These guys just can’t help themselves. The money is just too big.
This piece comes to us from Norman D. Pappous Councilman – City of Galveston; District 4 who reached out to me over the weekend.
According to Mr. Pappous the Feds and the State of Texas are leaning heavily on the City of Galveston to build public housing in a hurricane ravaged part of the city. This development will benefit a powerful builder with lots of sway in Washington and in Austin. The management fees the developer stands to gain over coming years are in the tens of millions. This is after the developer gets to build the developments, paid for by the taxpayer.
Below is the essay by Mr. Pappous.
By Norman D. Pappous Councilman – City of Galveston; District 4
The City of Galveston, TX is in the middle of a $250 million, bi-partisan, crony-capitalist trifecta. Taxpayer funds are being used to finance a housing project that is illegal, unethical, and unneeded. President Obama’s Department of Housing and Urban Development is administering FEMA disaster recovery funds like a political treasure chest for their political donors. This housing deal will create a decades long, multi-million dollar income stream for a large democratic donor and the “conservative” administration of Gov. Perry is not only supporting this, they are enforcing punitive actions should the City of Galveston not comply. But the outrage does not end there. The locations that HUD and the State of Texas demand the city build on probably violate the civil rights provisions of the Fair Housing Act.
In yesterday’s New York Times Gretchen Morgenson examines the plight of Ed DeMarco who is the acting director of the Federal Housing Finance Committee. He has suffered the slings and arrows of many in Washington because he hasn’t forced Fannie and Freddie to write down principal for underwater homeowners. He says he has an obligation to the taxpayer not to do so. Barney Frank disagrees. (Others do too.)
The author makes the argument that such write downs actually constitute yet another bailout for the banks.
Peter J. Wallison and Edward J. Pinto at the American Enterprise Institute delve into the accounting practices of the Federal Housing Authority which has risen to new prominence in the wake of the Freddie and Fannie dual implosions. It’s not pretty.
As the article below points out, 20% of all the new American mortgage loans made in 2012 are expected to be financed with the Fed’s money created out of thin air. It’s not that the Fed will be printing new money for this purpose. It will just use some of the vast quantities of money it newly printed in the last few years.