Monday, May 19, 2014

San Antonio Mayor, HUD...Oh, oh

The Wall Street Journal reports on another young Democrat with a future;
Raised from a young age to become a political leader, San Antonio Mayor Julián Castro is now poised to head a federal agency that could position him as one of the national leaders of the Democratic Party.
The White House has tapped the 39-year-old mayor to head the U.S. Department of Housing and Urban Development in a cabinet reshuffle that would result in current HUD Secretary, Shaun Donovan, leading the White House Office of Management and Budget, according to people familiar with the matter.
Let's hope it works out better than when San Antonio Mayor Henry Cisneros got the same nod from Bill Clinton back in 1993. That ended with Cisneros disgraced. Unfortunately not for his role in the housing bubble-implosion, but for paying off a girl-friend to keep quiet about their affair. The much greater scandal--HUD's Best Practices Initiative--dragged non-bank lenders like Countrywide Mortgage into the new, improved, home loan standards of no money down, no credit history mortgages. As HSIB put it a couple of years ago;
The Education of Angelo Mozilo starring HUD Sec'y Henry Cisneros.  In 1993, readers may recall the Democrats held not only both houses of congress, but the presidency.  
Cisneros told Angelo Mozilo (CEO of Countrywide Mortgage AND President of the Mortgage Bankers Assn) that that political fact of life meant that they had the power to extend the Community Re-investment Bank--1977 legislation that only applied to actual banks--to non-bankers lenders like him.  Especially to opponents of 'sub-prime' and other unconventional home loans, of which Mozillo was perhaps the most vocal at that time.
To save the Democrats the trouble of doing that, said Henry, why wouldn't Mozilo and his fellows in the MBA, simply sign on to HUD's Best Practices Iniative.  Which was the CRA in all but name.  
Mozilo et al. got the message, and HUD was able to announce a slew of 'voluntary' acceptances of their BPI in ensuing years.  Mozil, one might say, got the message, loud and clear; home lending was an intensely politicized business.  If one wanted to participate, then one had to play both offense and defense.
After being forced to resign from HUD in 1997, Cisneros went into the real estate business...with Angelo Mozillo. He made millions before the housing bubble popped.

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