Darling warned about housing bubble prior to The Great Recession

MCALLEN, Texas – It is not often the Rio Grande Guardian can weave The Big Short movie in one of its podcasts.

But anchor Mark Hanna was able to do so in a video interview about the scarcity of water with former McAllen Mayor Jim Darling.

After he did so he learned that Darling warned Washington, D.C., about the huge housing bubble that caused the Great Recession of 2007-2009!

The Big Short is a 2015 American biographical crime comedy-drama film directed and co-written by Adam McKay. It is based on the 2010 book The Big Short: Inside the Doomsday Machine by Michael Lewis. The film stars Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt. The supporting cast includes John Magaro, Finn Wittrock, Hamish Linklater, Rafe Spall, Jeremy Strong, Melissa Leo, and Marisa Tomei.

Bale plays the role of Michael Burry, an American investor and hedge fund manager who bet against the mortgage industry and won.

Rio Grande Guardian anchor Mark Hanna discussed The Big Short with former McAllen Mayor Jim Darling.

This is how Hanna weaved The Big Short into his conversation with Darling:

“There’s a movie called The Big Short, based off of Michael Burry, who bet against the mortgage industry, the housing industry in 2007-2008. At the end of the movie Burry won. He was right, there was a bubble with the mortgage industry. And Burry made a few billion dollars. Poor guy, right? He has left Wall Street and he’s investing all his money in water,” Hanna said.

Darling was not fazed by this left field remark.

“Let me tell you about that one. In 2008 I was lawyer for McAllen Affordable Homes, which is now (Affordable Homes of) South Texas. We took the bottom of the barrel house owner. I’m so proud of that. We put people in houses that could never afford a house. And (yet) we were losing customers to the regular lenders. And we went and said, if you’re lending them money, you’re in big trouble,” Darling said.

“We did a lot of creative things to get people in houses that weren’t available (to them). And we told them (about the regular lenders). We went to Washington and talked to the congressmen there. And we said, we don’t know how you guys are doing it. I mean, I know it’s gonna sound like we’re losing customers but we’re more concerned that these people are not going to be able to stay in these houses. And they blew us off. Oh, no, it’s alright (said the members of Congress). That was happening all over the country. They were lending money to people they never should have been lending money to.”

Darling then went further back.

“In the 1980s, they did the same damn thing. Except it was savings and loan associations that went broke. But it was less of a bubble.”

Darling said at that time he was working for a trust firm out of Washington and had a couple of projects down here. 

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