CPD IN THE NEWS

Gotham Gazette - November 24, 2014, by Samar Khurshid - At a hearing Monday, the New York City Council's Committee on Governmental Operations approved the latest drafts of two bills that enhance the responsibility of city agencies to conduct voter registration and a resolution calling for the State Legislature to pass similar legislation.

These measures are an attempt by the Council to improve the compliance of City agencies with Local Law 29, also known as the Pro-Voter Law, which was passed in 2000. The law requires 19 city agencies to handle voter registration applications for customers.

The new legislation is headed to the full Council for a vote on Tuesday and then, if passed as expected, to the desk of Mayor Bill de Blasio. The bills expand the mandate of the Pro-Voter law to seven additional agencies and create a standard for enforcing the law, including required semi-annual reports from participating agencies. Implementation of the existing law has proven to be a problem, with city agencies failing to uphold their responsibilities to offer registration forms to New Yorkers doing other business with the City.

The accompanying resolution calls upon the State Legislature to augment existing agency-assisted registration laws to include codes on registration forms that would help track agency performance and registration statistics.

Council Member Ben Kallos, chair of what he called the "good government committee," introduced Intro 493 A which expands scope of the Pro-Voter law and sets a deadline of December 1, 2015 for agencies to integrate their forms with voter registration.

The second bill, Intro 356 A, which establishes reporting requirements for the agencies, and the accompanying resolution, were introduced by Council Member Jumaane Williams.

"The last election was abysmal," Williams said of voter turnout in response to questions from Gotham Gazette. Stating that the city and state are falling behind in civic participation, he said, "This should be an issue that all parties - Republicans, Democrats, third parties - every party should be working to increase participation."

The push for increased voter registration began in July with Mayor de Blasio's Directive 1, which ordered agencies under the Pro-Voter law mandate to create plans for implementing the law. Then, in October, the City Council introduced the two new bills in response to a report released by a coalition of good government groups which showed the City's lax compliance with Local Law 29.

According to the report, 84 percent of clients at 14 of these agencies were not provided registration applications when they should have been. Additionally, only 2 out of 5 applicants with limited English proficiency were given translated applications, and agents were not trained in the application process.The report was compiled by the Pro-Voter Law Coalition, comprised of the Center for Popular Democracy (CPD), the Brennan Center for Justice at the NYU School of Law, Citizens Union of the City of New York, and the New York Public Interest Research Group (NYPIRG). Their investigation was aided by the Asian American Legal Defense and Education Fund.

The report's importance is highlighted by the fact that over 30 percent of New Yorkers who were interviewed at the agencies were not registered to vote.

The de Blasio administration initially rejected the two bills over privacy concerns and on the grounds that they came too close on the heels of Directive 1 and wishing to see agencies given more time to comply. Taking those concerns into consideration, changes were made to Williams' bill on reporting mandates. Williams disagreed with the administration but eventually came around to ensure changes were made in the proposal which will protect applicants' information while still allowing the Board of Elections to track registration data from agencies.

"I'm expecting (the) resolution to have a serious impact in Albany," said Council Member Kallos to Gotham Gazette. "Whether it's the Assembly or the Senate, we can all agree that government works better when we measure what its doing and this will take a step towards that."

Representatives of the good government groups that authored the report also testified at the hearing. Steven Carbo, director of Voting Rights and Democracy Initiatives at CPD praised the proposals, asserting, "Likely hundreds of thousands, if not millions of eligible voters were never given the opportunity to register to vote over the years, perpetuating regrettably low rates of voter registration in New York particularly among lower income, of color and immigrant citizens," he said.

Peggy Farber, legislative counsel for Citizens Union, called the proposals "meaningful steps to improve the pro-voter law, to codify the important work of the administration."

On Tuesday, the bills and the resolution will head to the full Council for a vote at the Stated Meeting, where they are very likely to pass.

Source

Today marks the 78th anniversary of the Fair Labor Standards Act, the law that gave us the minimum wage and a host of other protections to protect workers from the most cutthroat tendencies of capitalism.

While the law is still on the books, its power is fading. The federal minimum wage today – unchanged since 2009 – doesn’t let workers afford the most basic essentials, from a mortgage to monthly groceries.

In Detroit, federal inaction has hit workers especially hard. Detroit is already one of the most marginalized cities in the country. Last year, we faced the largest number of tax foreclosures in U.S. history. Our schools are teetering on the brink of bankruptcy. And a recent Brookings study found Detroit has the highest concentration of poverty of the largest metro areas in the country.

While parts of Detroit have risen like a phoenix in recent years, with growing signs of life in the auto industry and a shiny new hockey arena, the reality is progress hasn’t reached the majority of the city and people of color have largely been left out of Detroit’s revival.

To give all workers in Detroit a chance to share in the city’s recovery, we must start with wages. The current federal standard of $7.25 an hour is pitiful – and Michigan’s state rate of $8.15 is hardly an improvement.

Meanwhile, a recent study from the National Low Income Housing Coalition found it takes $15.62 to afford a two bedroom apartment in Michigan. A single parent with two children in Michigan needs an income of $21.23 per hour year to meet basic expenses. In Wayne County, an individual must earn $14.40 to support a family of four.

Two years ago, a ballot initiative was launched to raise the state wage to $10.10 per hour by 2017 with the support of hundreds of thousands of Michigan residents. Through a series of legislative maneuvers, the measure was defeated and the current rate was put in place. A year later, lawmakers voted to ban municipalities from raising wages at the local level.

As Detroit stagnates, around the country, minimum wages are on the march. From California to New York, workers have won raises as high as $15 an hour. And the same workers have been demanding progress here.

But we should go even further than higher wages. We need jobs that give workers access to a better life, with full benefits, stable hours, and a commute that doesn’t take hours on the bus each way. To that end, we have been working to ensure Detroiters have a seat at the table with developers to ensure that jobs are going to Detroiters.

Growing up, my parents struggled with chronic unemployment and homelessness. We moved constantly, often living in houses without running water, electricity or heat. In high school, my mom began working at General Motors and was finally able to meet our most basic needs. I could finally attend school every day of the week. That job didn’t just lift our family out of poverty. It gave us back our dignity.

For far too long we have encouraged people to just take any job, no matter the pay or working conditions. That is not the American Dream. Nearly a century ago, the Fair Labor Standards Act tried to put that dream within reach of every American. It is now up to us to continue the fight to ensure the promise.

We know it will take a lot of resources, but with the community driving this effort, we will reach our destination – good jobs for every Detroiter. That’s how we’ll truly rebuild Detroit.

By eclectablog

Source

Aljazeera America Fault Lines Blog - September 9, 2014, by Mark Kurlyandchik - In September 2010, the federal government got into the business of selling delinquent home mortgage loans, which are at least 90 days past due, to the highest bidder. The program was instituted to help the Federal Housing Administration (FHA) rebuild its cash reserves, which were wiped out by a wave of loan defaults.

In the first two years of the program, the FHA sold 2,000 loans in six national auctions. In September 2012, it expanded its loan pools under the newly named Distressed Asset Stabilization Program, or DASP, selling more than 3,000 loans in the first auction. The FHA also introduced a second stated objective of the program to help stabilize neighborhoods by creating a new category of loans tied to geographic areas hit hardest by foreclosures with mandates that purchasers service them in a manner that stabilizes surrounding communities.

Two critical new reports on DASP admit that the program is helping the FHA avoid having to hit up taxpayers for more money. But they question the sincerity of any efforts to protect neighborhoods plagued by foreclosures, pointing out that a whopping 97 percent of the loans have gone to private, for-profit investors, including hedge funds, mutual funds and private equity firms. And approximately just one out of 10 of the loans sold have achieved a neighborhood stabilization outcome.

“These are companies that put the financial gains of their shareholders first and community stabilization second—or I would say it's not even necessarily a priority for them,” says Connie Razza, co-author of a report by the Center for Popular Democracy and the Right To The City Alliance, which came out today.

Razza’s group sent a petition to Julian Castro, who recently took over the Department of Housing and Urban Development (HUD), the cabinet agency that houses the FHA, asking him to stop selling loans under the DASP until the program’s implementation could be strengthened and refocused on communities.

When the FHA was created in 1934 to stimulate a lifeless housing market buried in the depths of the Great Depression, the U.S. was a nation of renters—with only 40 percent of Americans owning their homes. The FHA was able to help boost that percentage by offering affordable mortgage insurance to approved lenders who made loans to high-risk borrowers with relatively low down payments. By 2004, nearly 70 percent of Americans were homeowners.

During the recent housing crash, with private lending drying up, the share of FHA-backed loans skyrocketed, rising from a reported 2 percent of all mortgages in 2006 to nearly a third in 2009. Those loans kept housing prices from going into free fall, but a wave of defaults plundered the FHA’s mortgage insurance fund. So, in 2013, it took a $1.7 billion taxpayer bailout to stay afloat.

So far, nearly 100,000 non-performing loans have been sold through DASP, netting the FHA $8.8 billion.

According to a report released last week by the Center for American Progress, only about 11 percent of the loans sold through DASP are now considered “re-performing.” Another 22 percent were either allowed to do a short sale or the home was surrendered in exchange for loan forgiveness. A third of the loans were turned around and sold to other buyers. The final third went into foreclosure.

Bidders who want to acquire neighborhood stabilization loans are required to achieve one of several outcomes that help homeowners and surrounding communities on at least half of the loans they purchase: getting the loans to re-perform, renting the home to the borrower, gifting the property to a land bank or paying off the loans in full. Through May of this year fewer than 18,000 of the FHA loans have been sold through neighborhood stabilization pools, compared to more than 73,000 that have no strings attached.

"In its current form, the DASP is unnecessarily undermining the very mission of HUD by selling loans to some of the same reckless actors who caused the financial crisis."

Connie Razza, Center for Popular Democracy

Instead of getting loans to re-perform, many of the companies buying up the loans may be looking to convert the distressed assets into rental properties. Since the housing crash, Wall Street-backed groups have bought up an estimated 200,000 single-family homes across the country to convert to rentals. As housing prices rise and foreclosures become less common, housing advocates worry that these firms have turned to non-performing loans as a way to increase their housing stock.

For instance, the private equity firm Blackstone, which has recently become the largest owner of single-family rental homes in the country, is a 46-percent owner of Bayview, the company that has won the second-highest number of DASP loans. According to one report, the delinquent notes are sold to the highest bidder without considering past performance metrics at getting the loans to reperform.

Further, allowing the vast majority of the loans to fall into the hands of high-bidding corporate investors—rather than defaulting—keeps many of the properties they’re tied to from going through the typical foreclosure process. As a result, the FHA might actually be diverting housing stock from first-time homebuyers, the very group it was formed to serve 80 years ago, said John Husing, chief economist at the Inland Empire Economic Partnership in San Bernardino, California.

Aljazeera America Fault Lines Blog - September 9, 2014, by Mark Kurlyandchik - "In its current form, the DASP is unnecessarily undermining the very mission of HUD by selling loans to some of the same reckless actors who caused the financial crisis," Razza and her co-authors write in their report.

The reports contend that HUD should be tracking bidders' track record for good outcomes and taking that performance into consideration. They also criticize HUD for a lack of transparency when it comes to making information about what happens to these loans available to the public. Further, they call for boosting the size and ratio of loans sold through the Neighborhood Stabilization Outcome pools and increasing access for non-profits in the bidding process.

“Community development financial institutions and other non-profits have been trying to participate,” Razza said. “They've only won 2.5 percent of the loans and are really shut out because HUD is running the program as a straight auction.”

Representatives for HUD did not respond to specific questions about the program, but offered this statement: “For purchasers, the program is an opportunity to acquire assets at competitive prices with the flexibility to service the assets while providing borrowers an opportunity to avoid costly foreclosures. The program is meeting financial goals as the amounts offered for these assets are steadily rising as volume has increased in recent years.”

Where investors used to pick up non-performing loans in the program for an average of 40 to 50 cents on the dollar, the most recent sale in June had an average of more than 77 cents. The bidding war was reportedly the most contested yet, with the entire pool going to one investor, private equity firm Lone Star Funds.

“I think that as demand for these loans grow, it builds a stronger case for FHA to ask buyers to do more for the communities they’re buying in,” said CAP report co-author Sarah Edelman. “We want to see loss-mitigation requirements on all of the loans sold.”

Source

But there’s a bigger risk-free payout the Fed makes to big banks, one set to rise exponentially as the economy improves. In fact, according to the Congressional Budget Office, hundreds of billions of dollars that would otherwise go into the federal Treasury will leak out to banks, including branches of foreign banks, in the coming years. If Congress needs to find money to pay for new programs, they could cancel the Fed’s recent practice of paying interest on bank reserves.

For nearly 100 years, the Federal Reserve managed the nation’s monetary policy without paying interest on reserves, including the 10 percent of the value of loanswhich banks are required by law to park at the Fed. But in 2006, Congress passed the Financial Services Regulatory Relief Act, authorizing interest payments. It was actually an old idea first promoted by conservative economist Milton Friedman.

Friedman thought that required reserves without compensation constituted a hidden tax on the financial industry. He also believed the strategy would make it easier for central banks to engage in monetary policy. If the Fed offered an interest rate on excess reserves just above the federal-funds rate (a.k.a. the rate banks use to lend to each other), then it makes more financial sense for banks to leave their money there. It sets a floor for the federal-funds rate, in other words, giving the Fed more control over its range. It also helps the Fed expand its balance sheet, critical to engaging in monetary interventions like quantitative easing.

Under the 2006 law, interest on reserves wasn’t supposed to kick in until 2011, but Congress moved up the date three years when it passed the law authorizing the Troubled Asset Relief Program (TARP). The Fed set the interest rate on all reserves at a skinny 0.25 percent, which produces a small payout on required reserves. But excess reserves above the 10 percent requirement, which banks never left at the Fed until 2008, exploded as the Fed’s balance sheet expanded. From virtually nothing seven years ago, excess reserves hover around $3 trillion today.

Who owns these excess reserves? As the Cleveland Fed noted in a report last week, more than 80 percent come from the top 100 largest banks. U.S. branches of foreign banks, primarily from the European Union, have about $1 trillion in excess reserves parked at the Fed.

The Fed’s audited financial statement indicates that they have paid banks $25.2 billion in interest on reserves from 2008 to 2014. That number jumped from $2.1 billion in 2009 to $6.7 billion in 2014, a three-fold increase. The entire time, the interest rate has been the same: 0.25 percent. But that’s subject to change.

As the economy improves, the Fed is clearly angling to raise the federal-funds rate, which has been stuck around zero since 2008. Fed officials have already indicated they will accomplish this mostly through recalibrating interest on reserves. At theirSeptember 2014 policy meeting, Fed Chair Janet Yellen said the central bank would “move the federal-funds rate into the target range … primarily by adjusting the interest rate it pays on excess reserve balances.” While the interest rate on required reserves may stay constant, the Fed would raise the interest rate on excess reserves, allowing interbank lending only to rise so far.

In effect, interest on excess reserves is equivalent to the federal-funds rate. And the higher the interest rate goes, the more money banks make from the Fed. You can see this most clearly in Congressional Budget Office (CBO) projections of Fed remittances.

Any money the Fed makes on investments gets returned to the federal Treasury. And business has been good for the Fed of late. They remitted $99 billion in 2014 and a projected $102 billion this year. But CBO’s latest update predicts that number will fall drastically, to $76 billion in 2016, $40 billion in 2017, and just $17 billion in 2018. The lion’s share of the difference comes from the Fed paying out their earnings to banks, with higher interest on reserves as they hike rates.

While it’s hard to pinpoint the totals because the CBO doesn’t separate out interest on reserves, by marking the difference between 2015 and subsequent years we can estimate that the Fed could deliver anywhere from $20 billion to $50 billion a year to banks, risk-free. That’s an enormous amount of money, based on the claim that interest on reserves is somehow an indispensible strategy for monetary policy, even though the Fed thrived for 91 years without such a tool.

This shift in how monetary policy is conducted occurred with practically no debate. Fed officials are reportedly worried about the “optics” of their exit plan, with its unjust enrichment of the largest banks. But outside of a few libertarians, nobody has raised alarms yet.

One progressive group that’s challenged the Fed from the left was stunned to learn that, in addition to depressing the economy, an interest-rate hike would have a secondary effect as a silent bank bailout. “Clearly this is under-covered, because I haven’t heard about it,” said Ady Barkan with the Center for Popular Democracy, director of Fed Up, a grassroots organization pushing the central bank to adopt pro-worker policies. “But we shouldn’t be shocked. It is the rule that the Fed prioritizes helping banks, and has over the last seven years.”

There are other ways to control monetary policy besides interest on excess reserves, unless you believe that the Fed was impotent from 1917 to 2008. For instance, the Fed could reduce their balance sheet, rather than letting it contract through attrition, the current strategy. That would reduce the money supply, which shows what a pickle the Fed has gotten itself into with its expanded balance sheet. But the Minneapolis Fed, at least, downplayed the risks of gradual asset sales into a global market.

Another option is to hold off on raising rates, allowing the balance sheet to slowly contract and encouraging banks to recirculate excess reserves into the economy by creating favorable conditions for more profitable investments. “It’s incomprehensible to us to think that the economy is getting too healthy too quickly,” said Barkan of Fed Up.

Members of Congress, who created this mess by authorizing interest on reserves, could take it away too, and in so doing could create a large pay-for that could be transferred into productive projects. You could potentially fund an entire six-year highway bill simply by eliminating interest on reserves.

We don’t even know if the Fed’s rate-raising strategy will work without drawbacks, as it’s never been tested. But if “working” equals paying the largest banks hundreds of billions in unearned money, the Fed should figure out something else.