HUD Secretary Resigns - Casualty of Having Too Big A Mouth For Typical Washington Corruption
Just this week, it has come out in the mainstream press that the former head of the Department of Housing and Urban Development (HUD), Alphonso Jackson, had been giving preferential treatment to political insiders and political party sympathizers.
What has been surprising about this is that it is being promoted as a victory of government over one corrupted official, and not representing the entire system of generally uncorrupted public appointees.
But HUD, just like almost every other government agency, has engaged in contract bias for decades.
The fact that corruption was found in the Department of Housing and Urban Development in the midst of a housing and foreclosure crisis should not really be surprising to the vast majority of Americans.
HUD has been run as an essentially corrupt organization for decades, giving out contracts to develop low-income housing, then assisting in the cleansing of these neighborhoods through drug raids.
Handing out contracts to pump up an artificially-inflated housing market did not just start with the Bush administration.
It would be wise to remember that the origins of this current run-up in housing prices began after the 1997 Asian Crisis during the Clinton years.
Alan Greenspan, former head of the Federal Reserve system, with the blessing of Congress and the president, began lowering rates and easing credit.
Banks involved in the crisis were bailed out, and the largest hedge fund to go bankrupt in that era, Long-Term Capital Management, was bailed out by the private banks that own the Fed.
The Government-Sponsored Enterprises, such as Fannie Mae and Freddie Mac, also saw increases in investment pouring in.
The banks were encouraged to make mortgages, even to people who could not afford to pay, and investors were encouraged to invest in mortgage-backed securities.
The benefit was that these mortgages owned by the GSE's were backed by the government, which would take the fall if defaults occurred, thus guaranteeing a level of profits for the banks and investors.
The seeds of the subprime crisis were nurtured here in the GSE's.
But the Department of Housing and Urban Development has always given out preferential contracts, just like every other government agency.
Almost everyone who does not live in a cave (and even some who do) have surely heard of companies like Halliburton, KBR, Dyncorp, and other corporations that benefit from government welfare.
These companies did not get no-bid cost-plus contracts to "rebuild" Iraq or provide other services because they proved they were the best company for the job -- they got them because of who they know currently in power in Washington.
So the preferential treatment afforded to some companies and political insiders has always existed; the trick is to keep it as quiet as possible.
Thus, the egregious mistake that the outgoing head of HUD made was that he stated the obvious out loud.
He said that he had removed a bid that had already been awarded to a company because a representative stated he did not like the president.
His stating this out loud to a group in Dallas, Texas, was a political mistake of the highest magnitude, as it admitted gross corruption and political favoritism.
To be successful in political bribery and manipulation, a secretary of a department really has to be like another Alan Greenspan.
The former head of the Fed was notorious for always talking in riddles and arguing about the definitions of words, rather than explaining things or answering questions.
Apparently, semantics and shallow arguments with confusing banking and financial lingo, which many members of Congress are unable to decipher, is the key to remaining in power and looking like a genius while engineering a huge housing market bubble.
If Alphonso Jackson had been able to keep his cards a little closer to his chest, he would probably still be the secretary of HUD, handing out preferential contracts and talking about how to solve the foreclosure crisis in the housing market.
But this act of rewarding politically connected corporations with preferential treatment and government contracts has been going on for centuries in America and across the world throughout history.
Contracts to insiders have been an unfortunate constant of government.
What has been surprising about this is that it is being promoted as a victory of government over one corrupted official, and not representing the entire system of generally uncorrupted public appointees.
But HUD, just like almost every other government agency, has engaged in contract bias for decades.
The fact that corruption was found in the Department of Housing and Urban Development in the midst of a housing and foreclosure crisis should not really be surprising to the vast majority of Americans.
HUD has been run as an essentially corrupt organization for decades, giving out contracts to develop low-income housing, then assisting in the cleansing of these neighborhoods through drug raids.
Handing out contracts to pump up an artificially-inflated housing market did not just start with the Bush administration.
It would be wise to remember that the origins of this current run-up in housing prices began after the 1997 Asian Crisis during the Clinton years.
Alan Greenspan, former head of the Federal Reserve system, with the blessing of Congress and the president, began lowering rates and easing credit.
Banks involved in the crisis were bailed out, and the largest hedge fund to go bankrupt in that era, Long-Term Capital Management, was bailed out by the private banks that own the Fed.
The Government-Sponsored Enterprises, such as Fannie Mae and Freddie Mac, also saw increases in investment pouring in.
The banks were encouraged to make mortgages, even to people who could not afford to pay, and investors were encouraged to invest in mortgage-backed securities.
The benefit was that these mortgages owned by the GSE's were backed by the government, which would take the fall if defaults occurred, thus guaranteeing a level of profits for the banks and investors.
The seeds of the subprime crisis were nurtured here in the GSE's.
But the Department of Housing and Urban Development has always given out preferential contracts, just like every other government agency.
Almost everyone who does not live in a cave (and even some who do) have surely heard of companies like Halliburton, KBR, Dyncorp, and other corporations that benefit from government welfare.
These companies did not get no-bid cost-plus contracts to "rebuild" Iraq or provide other services because they proved they were the best company for the job -- they got them because of who they know currently in power in Washington.
So the preferential treatment afforded to some companies and political insiders has always existed; the trick is to keep it as quiet as possible.
Thus, the egregious mistake that the outgoing head of HUD made was that he stated the obvious out loud.
He said that he had removed a bid that had already been awarded to a company because a representative stated he did not like the president.
His stating this out loud to a group in Dallas, Texas, was a political mistake of the highest magnitude, as it admitted gross corruption and political favoritism.
To be successful in political bribery and manipulation, a secretary of a department really has to be like another Alan Greenspan.
The former head of the Fed was notorious for always talking in riddles and arguing about the definitions of words, rather than explaining things or answering questions.
Apparently, semantics and shallow arguments with confusing banking and financial lingo, which many members of Congress are unable to decipher, is the key to remaining in power and looking like a genius while engineering a huge housing market bubble.
If Alphonso Jackson had been able to keep his cards a little closer to his chest, he would probably still be the secretary of HUD, handing out preferential contracts and talking about how to solve the foreclosure crisis in the housing market.
But this act of rewarding politically connected corporations with preferential treatment and government contracts has been going on for centuries in America and across the world throughout history.
Contracts to insiders have been an unfortunate constant of government.