Campaign News

A lack of transparency and inadequate oversight can set up the potential for waste, fraud, and abuse.  A  2015 report from the Alliance to Reclaim Our Schools and the Center for Popular Democracy, entitled “The Tip of the Iceberg,” reported over $200 million lost to fraud, corruption and mismanagement in charter schools.

Read the full article here.

The power of eminent domain has traditionally worked against homeowners, who can be forced to sell their property to make way for a new highway or shopping mall. But now the working-class city of Richmond, Calif., hopes to use the same legal tool to help people stay right where they are.

Scarcely touched by the nation’s housing recovery and tired of waiting for federal help, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures.

The results will be closely watched by both Wall Street banks, which have vigorously opposed the use of eminent domain to buy mortgages and reduce homeowner debt, and a host of cities across the country that are considering emulating Richmond.

The banks have warned that such a move will bring down a hail of lawsuits and all but halt mortgage lending in any city with the temerity to try it.

But local officials, frustrated at the lack of large-scale relief from the Obama administration, relatively free of the influence that Wall Street wields in Washington, and faced with fraying neighborhoods and a depleted middle class, are beginning to shrug off those threats.

“We’re not willing to back down on this,” said Gayle McLaughlin, the former schoolteacher who is serving her second term as Richmond’s mayor. “They can put forward as much pressure as they would like but I’m very committed to this program and I’m very committed to the well-being of our neighborhoods.”

Despite rising home prices in many parts of the country, including California, roughly half of all homeowners with mortgages in Richmond are underwater, meaning they owe more — in some cases three or four times as much more — than their home is currently worth. On Monday, the city sent a round of letters to the owners and servicers of the loans, offering to buy 626 underwater loans. In some cases, the homeowner is already behind on the payments. Others are considered to be at risk of default, mainly because home values have fallen so much that the homeowner has little incentive to keep paying.

Many cities, particularly those where minority residents were steered into predatory loans, face a situation similar to that in Richmond, which is largely black and Hispanic. About two dozen other local and state governments, including Newark, Seattle and a handful of cities in California, are looking at the eminent domain strategy, according to a count by Robert Hockett, a Cornell University law professor and one of the plan’s chief proponents. Irvington, N.J., passed a resolution supporting its use in July. North Las Vegas will consider an eminent domain proposal in August, and El Monte, Calif., is poised to act after hearing out the opposition this week.

But the cities face an uphill battle. Some have already backed off, and those that proceed will be challenged in court. After San Bernardino County dropped the idea earlier this year, a network of housing groups and unions began working to win community support and develop nonprofit alternatives to Mortgage Resolution Partners, the firm that is managing the Richmond program.

“Our local electeds can’t do this alone, they need the backup support from their constituents,” said Amy Schur, a campaign director for the national Home Defenders League. “That’s what’s been the game changer in this effort.”

Richmond is offering to buy both current and delinquent loans. To defend against the charge that irresponsible homeowners who used their homes as A.T.M.’s are being helped at the expense of investors, the first pool of 626 loans does not include any homes with large second mortgages, said Steven M. Gluckstern, the chairman of Mortgage Resolution Partners.

The city is offering to buy the loans at what it considers the fair market value. In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default.

Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program. The $30,000 difference goes to the city, the investors who put up the money to buy the loan, closing costs and M.R.P. The homeowner would go from owing twice what the home is worth to having $10,000 in equity.

All of the loans in question are tied up in what are called private label securities, meaning they were bundled and sold to private investors. Such loans are generally the most unfavorable to borrowers and the most likely to default, Mr. Gluckstern said. But they are also the most difficult to modify because they are controlled by loan servicers and trustees for the investors, not the investors themselves. If Richmond’s purchase offer is declined, the city intends to use eminent domain to condemn and buy the loans.

The banks and the real estate industry have argued that such a move would be unprecedented and unconstitutional. But Mr. Hockett says that all types of property, not just land and buildings, are subject to eminent domain if the government can show it is needed to promote the public good, in this case fighting blight and keeping communities intact. Railroad stocks, private bus companies, sports teams and even some mortgages have been subject to eminent domain.

Opponents, including the Securities Industry and Financial Markets Association, the American Bankers Association, the National Association of Realtors and some big investors have mounted a concerted opposition campaign on multiple levels, including flying lobbyists to California city halls and pressuring Fannie Mae, Freddie Mac and the Federal Housing Administration to use their control of the mortgage industry to ban the practice.

Tim Cameron, the head of Sifma’s Asset Management Group, said any city using eminent domain would make borrowing more expensive for everyone in the community and divert profits from the investors who now own the loan to M.R.P. and the investors financing the new program. “Eminent domain is used for roads and schools and bridges that benefit an entire community, not something that cherry-picks who the winners are and who the losers are,” he said.

Representative John Campbell, Republican of California, has introduced a bill that would prohibit Fannie, Freddie and the F.H.A. from making, guaranteeing or insuring a mortgage in any community that has used eminent domain in this way. Eminent domain supporters say such limits would constitute a throwback to the illegal practice called redlining, when banks refused to lend in minority communities.

Opponents have also employed hardball tactics. In North Las Vegas, a mass mailer paid for by real estate brokers warned that M.R.P. had “hatched a plan to make millions of dollars by foreclosing on homeowners who are current on their payments.”

In a letter to the Justice Department, Lt. Gov. Gavin Newsom of California complained that the opposition was violating antitrust laws and that one unnamed hedge fund had threatened an investor in the project.

But not all mortgage investors oppose the plan. Some have long argued that writing down homeowner debt makes sense in many cases. “This is not the first choice, but it’s rapidly becoming the only choice on how to fix this mess,” said William Frey, an investor advocate.

Mr. Frey said that the big banks were terrified that if eminent domain strategies became widespread, they would engulf not only primary mortgages but some $450 billion in second liens and home equity loans that are on the banks’ balance sheets. “It has nothing to do with morality or anything like that, it has to do with second liens.”

Many of the communities considering eminent domain were targeted by lenders who steered minority families eligible for conventional mortgages into loans with higher interest rates and ballooning payments. Robert and Patricia Castillo bought a three-bedroom, one-bathroom home in Richmond because their son, who is severely autistic, would anger landlords with his destructive impulses. They paid $420,000 for a home that is now worth $125,000, Mr. Castillo, a mechanic, said.

They have watched as their daughter’s playmates on the block have, one by one, lost their homes. But they are reluctant to walk away from the house in part for the sake of their son.

“We’re in a bad situation,” Mr. Castillo, 44, said. “Not only me and my family, but the whole of Richmond.”

Source:

Mahita Gajanan, The Guardian, 06.22.2015

Black customers at Spanish fashion retailer Zara’s New York stores have been disproportionately identified as potential thieves, a significant proportion of employees surveyed by the Center for Popular Democracy have claimed in a new report released on Monday.

A survey of 251 employees and a round of focus groups conducted by the union-allied workers’ rights campaign group claims there is a practice within Zara to label suspicious customers or potential thieves with the code words “special orders”. Once a “special order” was identified and his or her location radioed to employees’ headsets, an employee would follow that customer around, the report claims.

Forty-three percent of the respondents did not answer questions referring to “special orders” or said they did not know the term.

But out of the 57% that did respond to that question, 46% claimed black customers were called special orders “always” or “often”, compared with 14% who said the same about Latino customers and 7% about whites.

Employees quoted in the survey claimed special orders were identified by “dressing a certain way” and were “mostly African American”, according to the CPD. One employee told the group he felt “that black customers were targeted when it came to stealing”, the report said.

One black employee claimed that when he had come in to pick up a check one day wearing a hooded jacket he was identified as a special order and prevented from entering a back office.

Connie Razza, CPD’s director of strategic research, said the code words used at Zara had now changed from “special orders” to a request for “customer service” to go to the location of the suspicious customer.

The report also claims that employees of color face unequal conditions within the company’s eight New York City stores.

“I was expecting some level of discrimination, but the degree of disparity with workers getting raises and hours that vary so dramatically was surprising,” said Razza.

The report claims:

Black employees are more than twice as dissatisfied with their hours as white employees.

Darker-skinned employees were least likely to be promoted, and received harsher treatment from managers.

Lighter-skinned employees of color and white employees experienced better treatment within the company, with higher status assignments, more work hours and a stronger likelihood of being promoted.

Many of the employees interviewed felt there was favoritism within the company based on race.

Razza said that while the retail industry was known for unpredictable working schedules and low wages, the situation was “even worse for black employees”.

The report, compiled from surveys conducted between February and April, claimed employees said that managers showed favoritism, and “many of the employees interviewed felt that favoritism is based on race”.

Such favoritism, they said, can have an impact on promotions, the distribution of work hours and management evaluation and treatment, the report claimed.

Of the 251 employees surveyed, 130 identified as Hispanic, 59 as black, 34 as white, 12 as Asian and 11 as mixed race. Employees were also identified by their skin color on a scale of one to four, with one indicating very light skin and four indicating dark skin. There are approximately 1,500 Zara employees in New York, suggesting one-sixth were surveyed.

“We found darker skinned employees were least likely to be promoted, and received harsher treatment from managers,” Razza said.

In some instances, the report claims, managers told employees not to take the survey. On at least one occasion, managers called the police on one of the employees taking the survey, the CPD claims.

A spokesperson for Zara USA denied any of the claims were accurate.

“Zara USA vehemently refutes the findings of the Center for Popular Democracy report, which was published without any attempt to contact the company,” the spokesperson said in a statement to the Guardian.

“The baseless report was prepared with ulterior motives and not because of any actual discrimination or mistreatment,” the statement went on. “It makes assertions that cannot be supported and do not reflect Zara’s diverse workforce. Zara USA believes that the report is completely inconsistent with the company’s true culture and the experiences of the over 1,500 Zara employees in New York City.

“We are an equal opportunity employer, and if there are individuals who are not satisfied with any aspect of their employment, we have multiple avenues for them to raise issues that we would immediately investigate and address.”

Referring to the claims about black customers being disproportionately identified with the code words “special orders”, it said: “We are a global multicultural company serving valued customers across 88 countries, and do not tolerate discrimination of any form.”

In a later statement, a Zara USA spokesperson added: “The expression ‘special order’ is a term used to designate a common situation in which associates are requested to enforce customer service and zone coverage on the floor. It does not designate a person or group of people of any category.”

Referring to claims about discrimination in promotions, the spokesperson said: “In its most recent round of internal promotions at Zara USA, approximately half were Hispanic or African American employees. In addition, approximately half of all hours are regularly allocated to Hispanic or African American employees. These facts clearly demonstrate that diversity and equal opportunity are two of the company’s core values.”

According Zara, approximately half of all Zara USA’s employees are Hispanic or African American.

The report arrives on the heels of a $40m discrimination lawsuit filed earlier this month by Ian Miller, who was general counsel for Zara USA Inc from 2008 until this March. According to the lawsuit, Miller – who is Jewish, American and gay – said he was excluded from meetings, given smaller raises than co-workers and subjected to racist, homophobic and antisemitic remarks because he did not fit the company’s “preferred profile” of Christian, Spanish and straight.

Miller also claimed his harassers were protected from punishment by company founder Amancio Ortega Gaona. He sued Zara, his former supervisor Dilip Patel and former Zara USA CEO Moíses Costas Rodríguez, under various New York state and city laws prohibiting pay discrimination, wrongful discharge, retaliation and hostile work environments.

Razza claimed discrimination pervaded the whole company.

“It’s a corporate culture that’s very problematic,” she said. “The lawsuit brings to light the depth that discrimination pervades Zara USA. Given the revelations of the lawsuit, we felt it was very important to reflect that it happens across all levels.”

The lawsuit and report follow a number of occasions during which Zara was criticized for selling items with racially insensitive designs. A bag embroidered with swastikas was pulled from stores after customers complained in 2007. In 2013, Zara sold necklaces with figurines in blackface.

Last August, the retailer was the subject of a backlash from customers for two different shirt designs — one striped and emblazoned with a gold star that resembled uniforms worn by Jewish victims in Nazi concentration camps and the second a white T-shirt displaying the words “White is the New Black”.

There is a recent history of controversies over alleged racism in the New York retail sector. In 2013, Macy’s and Barneys, two of New York’s most famous department stores, faced investigation from the state attorney general after several customers accused the stores of racially based discrimination.

Macy’s and Barneys both came to settlements for $650,000 and $525,000, respectively, in August 2014.

Razza said the CPD focused on Zara because of the company’s concentration in New York City and recent organization efforts by workers for fair wages at Zara.

Source: The Guardian

After weeks of a hunger strike by 12 residents fighting for the predominately African-American Bronzeville’s Walter Dyett High School, two strikers were admitted to the hospital.

All this in an effort to make Chicago Public School (CPS) officials heed their plea: to end the privatization of education and to make Walter Dyett High school into a Green Technology community high school.

The hunger strikers are saying what needs to be said: that Black and brown children must be valued, their families must be valued, and their schools must nourish their inherit value.

The demands of the hunger strikers are easy to understand. They don’t merely want a re-opened school, as was finally agreed to by Mayor Rahm Emanuel and CPS last week after 18 days of hunger strike. They want a Green Technology community high school with parent engagement in decision-making from the beginning. Their plan for the new school was vetted by multiple education experts at the University of Chicago. The comprehensive plan presented by the community and the hunger strikers to CPS was “excellent and should be chosen,” said Jeannie Oakes, president of American Educational Research Association, AERA.

Why Walter Dyett High School was set up for closure by the CPS to begin with is difficult to understand. The school received awards in 2008 and 2011. First, for the largest increase of students going to college out of all Chicago’s public schools, and then the ESPN “Rise Up” award for small schools making great improvements, but in need of some help. The school won a $4 million athletic facilities renovation.

So what happened? In a part of town activists say is a target for gentrification, the school was closed before students even got a chance to enjoy the new facilities. The strikers called it “racism” and “systemic disinvestment.” “Our schools weren’t failing,” they said. “They were failed.” And Walter Dyett High School was set to become yet another victim in the closing of over 50 neighborhood Chicago public schools in favor of privately owned and managed charter schools, with poor records of achievement, no accountability and inadequate oversight. But due to the sacrifice of the hunger strikers risking their health, that plan was overturned last week.

However, the Bronzeville hunger strikers know what a growing chorus of national education experts recognize: while just keeping schools open is not enough, sustainable “community schools” can help transform neighborhoods. As it is now, Bronzeville is a food and job desert, but Green Technology addresses both problems. There are already 5000 community schools in the US that through civic partnerships address the majority of challenges in a neighborhood by providing wrap-around healthcare, social and psychological services, in addition to the standard educational offerings. Community schools focus on restorative justice practices and a curriculum based in the community and evaluated by teachers, so students can learn more. Community schools are making marked gains in student outcomes both academically and socially.

Take Cincinnati. The city turned around their public schools’ statistics when they bet on the effectiveness of community schools over charter schools. The results are staggering. In 2003, before introducing the model, only 51 percent of all students graduated. In 2014, when 34 out 55 schools were community schools, 82 percent of all students were graduating. Community schools combat racial inequality, as well: in Cincinnati, the black/white achievement gap dropped 10 percent in those same 11 years. Similar results are seen in New York, Baltimore, Kentucky, Ohio, Minnesota, and other places where community schools have been prioritized.

These are the kind of schools that Bronzeville deserves.

It is under this history of political disinvestment that Bronzeville community leaders arrived to last month’s protests: community members risking their health to fight for their children’s access to something as basic as a good public school. While school officials took the right first step by moving to keep Dyett open, they must heed the deeper call of the people of Bronzeville and invest in a community school that will better the future of the children in Chicago. 

Source: In These Times