Under Governor Rick Perry, Texas spent $35 million to attract risky mortgage lenders, a group Perry hailed as a national model for creating jobs, the Associated Press reported on Monday.
The state spent tens of millions of taxpayer dollars on grants to Countrywide Financial Corp., Washington Mutual and their subsidiaries. "Within four years, the banks were out of business and homeowners across Texas faced foreclosure," the AP reported. Countrywide and Washington Mutual also gave $15,000 to Perry's gubernatorial campaign.
Subsidies from the Texas Enterprise Fund encouraged the banks and their subsidiaries to expand their business in Texas. Washington Mutual and Countrywide pledged to create over 11,000 jobs in exchange for TEF subsidies, the AP reported. Perry has touted his job creation achievements as he seeks the Republican presidential nomination.
The Countrywide contract “ultimately produced more than 3,800 jobs for Texans,” Perry spokeswoman Catherine Frazier told the AP. But later nationwide layoffs undermined Countrywide’s job creation pledge.