Perry Gave Huge Tax Grants to Subprime Lenders

Countrywide, WaMu got $35M as they upped risky loans
By Matt Cantor,  Newser User
Posted Oct 3, 2011 10:03 AM CDT
Rick Perry gestures during an address during a campaign stop in Derry, N.H., Friday, Sept. 30, 2011.   (AP Photo/Charles Krupa)

(Newser) – Rick Perry handed mortgage lenders millions to draw them to Texas—right when their risky lending practices surged. The governor gave Countrywide $20 million and Washington Mutual $15 million in what he called an exemplary job-creation move; in effect, that $35 million subsidized dangerous subprime lending, an AP analysis of data and records finds. And when some began to fear the impending mortgage crisis, Perry's rep shrugged off their concerns as “slightly alarmist.”

Officials promised that the contracts with Countrywide and WaMu would bring in 11,000 jobs. But risky lending soared within a year of the grants. Just one in 100 WaMu loans went to Texas homeowners with troubled credit in 2004; a year later, it was one in four. In the same period, Countrywide increased loans to high-risk borrowers from 14% of all loans to almost one in three, finds the AP. And as hundreds of billions in mortgage-backed assets were being downgraded on Wall Street in 2007, a rep for Perry called Texas “one of the hottest housing markets in the nation.” The AP notes that state records show Countrywide and WaMu contributed more than $15,000 to Perry over the years. Click through for more on Perry’s relationship with the subprime lenders.

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