Wall Street Titans Use Aliases to Foreclose on Families While Partnering With a Federal Agency
By PAM MARTENS
A federal agency tasked with expanding the American dream of home ownership and affordable housing free from discrimination to people of modest means has been quietly moving a chunk of that role to Wall Street since 2002. In a stealth partial privatization, the U.S. Department of Housing and Urban Development (HUD) farmed out its mandate of working with single family homeowners in trouble on their mortgages to the industry most responsible for separating people from their savings and creating an unprecedented wealth gap that renders millions unable to pay those mortgages. This industry also ranks as one of the most storied industries in terms of race discrimination. Rounding out its dubious housing credentials, Wall Street is now on life support courtesy of the public purse known as TARP as a result of issuing trillions of dollars in miss-rated housing bonds and housing-related derivatives, many of which were nothing more than algorithmic concepts wrapped in a high priced legal opinion. It's difficult to imagine a more problematic resume for the new housing czars.
To what degree this surreptitious program has contributed to putting children and families out on the street during one of the worst economic slumps since the '30s should be on a Congressional short list for investigation. HUD's demand for confidentiality from all bidders and announcement of winning bids to parties known only as "the winning bidder" deserves its own investigation in terms of obfuscating the public's right to know and the ability of the press to properly fulfill its function in a free society.
Despite three days of emails and phone calls to HUD officials, they have refused to provide the names of the winning bidders or the firms that teamed as co-bidders with the winning party. Obtaining this information independently has been akin to extracting a painful splinter wearing a blindfold and oven mitts.
That a taxpayer-supported Federal agency conducts a competitive bid program of over $2 billion and then refuses to announce the names of the winning bidders is beyond contempt for the American people. If the Obama administration does not quickly purge this Bush mindset from these Federal agencies, he is inviting a massive backlash in the midterm elections.
The HUD program was benignly called Accelerated Claims Disposition (ACD) and was said to be a pilot program. A pilot program might suggest to those uninformed in the ways of the new Wall Street occupation of America a modest spending outlay; a go slow approach. In this case, from 2002 to 2005, HUD transferred in excess of $2.4 billion of defaulted mortgages insured by its sibling, the FHA, into the hands of Citigroup, Lehman Brothers and Bear Stearns while providing the firms with wide latitude to foreclose, restructure or sell off in bundles to investors. HUD retained a minority interest of 30 to 40 percent in each joint venture. Citigroup was awarded the 2002 and 2004 joint ventures; Lehman Brothers the 2003; Bear Stearns the 2005. I obtained this information by reconciling the aliases used by these firms in foreclosures of HUD properties to the addresses of the corporate parents. I further confirmed the information by checking the official records at multiple Secretaries of State offices where the firms must register their subsidiaries to do business within the state.