JEB BUSH AND THE HOUSING CRISIS

Jeb Bush and the Subprime Mortgage Crisis

The Huckster and the Wreckage

By ALAN FARAGO

It was a classic run on the bank. Until his recent resignation under fire, Coleman Stipanovich, a Bush loyalist, headed the Florida State Board of Administration, responsible for investing billions of dollars of state funds. Stipanovich’s brother, “Mac”, is a former chief of staff in the governor’s office, Jeb Bush campaign manager, and now partner in the law firm, Fowler White, Boggs-the Tallahassee lobbying whip of the Growth Machine (he is also board member of US Sugar).

Jeb Bush left Tallahassee for Miami in January 2007, having served two terms as governor. He incorporated Jeb Bush & Co., and in June was hired as a consultant with Lehman Brothers, the Wall Street investment banking firm.

In July and August, Stipanovich approved the purchase of $842 million in securitized mortgage bonds from Lehman.

Today the value of those bonds is practically zero, vanished in the debt crisis that is tipping the national economy into a recession.

So far, the media is buying the state spin: that Florida’s municipalities made their own decisions to invest with the state government investment pool. Senate President Ken Pruitt, another Bush loyalist, huffily defended the state investment pool with Indian River county officials, “No one put a gun to your head.”

But that is only half of the story, as any investor knows: the other half is that the state was fiduciary and obligated to invest those funds within tolerable risk parameters.

Any fiduciary that bothered with due diligence could see in the overdevelopment of Florida that the bubble in housing markets would pop, and that financial instruments that created the bubble would vanish into the ether.

The mortgage derivatives were only as good as their ratings, and their ratings and insurance were administered through incestuous relationships with originators on Wall Street, like Lehman.

The suburban housing bubble was a function-not of market demand-but of insider politics and campaign contributions that persuaded everyone involved to “mis-price risk” (risk to families, risk to wetlands, risk to government infrastructure budgets) leading to the theft of quality of life, the environment, and an equitable future.

READ THE REST AT :  http://www.counterpunch.org/farago12202007.html

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One Response

  1. Hi, Have nice day. Thanks:)

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