Historian: Housing Nominee Mel Watt Helped Spawn the Subprime Crisis

by Hans Bader on May 6, 2013 · 0 comments

in Bailout Watch, Economy, Legal, Politics as Usual, Zeitgeist

In the Daily Caller, historian and presidential biographer Charles C. Johnson writes that “Housing nominee Mel Watt helped create the subcrime crisis.”  Watt has been nominated by President Obama to be director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.  As John Berlau discussed earlier, Watt’s record also flunks privacy, transparency and government-accountability tests.

As Johnson notes, while in Congress, Watt “pushed government programs to help welfare recipients buy homes during the creation of the subprime mortgage bubble,” ultimately at taxpayer expense.  “Watt, a 20-year Member of Congress from North Carolina’s 12th district, also had a hand in programs allowing borrowers with poor credit to buy homes with no down payment.”  Later, “millions of bad borrowers defaulted on their loans, setting off a market crash that wiped out nearly 40 percent of the net worth of Americans.”  As Johnson points out, “Watt, alongside then-Rep. Barney Frank, D-Mass., blocked Bush administration efforts to reduce Fannie and Freddie’s overexposure to subprime loans” in 2003.  “In 2007, a full year after the real estate market peaked and began to plummet under the weight of millions of mortgage defaults, Watt and Frank co-sponsored a bill forcing Fannie and Freddie to meet even higher quotas for affordable lending and to invest in an “Affordable Housing Fund” for inner city communities.”  As Johnson observes, “Many of those risky loans ultimately led to the housing bubble and financial crisis.”……To Read More…..