President Obama, early in his first term on December 13, 2009 famously said in an interview with CBS that "I Did Not Run for Office to Be Helping Out a Bunch of Fat Cat Bankers on Wall Street." Yet, as one of his last official acts as President that is exactly what he did by allowing federal loan guarantees of junk derivatives based on securitized mortgage backed rental properties. Now he’s in the news again for a receiving $400,000 to give a speech to Wall Street bank!

Here's the video from 2009:

[video:https://www.youtube.com/watch?v=q-z9jeCi3Bw]

And here is the going away present he gave to Wall Street firms, such as the multi-billion dollar private-equity firm, Blackstone, who sold derivatives to investors in distressed mortgaged backed rental properties:

Invitation Homes, the 2012 buy-to-rent creature of private-equity firm Blackstone, and now owner of 48,431 single-family homes, thus the largest landlord of single-family homes in the US, accomplished another feat: it obtained government guarantees for $1 billion in rental-home mortgage backed securities.

The disclosure came in an amended S-11 filing with the SEC on Monday in preparation for Invitation Homes’ IPO. Invitation Homes bought these properties out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. The IPO filing lists $9.7 billion in single-family properties and $7.7 billion in debt. [...]

This is the first time ever that a government-sponsored enterprise has guaranteed single-family rental-home mortgage-backed securities, issued by a huge corporate landlord. It’s an essential step forward in financializing rents: taxpayer backing for funding the biggest landlords.

Government guarantees allow the mega-landlord to sell these securities at a lower yield and thus offer landlords like Blackstone’s entity even cheaper financing for future home purchases, and thus lower costs and greater profit potential.

Meanwhile, how bad are these giant, investment firms as landlords? Pretty bad:

Hedge funds, large investment firms and private equity companies helped the U.S. housing market recover after the crash in 2008 by turning empty foreclosures from Atlanta to Las Vegas into occupied rentals. [...]

Now among America’s biggest landlords, some of these companies are leaving tenants like Allen in the cold. In a business long dominated by mom-and-pop landlords, large-scale investors are shifting collections conversations from front stoops to call centers and courtrooms as they try to maximize profits.

The name of of the study by the Federal Reserve in Atalanta that determined these Wall Street firms were responsible for increasing "housing instability there? "Corporate Landlords,
Institutional Investors, and Displacement: Eviction Rates in Single-Family Rentals." And, as the study determined, it was The Fed under Bernanke that promoted Wall Street to invest in these properties creating another fine mess in our housing and rental markets for the Federal Government to clean-up:

The Federal Reserve was the first to suggest that private equity firms were the one group with cash on hand to invest in foreclosed homes (Bernanke, 2012).

In 2012, the Federal Housing Finance Agency (FHFA), conservator of the GSEs, issued a pilot to develop structured transactions that could be used to sell its REO homes in bulk. The private market followed by developing and standardizing financial instruments to allow broader market investment in converting foreclosed homes into single-family rentals. Rental housing, traditionally the purview of mom-and-pop landlords, caught the attention of large financial firms.

Nationwide, an estimated 350,000 homes were purchased by institutional investors from 2011 to 2013, and these were spatially concentrated in cities like Atlanta with high numbers of bank-owned homes and the prospect of future home price appreciation. Today there is high concentration in the single-family rental business, with an estimated 170,000 single-family rental homes owned by the seven largest firms.

Here's how this works. Major Wall Street firms bought up distressed properties using cheap money they obtained from (who else) the Federal Reserve, turned them into rental properties, and the securitized the income flow from the rents. That rental income they then sold to institutional investors in the form of mortgaed backed securities (sound familiar?), creating a whole new housing boom in the process, helped raise rents, and made it much harder for lower and middle class folks to afford a home, or in many cases to rent one.

And now that these derivatives (AAA rated, of course) are not doing so well, here comes Blackstone, a "pioneer in the post-Financial Crisis buy-to-rent scheme, including issuing the first rent-backed structured securities in November 2013," getting the outgoing Obama administration to sign off on guaranteeing a new initial public offering (IPO) of their latest rental based derivatives.

By the way, Blackstone's contributions to Democratic candidates since 2008 were a mere $6,679,231, according to Open Secrets.org ( site maintained by the Center for Responsive Politics). Blackstone got a nice return on it's investment in Democrats out of this one deal alone! Thanks, Obama!

And based upon former President Obama's initial paid speech from a Wall Street investment bank, Cantor Fitzgerald, it seems they aren't the only ones who might have reason to be pleased by how well their industry profited under the Obama administration's tender loving care.

Maybe he didn't run to help Wall Street Fat Cats, but boy oh boy did they ever do well once Obama was in office. This is his legacy, and the legacy of the Democratic establishment. And you wonder 67% of Americans believe the Democrats are out of touch with their concerns, a rate higher than either the Republican Party or even The Donald.