Gov. Patrick ‘proud’ of his subprime mortgage work
Published: 2:47 PM 02/24/2012 By Neil Munro
Massachusetts Democratic Gov. Deval Patrick, Barack Obama’s friend and campaign co-chair, told The Daily Caller that he’s proud of the work his did for Ameriquest as it pumped up the nation’s mortgage bubble.
“I served on the board of the holding company for that company, and it was work that I was asked to do with some of their fair-lending issues, and I’m proud of that work,” said Patrick, who was appointed Feb. 22 by Obama as a one of his 2012 campaign’s co-chairs.
Patrick served on the five-member board of Ameriquest’s holding company, ACC Capital Holdings, from 2004 to 2005. This was when the mortgage bubble rapidly inflated under pressure from George W. Bush, 1990s regulations, numerous Democratic-affiliated housing groups, as well as executives in Fannie Mae and Wall Street companies.
Ameriquest was a leading cause of the bubble, in part, because it began the practice of selling mortgages to people that were deemed by other mortgage companies to be a bad credit risk. For example, the company pioneered the practice of selling mortgages to people without asking for documentation of their income, greatly raising the chance that each loan would go into foreclosure.
In turn, Ameriquest sold the flawed mortgages, dubbed no-doc subprime mortgages, to Fannie Mae and Wall Street, and profited from the processing fees.
The subsequent foreclosure of many risky mortgages dragged down Wall Street and the national economy. Since then, the street unemployment rate has remained well above 10 percent, and the nation’s formal debt has risen by $5 trillion. The median wealth of African-American households fell by 53 percent, according to a 2011 Pew study.
Obama tapped his long-time friend for the campaign job, despite Obama’s routine criticism of mortgage company executives. (RELATED: Obama campaign co-chair tied to subprime mortgage crisis)