President of bankrupt developer whines about the banks

You know this guy is full of crap if he gets me to defend Goldman Sachs.

In an op-ed in the Salem News, Michael D. "Mick" Pattinson, president of bankrupt developer Barratt American (builder of Leucadia's Rancho Tyvek Estates -- "Come for the tiny lots, stay for the low-income housing next door"), complains that it's not fair that some people on Wall Street recognized the housing bubble and bet that it would burst, or that some banks stopped lending to overleveraged developers as the housing market cratered.

The developer industry spent millions of dollars lobbying Congress to keep the housing bubble going with tax incentives, lax lending standards, and easy credit from an alphabet soup of government and quasi-government agencies including FHA, Fannie Mae, Freddie Mac, and the Federal Reserve. I didn't hear Mr. Pattinson complaining as he was getting rich from the funny-money-fueled bubble. In fact, Pattinson was a frequent contributor to the industry's lobbying PAC.

The housing crash was the inevitable result of the greatest asset bubble in the history of the world. Any builders who were overleveraged at the peak of the biggest bubble in history have only themselves to blame for their demise.

Pattinson's argument is equivalent to saying that Bernie Madoff's Ponzi scheme was a good thing, and the only problem was that investors stopped giving Madoff money to keep the Ponzi going.

Pattinson should stop trying to shift the blame to those who recognized the bubble, and apologize for the wreckage that his industry has caused the entire economy.

1 comment:

Anonymous said...

Great article. Builders didn't just help wreck the economy through over building and lobbying to keep the bubble going though. They also ran their own mortgage companies or at the very least steered buyers to affiliated lenders like Countrywide which is infamous for predatory lending. Beazer Homes agreed last year to settle with the government in a criminal mortgage fraud investigation. KB Home and others have been fined millions by HUD for violation of lending laws. Even now, the building industry is involved in lobbying and lawsuits to prevent HUD from enforcing its rules, and to bring back toxic money laundering programs like seller funded down payment assistance which the IRS called a scam, and which result in more foreclosures. Like other lenders, builders mortgage co's sell the loans and escape the risk of predictable defaults. Why do you think so many foreclosures are in houses/developments built in the last few years? Thanks for your article.

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