"Rick Perry Gave Millions Of Taxpayer Dollars To Subprime Lenders"
2012 GOP presidential hopeful Rick Perry has already caught some well-deserved flak for his administering of the Texas Enterprise Fund (TEF), which was meant to deliver incentives to companies that would create jobs in the Lone Star State. Instead, as Time’s Massimo Calabresi reported, the fund “channeled millions of dollars to companies whose officers or investors are major Perry campaign donors and Perry has allowed them to keep their subsidies in many cases even when they fail to deliver promised jobs.”
And it turns out that some of the businesses which Perry chose to subsidize — and he had almost complete control over which companies received TEF funds — were notorious subprime lenders Countrywide and Washington Mutual:
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. [...]
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.
Both of these companies blew themselves (and many, many homeowners) up via subprime loans, and helped subprime lending increase significantly in Texas:
The AP analysis found that Washington Mutual, Countrywide and their subsidiaries boosted risky lending in Texas within a year after receiving grants from the Texas Enterprise Fund. In 2004, only one out of every 100 Washington Mutual loans in the state was originated to homeowners with less-than-perfect credit. The next year, that figure rose to more than one in four.
In a 2004 speech, Perry “called Countrywide a good employer and said state government subsidies would help other such companies move their businesses to Texas.
Texas actually had quite stringent mortgage lending regulations that allowed it to avoid the worst of the housing bubble. And it seems like the state could have been even better off if Perry hadn’t actively brought some of the worst subprime offenders into the state to ply their wares.