Obama's Housing Secretary Pick Foresaw Subprime Crisis

by Deb Cupples |    President-elect Barack Obama has nominated New York City's housing commissioner Shaun Donovan as U.S. Secretary of Housing.  I know nothing about the 42-year-old nominee, but the New York Times has a backgrounder on him.

Politico says that Mr. Donovan actually predicted the current subprime-mortgage crisis back in 2004 -- at least with respect to New York City:

"In the middle of 2004, I sat down with Donovan (I was at Newsday at the time) for a chat about Mayor Michael Bloomberg's initiative to tackle the shortage of low- and middle-income housing in the city.

"To my surprise, Donovan brushed aside my questions about the city's initiatives and began talking at length about the coming "flood" of foreclosures he anticipated among highly leveraged apartment buildings purchased by recent immigrants -- and a looming subprime crisis for one- and two-family homeowners in up-and-coming neighborhoods in southeast Queens and central Brooklyn."

It never hurts to have a guy running things who can play to the end of the tape and reasonably foresee consequences that other officials and players in the lending game should also have foreseen.

Memeorandum has commentary.

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