Subject: Policies
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Deja vu: the sensation that you are doing something that you have done before. In an eerily familiar Web-only piece, Laura Brunts and Theodore Kahn of The Atlantic recap vintage coverage of America’s appraisal of its financial misdeeds in the…
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My son downloaded “The Ghost of Tom Joad” by Bruce Springsteen with Tom Morello on my iPod a couple of months ago. During this past Thanksgiving week, we went together to see Morello perform as The Nightwatchman. With all due respect to The Boss, Morello now owns this song. As we all countdown to Jan. 20, these lyrics in the headline above may serve as the best anthem for the transition from the Bush legacy of a wrecked economy to our collective Obama hopes for change.
As Citibank reaches out for the latest lifeline in billions, homeowners remain adrift in a rising sea of foreclosures. The Chicago Tribune on Thanksgiving (Nov. 27, 2008) ran a chart breaking out the $8.5 TRILLION that the U.S. government has committed to rescuing Wall Street and our “crippled financial system.” And you thought it was only Henry Paulson’s $700 billion. more
What a great attention-grabber. Dated July 4, 2009, the lead story in the edition of The New York Times handed out to commuters in New York City yesterday morning trumpeted in giant type “IRAQ WAR ENDS”—alongside the other above-the-fold headline,…
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The House Financial Services Committee met this morning to begin, ever so tentatively, to redraw the regulatory landscape for the financial services industry in the wake of the nation’s economic earthquake. The question is, has the Washington status quo that…
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At week’s end, there’s not much good news, but instead a world of pain to report. As of today, Americans have a “rescue plan” that doesn’t rescue millions of people sinking under the waves of a turbulent economy. Today’s announcement…
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Everyone should be outraged that the proposed economic bailout package passed by the Senate on Wednesday night and being debated in the House this morning does virtually nothing to assist troubled borrowers. The House and the Senate bills abandoned help…
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Today’s New York Times editorial titled “Show Us the Hope” slams the inadequacies of both the Bush administration’s and Congress’s attention to the plight of homeowners caught in the foreclosure crisis that is behind the current economic turmoil.
The editorialist points to HUD’s Hope for Homeowners program —launched on Wednesday in the midst of the congressional rescue wrangling — as already showing the signs of sinking like a “lead balloon”:
Under the program, the government will insure up to $300 billion in new, more affordable loans for troubled borrowers. For the insurance to kick in, however, lenders must first voluntarily refinance the delinquent mortgages by reducing the loan balances to 90 percent of the home’s current market value.
In exchange, lenders would avoid the expense of foreclosure and uncertainty about being repaid. The government would stem the social and economic damage of more foreclosures, at presumably little risk to taxpayers.
There’s just one problem. At a Congressional hearing in September, lenders were lukewarm about participating in the new program — reluctant, it seems, to take the loss that comes with reducing loan balances.
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It is true that the economic well-being of our nation is in jeopardy and that consumer confidence and liquidity is badly needed in order to have any hope of reversing this downward economic slide. The Emergency Economic Recovery Act of 2008 directly and meaningfully addresses financial liquidity but fails to seriously address the core problem underlying the current financial crisis: massive home foreclosures.
It is therefore equally true that the congressional focus on bailing out Wall Street cannot be separated from efforts to stop foreclosures. I say this not only because it is the right and fair thing to do, but also because the bailout won’t work without it.
Last week, the leadership of the National Community Reinvestment Coalition (NCRC) met with Federal Reserve Board Chairman Ben Bernanke and he made it clear that another two million foreclosures were imminent. Treasury Secretary Henry Paulson has said he expects we’ll see 2.5 million foreclosures this year. These figures show a dramatic acceleration of the foreclosure rates we have seen over the past few years.
If the foreclosures of these past four years can drive the U.S. economy to the brink of a depression, what can we expect from a dramatic increase in those numbers? more
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Between the recent string of bank failures and shotgun weddings, Citigroup’s FDIC-brokered purchase of troubled Wachovia this morning, and talk of handing off a heaping helping of toxic mortgage debt to taxpayers in order to avert economic catastrophe, it’s clear that America will be watching its financial institutions more closely for a long, long time. Perhaps the most famous and hotly debated financial regulation since the 1930s has been 1979’s Community Reinvestment Act (CRA), a source of lifeblood for inner-city neighborhoods and community organizations for nearly 30 years. Where does the CRA fit into this mess?
As one might expect, many conservatives blame the CRA for instigating the subprime debacle. From the National Review:
The CRA empowers the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Among other things, mergers and acquisitions can be blocked if CRA inquisitors are not satisfied that their demands — which are political demands — have been met. There is a name for loans made to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage: subprime.
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In last week’s media blitz of trying to explain our financial crisis, the clearest description I saw was a Chattanooga Times Free Press cartoon, which the Chicago Tribune ran on its editorial page on Sept. 25. Titled “The Rescue Plan,” it depicts four firemen hosing down a bank, while they are surrounded on every corner behind them by a community burning. I’m still waiting for the headline, “It’s the Foreclosures, Stupid!”
To their credit, several reporters have included references to critics of our financial system. John McCarron in his Chicago Tribune column on Sept. 21, remembers the late activists Gale Cincotta and Msgr. Jack Egan, who “complained that finance companies were pushing ruinous payday loans and high-interest mortgages like crack cocaine.” I had the privilege to work over a decade for Gale and I confess to having been an altar boy for Msgr. Egan.
There have been only a few press references to efforts in states such as North Carolina or cities like Dayton, Ohio to squelch predatory lending. But these and other local efforts were trumped by Bush regulators and left unsupported by congressional gridlock that would not pass national anti-predatory legislation.
I haven’t seen any in-depth analysis of how Phil Gramm’s repeal of Glass-Steagall in 1999 enabled commercial lenders to underwrite, trade, and purchase instruments such as mortgage-backed securities and collateralized debt obligations.
In the midst of this current DC chaos, I joined 18 other board directors of the National Community Reinvestment Coalition from around the country in meeting with Federal Reserve Chairman Ben Bernanke on September 22 to share our outrage (which I assure you is much higher than Treasury Secretary Paulson’s).
My colleague Stella Adams played her “I told you so” card, citing a March 2006 meeting as a member of the Federal Reserve’s Consumer Advisory Council at which she had spoken to him about the prevalent abusive lending plaguing communities. more
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Listening to Secretary of the Treasury Henry Paulson testify before the Senate Banking Committee, I’m marveling at his insistence to Republican Sen. Mel Martinez, former HUD secretary, that “I welcome oversight.” Martinez is leading Paulson through a kind of call-and-response…
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Robert Shiller in an article in The New York Times proposed a more flexible home mortgage that he argues would help prevent crises like the current subprime mortgage crisis. Shiller, an economics professor at Yale and author of The Subprime…
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From AFP today: The 700-billion dollar Wall Street bailout plan, put together last week by the U.S. administration, would allow the U.S .Treasury to sell new debt to buy vast amounts of mortgage securities and other “toxic” assets that have…
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Just finished watching ServiceNation’s presidential forum on national service, and I’m here to give credit where it’s due: Judy Woodruff asked John McCain to explain his running-mate’s disparaging taunts about community organizers vs. those — specifically small-town mayors — with…
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Friday’s New York Times article on Section 8 households in Antioch, Calif., has attracted a great deal of attention. I couldn’t wait to read it because I recently published a book, Neighborhood Choices, on Section 8 vouchers that includes a…
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The wags at Immigration and Customs Enforcement (ICE) — a.k.a the U.S. immigration agency — launched a pilot program last week that would allow people with outstanding deportation orders to deport themselves. ICE calls the pilot program “Scheduled Departure.” Other…
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The late George Carlin once quipped that “Frisbeetarianism is the belief that when you die, your soul goes up on the roof and gets stuck.” When homeowners die, or are foreclosed on, or just abandon their properties, their houses —…
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When faced with a serious and persistent problem, it is often tempting to propose dramatic ideas, like blowing up existing programs and starting from scratch. Occasionally that might be useful, but more often it is simply overzealousness. It is more…
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Invisible amid all of the media talk of a congressional “bailout” for Fannie Mae and Freddie Mac is a triumph for affordable housing advocates secured when the House Wednesday passed the American Housing Rescue and Foreclosure Prevention Act of 2008…
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The Marine base that exerts an outsize gravitational pull on Twentynine Palms, Calif. is the largest in the world, and shimmers several miles outside of town in the desert at the foot of the Bullion Mountains. Twentynine Palms is some…
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National Housing Institute
