The Guy Who Screwed America’s Economy Hearts Hillary Clinton
The man behind Goldman’s infamous bets now buys foreclosures and rents them out—but not to anyone convicted of financial crimes. He’s also a big Clinton donor.
Wall Street is buying Main Street one foreclosed home at a time.
The houses—more than 200,000 of them—are then rented to folks who continue to struggle in the aftermath of a near financial collapse in 2008.
And one of the leading figures in Wall Street’s scavenging of the wreckage created by Wall Street is also a big-time backer of Hillary Clinton.
His name is Donald Mullen, and he was once the global head of credit at Goldman Sachs. He was credited with devising the infamous “big short,” by which the firm bet bigger than big that the housing market would collapse even as it was urging customers to invest in it.
“Sounds like we will make some serious money,” he famously emailed colleagues in 2007, at early signs of the impending implosion.
Mullen left Goldman Sachs in 2012 and made some more serious money by becoming one of a number of Wall Streeters who are acquiring and leasing thousands of foreclosed homes.
Mullen embarked on this new endeavor with Curt Schade, formerly a managing director at Bear Stearns, which failed at the start of the financial crisis. Mullen and Schade received a $400 million credit line from Deutsche Bank, which survived thanks to billions of dollars in direct and indirect financial support from the government.
The new firm came to be called Progress Residential. The name takes on an added resonance when you visit the website of the major pro-Clinton super PAC Priorities USA Action, to which Mullen contributed $100,000 in June. You are welcomed by a picture of a smiling, waving Hillary Clinton and a message:
“The story of America is one of hard-fought, hard-won progress. And it continues today.”
The $100,000 to the pro-Clinton super PAC was noted by OpenSecrets.org and reported by various news outlets. The Washington Post has further reported that Mullen is one of 146 people who have contributed to all six of the federal races entered by either Hillary or Bill Clinton.
What has not been reported are some supreme ironies arising not so much from the money Mullen hands out but in the money he rakes in. Consider the “Rental Qualification Criteria” that a prospective tenant must pass before being granted a lease to one of the foreclosed homes that Progress Residential has acquired.
Applicants must document monthly household income of at least three times the monthly rent. Income and “credit worthiness” (PDF) are then “entered into an application scoring model to determine rental eligibility.”
But that is not all. You must also attest that you have never been convicted of any one of various felonies, including these:
The ban in this category applies for 10 years for those convicted of a felony, three years for a misdemeanor.
A guy who has been caught passing a bad check can forget renting one of Mullen’s houses for a decade.
That by the onetime credit chief at Goldman Sachs, which this month reached a $5.06 billion settlement with the government arising from allegations that the bank knowingly sold iffy mortgages to unsuspecting customers even as it was betting against them via Mullen’s big short.
In announcing the deal, the head of the Justice Department’s Civil Division, Benjamin Mizer, said, “Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008.”
If there was illegal conduct, how come nobody was arrested?
In truth, the settlement was another example of the department’s failure to hold any individuals accountable for breaking the law.
Too big to jail.
To be completely fair to Mullen, the Goldman emails show that he at one point worried “about the representations we may be making to clients.”
But that does not seem to have stopped him from playing a major role in what followed, which is to say upending the lives of millions of people.
And he refuses to rent not only to those who have committed financial crimes but also to those who have been evicted within the past seven years.
In other words, a family could be evicted when its home is foreclosed, watch Mullen buy the house, and then find itself barred from renting any of his thousands of properties because they had been evicted.
Also barred from renting are those who have been incarcerated for a felony of any kind within the past five years; those jailed for a misdemeanor have to wait three years.
Those who survived the financial collapse without being evicted or going bankrupt or committing a crime for which Main Street if not Wall Street folks are jailed might then actually get a lease.
The fee just to apply for a lease is $45, followed by a $500 “holding fee” when the application is submitted.
“By submitting the holding fee, you acknowledge and agree in good faith that if your lease application is approved, you intend to rent the home by the proposed lease start date, whether or not you have been able to visit the home for a walk through,” the site states.
For rented homes where the utilities are in Progress Residential’s name, tenants are automatically enrolled “in our utilities payment plan,” which entails an added $25 “enrollment fee” and $9.99 monthly “service fee.”
In addition, tenants who fail to obtain renter’s insurance for at least $100,000 are hit with an unspecified monthly “exemption fee.”
Tenants are limited to three “acceptable pets,” these including dogs, cats, caged birds, and fish, but not potbellied pigs. Renters also can have no more than three cars.
“Boats or trailers are not allowed unless approved in writing by the landlord,” the site says.
In those houses that have a pool, tenants cannot expect Mullen’s company to have complied with municipal codes requiring a safety fence. An Arizona family renting a Mullen house repeatedly requested a fence but only got it three months after their 2-year-old child drowned.
As Mullen and the other foreclosure barons were acquiring houses by the thousands, they did not seem greatly worried about getting a bargain on particular purchases. They appeared to be looking not for deals but for inventory.
“They can’t get their hands on enough homes,” one former banker told Bloomberg News.
And the reason became apparent when the Wall Streeters began offering securities secured by the rents paid by the tenants in foreclosed houses, just as the same Wall Streeters previously offered securities secured by mortgages.
No doubt, a fair number of houses have figured in the bonds leading up to the crash as well as the bonds that are now being assembled amid the wreckage.
The result is seriously serious money, some of which Mullen has used to subsidize the arts. He has been a big-time backer of the elevated High Line park in New York City. He once got into a bidding war with actor Alec Baldwin at a Hamptons art auction.
Mullen has also reportedly given considerable sums to the Republican Committee in Easthampton, apparently to fight a move by the local Democrats to curtail helicopter traffic by the ultra rich to their summer homes. He is said to be fond of such unfettered travel and to own a piece of a helicopter company.
Mullen did not respond to a request for comment about helicopters, or about the big short or about the foreclosed houses—or about his contribution to the pro-Clinton PAC in the name of what both he and she call Progress.
Lost your house?
Can’t get a mortgage?
Rent a Mullen house!
And vote Hillary!
Vote for Progress!