice homes are finding out that they’re having to pack up and move out. I’m a little inconvenienced, these folks are losing their homes.

There are more than enough things to blame out there for the housing crisis, but one can hardly ignore the soon to be departed Housing and Urban Development Secretary Alphonso Jackson. Like so many other Bush appointed official, Jackson is a crony, his relationship with Bush beginning back in the 80’s as neighbor and friend in Dallas Texas.

Now, when we talk about cronyism we sometimes treat the subject as though it’s a foregone conclusion that it’s bad, kinda like how lobbyists are universally seen as bad (unless they’re running your campaign, right John?). But I think it’s important to make it clear exactly why someone would want to do a little more than simply hook up their friends.

For instance, the fact that these people are being tapped to run a country as opposed to a country club might be a great place to start. For this reason, there should probably be an adequate level of competence at play here. Also, it’s kind of important to pick someone who knows how to tell the boss, “no,” from time to time when it’s warranted. This because people, even presidents, can sometimes be wrong, or not know enough about a particular area.

Also, corruption and greed, those are a couple of other reasons why one should be perhaps just a little bit more careful when selecting cabinet members.

This wasn’t exactly what was going through Bush’s head when he tapped Jackson to be the number one guy at HUD four years ago. Nope, it was all about hooking up a friend that would adopt the mantle of sycophant without the slightest bit of reservation.

This WaPo article on Jackson really kind of highlights the follies of cronyism, a cautionary tale told in retrospect, and a final clue for those who just weren’t convinced by “Heck of a job, Brownie.” It tells the tale of a man eager to get fat off the federal teat, and who adopted the very Bushian practice of painting everything with a rose colored brush. It also tells the tale of a man who put home owners at risk because he was so eager to please his boss.

Just some interesting points from the piece:

-Called the mortgage crisis a “correction,” even though economists were predicting it to be a crisis. This, folks, would be something akin to, “We’re turning the corner,” a phrase as oft used regarding Iraq as the Friedman unit is.

-Pushed legislation to make it easier to prey on risky borrowers and pushed rules that actually weakened the ability to detect mortgage fraud. There’s a name for this, it’s called deregulation, and for those of you out there that aren’t thrilled about your jobs getting pushed overseas, yes, there are analogous principles running here.

-Ignored internal warnings that his policies probably weren’t going to help. I’m sure General Shinseki would probably be able to sympathize with those Chicken Littles. Or even perhaps the Dick Cheney of the first Gulf War before he turned into the Dick Cheney of the current Iraq war (I wonder if those two would even get along).

Using a different analogy, “Army Corps of Engineers? Pfft. What do they know?”

-One of my personal favorites: spending $7 million for an auditorium, $100,000 for oil portraits for himself and other HUD secretaries, and making it on the 2005 list of Washington’s most invited. I had no idea Housing secretaries got down like that. I’m obviously in the wrong line of work. After all, I am a very handsome man, and it would be awesome to have an oil portrait of myself.

I was going to leave this one alone initially, you know, let it stand on its own, but then I remembered the office of Homeland Security that caused something of a stir when it was discovered that it spent a little too much time and money throwing awards ceremonies for itself compared to, you know, protecting the Homeland.

Because I simply can’t imagine how you’re supposed to help put Americans into homes without a $7 million dollar auditorium. My only question is, why wasn’t there one built there in the first place?

And then there’s this bit:

In the policy arena, Jackson quickly made known his loyalty to Bush and his determination to help increase the number of U.S. homeowners by at least 5 million. Loans by FHA-approved lenders accounted for less than 10 percent of the overall market in the past five years, but its loan programs were supposed to be targeted to low- and moderate-income individuals, many of them first-time buyers.

In 2006, Jackson proposed plans to modernize the FHA lending process. Backed by the White House, his proposal would allow FHA lenders to offer loans with no down payment, eliminating the long-standing 3 percent minimum. Lenders also could increase the size of the loan to cover the median home price in high-cost areas. High-risk borrowers could qualify by agreeing to pay higher premiums.

Jackson said the goals were to encourage first-time home buyers and to help the FHA compete with the booming subprime market. In an online White House forum in 2007, he said the FHA “is undergoing a historic transformation to give homebuyers who do not qualify for prime financing a better alternative to high-cost, high-risk loan products.”

But Inspector General Kenneth Donohue chided Jackson and FHA Commissioner Brian Montgomery, a former White House political aide with no previous housing experience. Testifying on Capitol Hill in March 2007, Donohue agreed that the FHA needed changes to help working families, but not to mimic subprime lenders. He said some of the changes could distract the FHA from its affordable-housing mission while helping government-backed lenders reach high-end buyers.

He also expressed concern that Jackson’s proposals would do nothing to detect abuse and fraud. At the time, the FHA monitored 6 to 7 percent of the loans in its portfolio.

Because regulation and oversight is a terrible thing to do.

I suppose I wouldn’t be so upset over this if it was in a department that no one cared about, like FEMA… or maybe the military…

or…

Never mind.

So good riddance to Alphonso Jackson, may he never again darken the doorstep of another agency again. But that’s just a temporary fix, if you could even go that far. Does anyone really think that Bush is going to pick someone better? The anti-Jackson, perhaps?

No, I didn’t think so.

Which means we must look towards our next president to carry on a more responsible approach towards appointing the head of HUD. Do we really want John McCain? You know, the guy who didn’t even want to get involved with the housing crisis until he realized that his position hurt his chances in November and thus changed his mind (aka “Flip-Flopped”)? No, probably not.

In fact, that doesn’t really sound very much like Straight Talk to me. Had he stuck to his guns that Americans just had to be responsible for themselves and the housing crisis was all their fault, than sure, that would be Straight Talk. It’d be stupid, but it would be Straight Talk nonetheless. Instead, McCain just came out seemingly a little…

…well, a little out of touch really.

But go ahead McCain, no one’s bitter, just keep telling us to fend for ourselves while you continue to deregulate a market that would likely masticate us. As long as you know which beer to drink, no one will ever accuse you of being out of touch.

And we promise never to be bitter.

(edited by DrGail)

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