The Shelterforce blog

September 2008

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  A Victory for American Democracy

  Americans all over the nation, political pundits, Wall Street workers, and, I venture to guess, even the president, were stunned Monday afternoon to hear that the bailout bill had been defeated in the U.S. House of Representatives. The bailout had…

• Some Act

  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. more

• Rescue Communities Now!

  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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  Disappearing Ink: Why No Coverage of the Demonstrations?

  CNN this morning reported that grass-roots groups are organizing demonstrations across the country against what they’re calling the Bush administration’s “cash for trash” bailout plan. According to today’s Boston Globe, yesterday there were demonstrations on Boston Common, at the N.Y.…

• DOJ Keeps An Eye On Michigan

  Following reports out of Michigan earlier this month as outlined on this Rooflines post that state Republicans there were planning to use a list of foreclosed homes to block people from voting in the upcoming election as part of an effort to challenge some voters on Election Day, the U.S. Department of Justice is now reportedly paying close attention to reports coming out of the the state that is lining up to be one of a handful of crucial swing states that could decide the outcome of the 2008 presidential election. Wednesday’s edition of the Michigan Messenger, which broke the story earlier this month that a GOP county chair was planning to use a list of foreclosed homes to block people from voting this year From the Messenger: “If those allegations were true, it would be a concern to us in the Civil Rights Division,” Grace Chung Becker, the acting assistant Attorney General for Civil Rights, told lawmakers at a joint hearing of the House Judiciary and Administration Committees on Wednesday. Becker also informed lawmakers that criminal prosecutors from the Justice Department would not monitor polling stations. At that same hearing, Republicans argued that fraud was the issue at hand, and not voter suppression. Election officials from Ohio, Pennsylvania, and Virginia also discussed issues pertaining to having the right number of paper ballots, voting machines, and security. This story needs the disinfectant power of sunshine, to paraphrase Justice Brandeis. Keep an eye on this one, as well as any irregularities in your voting district. more

• Will Financial Crisis Lead to Hard Times for Nonprofits?

  With congressional leaders reaching an agreement Thursday afternoon on the president’s proposal to pump $700 billion into the country’s financial system, it’s not yet clear how corporations and foundations will change their policies in giving grants and gifts. However, if…

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  A Green Job Renaissance?

  Even decades after de-industrialization and outsourcing decimated the once-solid, well-paid, empowered blue collar union workforce of the Midwest, jobs are still being lost by the hundreds or thousands as industries tighten their belts or close up shop altogether — from…

• Preserving Safe, High Quality Public Housing Should Be a Federal Priority

  A report I recently co-authored for the Center on Budget and Policy Priorities examines the state of public housing in the United States today using significant new research on the location of remaining units. The report finds that public housing…

• Congress Can’t Give House Room to Paulson’s Section 8

  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…

• Shiller’s “Continuous-Workout Mortgages” Won’t Address the Crux of the Problem

  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…

• The Free Market Ain’t Free

  On Friday, President Bush suddenly decided it was okay for Government to make contact with the Market’s Invisible Hand, as long as Government does not slap The Hand’s wrist but instead stuffs It with cash. Yeah, yeah, so much for the much-vaunted Free Market. Not so free, as it turns out–someone pays. This time it’s a proposed tab of $700 eye-popping billion. And Wall Street’s losses are to be absorbed by–oh, guess who? You! And me, and our offspring and theirs. Because otherwise the economy will completely collapse even further, although we could still be looking at an implosion that will only be good for writers of post-apocalypse novels. But not really, since the publishing and distribution mechanisms are sure to be compromised, We’ll bail out the financial houses, but so far, if yours is one of the homes being foreclosed — 1,000 a day going down that road here in Southern California — don’t wait around by your mailbox waiting for your bailout check. That is, if you still have a mailbox. Oh, Bush has made some noise about maybe-could-be-would-be bailing out homeowners — guess the GOP held a finger to the wind and saw that coddling Wall Street while sticking it to Main Street is dumb-ish election year politics. Still, searching the interwebs for the Administration’s firmness of resolve on this idea comes up thin. Anyway, here’s CNN’s take on — the latest early Tuesday Eastern time. The Dems at least are getting up on their hind legs and calling for homeowner relief and more oversight, and the Bushies are predictably saying hurry, hurry, don’t think too hard about this even though it’s the largest bailout in the history of the world. more

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  Portland Shrinks Carbon Footprint with Revitalization, Walkability

  Portland, Oregon has become such a recognized model of progressive planning and development that people like me are actually discouraged from talking about the region in professional circles. “Everybody already knows about Portland,” the line goes. I don’t think that…

• Toxic Assets: The Diagnosis Comes Too Late for Foreclosed Homeowners

  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…

• Affordable Housing as an “Unfunded Mandate”

  Sorry to keep the focus on New Jersey, folks, but if you are a long-time Rooflines reader, you’ll know that I will, once again, preface this post with: At least we’re talking about an affordable housing mandate (even if that…

• Financial Implosion: 2nd Chance for Progressive Banking Reform?

  When present and former public officials ranging from Treasury Secretary Henry Paulson to Lawrence H. Summers, the former Treasury secretary under President Clinton, started calling for the creation of a new agency that would buy the almost worthless assets from staggering financial companies, my first thought was great. As Barney Frank, Democrat of Massachusetts, who heads the House Financial Services Committee, said this week, “…the question of a broader more systemic action in which the government tries to help resolve these things is very important.” When I realized these leaders would model a new agency along the lines of the Resolution Trust Corporation, all I could think of was Charles Keating, the Savings & Loan bailout, and the response by progressives to that bailout, and I shuddered. What should we do? Keating — head of the Lincoln Savings & Loan, which in the words of Frank Rich in today’s New York Times, “went belly up because of risky, unregulated investments” — became the poster boy of the S & L bailout of the 1980s. He started his public career in the late 1950s, founding the Cincinnati anti-pornography organization Citizens for Decent Literature. A greedy man, he was determined to make his mark in the banking business. As the head of Lincoln Savings of Irvine, Calif., he made millions through nepotism, buying politicians, and speculating with bank deposits. Keating took advantage of the federal government’s rush to deregulate banks. It eased federal restrictions on the S&Ls, corrupting the federal rules originally created to provide homeownership to families with modest means. Congress changed the rules by lifting the lid on interest rates. This gave S&Ls, whose deposits were insured up to $100,000, a green light to engage in real-estate speculation. Soon we had bankers, exemplified by Keating, leading the country into a massive abuse and misuse of deposits for quick profits. more

• When Worldviews Collide

  John McCain reinvented himself — again — this morning. And the latest avatar is the reincarnation of Sen. Joseph McCarthy. Speaking in Green Bay, Wisc. about the global economic collapse that’s flowed directly from the orgy of deregulation he and…

• What Does the Financial Crisis Mean for CDCs?

  Being a person who doesn’t have much invested in the stock market, I tend not to pay too close attention to photos on the business pages of weary stockbrokers on the trading floor. We’ve been through crashes before, and this…

• Community Organizers Help Turn the Tide

  Peter Dreier’s most recent Rooflines post cited a story titled “Community Organizing Changed Fishery,” in which John Corrigan, the fishing writer for the Concord (N.H.) Monitor, explained that “anybody who has caught a fish at Sewalls Falls over the last…

• Discouraging the Voter

  We’ve seen it before, and we’ll see it again, but, in Michigan — which is shaping up to be a crucial swing state in the presidential contest — we’re already seeing a mounting campaign to scare off potential voters. In…

• Why Has Palin Cooled Toward ARDOR?

  Let’s take a closer look at GOP vice presidential candidate Sarah Palin’s record on community organizing. It seems, as I said in my previous Rooflines post, that she was for community organizing before she was against it. From the State…

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