Uncategorized

MEMO: Perry, Romney, And The Mortgage Crisis

TO: Reporters and Editors
FR: Matt Thornton, American Bridge 21st Century
RE: Perry, Romney, and the Mortgage Crisis
DT: October 3, 2011

As the GOP frontrunners continue to attack President Obama on the economic crisis caused largely by the subprime mortgage meltdown and the subsequent recession, information about Rick Perry’s and Mitt Romney’s questionable dealings with regard to this crisis has come to light.

This morning, the Associated Press published a profile of Rick Perry’s efforts to attract subprime lenders to Texas. The plan cost taxpayers millions, but netted sizable contributions to Perry’s campaign account.

Mitt Romney had a stake in the mortgage crisis and subsequent bailout – although his was much more personal in nature. As originally reported by the Boston Globe, Romney made sizable investments in mortgage funds that hold major substantial stakes in Fannie Mae and Freddie Mac. It should be noted that these investments were made outside of Romney’s blind trust, meaning he would have direct knowledge of the transactions.

“Romney and Perry have proven adept at passing the buck – and making a buck – when it comes to the mortgage crisis, but the American people deserve better. While they were lining their pockets and campaign accounts, average people were losing their homes, a contrast voters will not be quick to forget,” said Matt Thornton, spokesman for American Bridge 21st Century.

AP: Perry bet big on tax grants to subprime lenders

By Jack Gillum, October 3, 2011

WASHINGTON—As Texas governor, Rick Perry spent tens of millions in taxpayer money to lure some of the nation’s leading mortgage companies to expand their business in his state, calling it a national model for creating jobs. But the plan backfired.

Just as the largest banks began receiving public cash, they aggressively ramped up risky lending. Within four years, the banks were out of business and homeowners across Texas faced foreclosure. In the end, the state paid $35 million to subsidize it.

An Associated Press review of federal mortgage data, court filings and public statements found that Perry downplayed early warnings of an impending mortgage crisis as alarmist. That’s even as Perry’s own attorney general would later investigate whether Countywide Financial Corp. encouraged homeowners to borrow more than they could afford.

As Perry offered $20 million in grants to Countrywide and $15 million to Washington Mutual Inc. — each blamed for having a major role in one of the country’s most serious recessions — he took in tens of thousands of their dollars for his gubernatorial campaign.

Perry, a Republican candidate for the White House, did what any governor would want to do: bring in jobs for his state. He also supported a cap on how much consumers could borrow against their homes, which experts credit for softening the blow of the mortgage crisis in Texas: by the end of 2008, more than 22 states had a greater percentage of foreclosures.

Boston Globe: Romney pummels, profits from Fannie, Freddie

By Matt Viser, 09/19/2011

WASHINGTON – Republican presidential candidate Mitt Romney has long been critical of Fannie Mae and Freddie Mac, blaming the government-backed housing lenders for inducing the home-mortgage crisis and saying they have become too unwieldy.

“I look at Fannie and Freddie and just think that obviously they’ve grown massively beyond the scope that had been envisioned for them originally,” he said two weeks ago at a forum in South Carolina. “The failures of Fannie Mae, Freddie Mac, Barney Frank, Chris Dodd are just so legion that we have to rethink about how we’re going to support a growing housing industry.”

Yet Romney has profited from investments that were made in both government entities, according to his personal finance disclosure forms and documents compiled by American Bridge, one of several Democratic groups in Washington formed to back the election campaigns of Obama and other Democrats.

The issue illustrates the potential perils for a candidate with vast financial holdings whose rhetoric does not necessarily match his investment interests.

“Once again, Mitt Romney has proven his hypocrisy knows no limits,” said Ty Matsdorf, spokesman for American Bridge, which was formed earlier this year and has been going through the records of President Obama’s potential opponents. “To continually attack the housing crisis, yet invest up to a half a million dollars in the major players is absolutely mind boggling. I didn’t know a person could flip flop on themselves, but Romney has proven that wrong.”

On his financial disclosure statement filed last month, Romney reported owning between $250,001 and $500,000 in a mutual fund that invests in debt notes of Fannie Mae, Freddie Mac, among other government entities. Over the previous year, he had reported earning between $15,001 and $50,000 in interest from those investments.