It's only the second-most controversial story of the past few days involving Rick Perry and Texas real estate, but the report on the degree to which the governor courted banks involved in subprime lending could also have a lasting impact on his campaign.
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.
An Associated Press review of federal mortgage data, court filings and public statements found that Perry downplayed early warnings of an impending mortgage crisis as alarmist. That’s even as Perry’s own attorney general would later investigate whether Countywide Financial Corp. encouraged homeowners to borrow more than they could afford.
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.
The AP concedes that Texas under Perry did place a cap on the amount consumers could borrow, lessening the blow of the mortgage crisis relative to other states. But the news service all but reminds readers of Perry's D in economics at Texas A&M with the next line: "Perry didn’t appear to recognize that the industry his administration had subsidized was damaging the national economy." Whether Perry "recognized" that fact or not, the whole controversy provides more grist for those inclined to think that, despite that econ grade, maybe Perry's most finely honed instinct is a nose for cash.