Campaign News

Targeted by progressive activists hoping to kill his chances of being Hillary Clinton’s running mate, Julián Castro is set this week to announce changes to a hot-button Housing and Urban Development program to sell bad mortgages on its books.

The changes, which HUD officials will brief stakeholders and activists on during a conference call on Monday, could be made public as early as Tuesday — depending on when department lawyers give the green light to publishing them in the Federal Register.

But they won’t take effect before the next auction of HUD mortgages, scheduled for May 18.

Castro’s actions could potentially defuse an issue that activists have been using to question his progressive credentials — and he’ll be doing it at the moment the running mate search has begun to get serious at Clinton campaign headquarters.

Among the changes, according to people with knowledge of what’s coming: The Federal Housing Authority will put out a new plan requiring investors to offer principal reduction for all occupied loans, start a new requirement that all loan modifications be fixed for at least five years and limit any subsequent increase to 1 percent per year, and create a “walk-away prohibition” to block any purchaser of single-family mortgages from abandoning lower-value properties in the hopes of preventing neighborhood blight.

HUD officials say that the timing isn’t a response to the activist pressure or the presidential campaign calendar.

“It has always been our goal to get the policy right, regardless of arbitrary deadlines, and we expect to announce those changes this week,” said HUD press secretary Cameron French.

But the changes come after two years of calls by activists — joined last September by Sen. Elizabeth Warren (D-Mass.) — for major reforms to the Distressed Asset Stabilization Program. Their calculations — numbers that HUD says are way off — allege that during Castro’s tenure, 98 percent of problematic mortgages the department has sold went to Wall Street firms that they say were responsible for the housing crisis in the first place.

With the backdrop of a Democratic Party recalibrated by Bernie Sanders’ surprisingly strong candidacy, activists were preparing a full offensive against Castro this week, looking to leverage his political ambitions against him to extract major concessions.

Last Thursday, activists sent an ultimatum letter to HUD titled, “Seeking swift changes to HUD's DASP program,” and demanding response within 24 hours. They had set up a national day of action for Tuesday, with protests scheduled at HUD offices in New York, Philadelphia, Los Angeles and San Francisco, along with a news conference at Newark City Hall — which remains on for now, pending whether they feel HUD has gone far enough in what the agency tells stakeholders on Monday afternoon.

“I would say we’re cautiously optimistic, but we don’t know, and what we need to see is a plan that will lead to substantially more mortgages not getting into the hands of bad actors and saving more homes from foreclosure,” said Amy Schur, campaign director for the Alliance of Californians for Community Empowerment, on Sunday afternoon. “Unless we see that, it’s going to be a problem.”

Schur has been in touch with HUD regularly over the course of the past two years, and in recent weeks when the conversations stepped up after the activists fired a warning shot against Castro by launching a public effort built around the website DontSellOurHomestoWallStreet.org.

That first attack on Castro in early April prompted a number of leaders to rush to his defense — some because they felt the criticisms were unfair, others because they were eager to protect the future of arguably the most promising Latino rising star in the Democratic Party.

“Some of y’all may have seen recently concerns that were voiced about DASP,” Castro said last week in an appearance at a National Association of Realtors event teasing the changes.

“We’re improving that and have been working to do that to ensure that folks are able to stay in their homes longer because they’re offered principal reduction in certain instances,” Castro said, “that we get better outcomes for neighborhoods by making sure that folks who secure those loans aren’t able to just walk away from those properties and by instituting something that we refer to [as] ‘payment shock protection’ to make sure that once payments are modified that they don’t just jump up a couple years later.”

Other members of the coalition and signatories on the ultimatum letter are American Family Voices, the Center for Popular Democracy Action, Daily Kos, Democracy for America, MoveOn.org Civic Action, New York Communities for Change, Other 98% Action, Presente.org, RootsAction.org, the Rootstrikers Project at Demand Progress and the Working Families Party.

Schur said that she and others are hoping that HUD will include some method of incentivizing mortgage sales through early bidding or favorable rates to nonprofits and neighborhood groups, rather than the Wall Street firms that have bought many of the mortgages. They feel that large financial institutions don’t care about the effect on neighborhoods from letting properties go vacant or decline, or of overwhelming homeowners with liabilities — though many argue that the reason these institutions buy so many of the mortgages is that they are the only ones that have the capital and management capability to handle the purchases.

“Where we would like to be with HUD is partnering to roll out a positive program in our cities across the country,” Schur said. “We’d rather be doing that than protesting. But if the changes are insufficient and this program is going to continue to be almost a wholesale giveaway to speculators, we’re going to have to keep the pressure up. We’re not going to have a choice.”

HUD officials point out that the May 18 auction isn’t for the DASP program and call the complaints surrounding that unfair. It is for different mortgages, called an “aged loan sale,” scheduled before these reforms were far along. No DASP auction has been set yet for 2016, and reconsideration of the program, according to French, has been underway since the most recent DASP auction, at the end of last year.

“Since 2014, FHA has made changes to the DASP program before every sale. FHA has been working on the latest round of changes to the DASP program for months, and, in our desire to be as comprehensive as possible, we’ve engaged a broad group of stakeholders on the potential reforms that would make the most impact for distressed homeowners,” French said.

Activists had been growing frustrated with the pace and substance of the conversations with HUD, and HUD officials have been losing patience with them as well, feeling that the activists are out for attention and landing on Castro simply because his name is in the running mate mix.

And, well aware that this is a critical political moment for Castro, activists warn that they’re ready to keep after him until the Democratic convention in July, and beyond that if he is Clinton’s pick.

“We would all love for the secretary to really come through in a big way, but housing activists and folks in our neighborhoods are not going to stop when our neighborhoods are being sold off to Wall Street. There has to be a major, major change,” said Jonathan Westin, director of New York Communities for Change. “Folks are completely ready to keep pushing.”

By Edward-Isaac Dovere

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“Yet the drum beat of criticism in recent weeks, including a demonstration outside the New York Fed and letters from state and city lawmakers, is raising worries within the Fed about independence from political pressure. Some lawmakers have in the past said the New York Fed president should be a presidential appointment like Fed governors. On Tuesday, advocacy group Fed Up slammed the appointment of "yet another white man whose record on Wall Street regulation and full employment raises serious questions."

Read the full article here.

ThinkProgress - June 27, 2013, by Bryce Covert - In an early morning session on Thursday, the New York City Council voted to override a veto from Mayor Michael Bloomberg on paid sick days legislation. The bill, which now becomes law, requires any company with more than 15 employees to provide five days of paid leave a year and any company with fewer employees to offer five days of unpaid leave. This means that more than 1 million New York City workers will now have access to paid sick leave who didn’t have it before.

New York City joins four other cities — Seattle, Washington; San Francisco, California; Washington, DC; and Portland, Oregon — and the state of Connecticut in the group of places that have mandated paid sick days. However, New York’s legislation is not as strong as that in the other cities, which require companies with five or more employees to offer paid leave.

The city’s law will be implemented over a slow timeline, not taking effect until 2014 and only applying to companies with more than 20 employees for the first year and a half.

Despite initial concerns from City Council Speaker Christine Quinn and the objections raised by Mayor Bloomberg that the bill will put too large a cost burden on businesses, studies of laws in other places show either a neutral or positive effect. A recent audit of Washington, DC’s law found no negative impact on businesses, while a study of San Francisco found little negative impact and strong support among businesses and another of Connecticut found a small cost with big potential upsides. In fact, San Francisco’s law was found to have spurred job growth.

Even with these laws in place around the country, most workers don’t have access to paid leave. Forty percent of private workers and 80 percent of low-income workers can’t take a paid day off if they or their family members get sick.

Meanwhile, a rash of preemption bills, which bar cities and localities from enacting paid sick days legislation, have also been implemented across the country, the latest of which was signed into law by Florida Governor Rick Scott (R). They have also cropped up in Wisconsin, Michigan, and Mississippi. These bills have been sponsored by big businesses and local chambers of commerce and are part of a national effort backed by the American Legislative Exchange Council (ALEC), a right-wing group that coordinates conservative laws across states.

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Like many people, when the alarm goes off, I hit snooze a few times and wish for more sleep. But what gets me out of bed is that precious hour I have with my young son. We eat breakfast together, we race to see who can get dressed first, and then I walk him to school.

I’m lucky– as a salaried employee at an organization that values flexibility and family, I can arrange my schedule around my son if need be. But for people working low-wage hourly jobs, that kind of control over their scheduling is virtually unheard of.

Today, corporations that pay low wages rarely provide their employees with full-time work or reliable hours. Take Manuel, who works at one of Emeryville’s many retail chains. He had his hours cut from 20 a week down to four, and then nothing for two weeks — throwing his family into massive debt.

Emeryville may be the first city in the East Bay to change that, where the City Council is voting on a Fair Workweek policy on Oct. 18. This is part of a simple set of standards needed to ensure that working people can afford to stay in the East Bay region.

What is a Fair Workweek? It means employers must provide reliable, predictable hours so their employees can budget. Workers get schedules two weeks in advance so they can plan childcare, second jobs, family time, and even rest. And when more hours are available, current employees get priority so they can get closer to full-time work.

In Emeryville, the policy would only apply to large companies with more than 12 locations worldwide. These simple improvements would cost employers almost nothing if they follow the law and have a huge impact on the lives of thousands of Emeryville workers. Hundreds of thousands more working people would benefit if other East Bay cities follow suit.

Emeryville’s own Economic Development Advisory Committee – the city’s business advisory group – said even they agree that increasing stability of schedules, reducing employee turnover, and decreasing underemployment in Emeryville is important. And that’s what a Fair Workweek policy would do.

Many companies are already doing the right thing. This policy would reinforce that good behavior and target companies that are bad actors. However, global, multi-billion dollar corporations and their lobbyists are coming out against this low-cost policy, claiming it will kill the economic climate. But I wonder: how exactly would reliable schedules hurt companies like IKEA, The Gap or Home Depot?

Before the recession, big business painted doomsday scenarios saying that raising wages would force them to close shop. During the Great Recession, working people bore the brunt of tough times in the form of reduced pay, slashed benefits, and a cutback to part-time hours. And now that big business has not only recovered but is booming, companies are back to the mantra that improving standards for their workers will hurt them.

Common sense tells us that business — especially big business — is doing fine. Look at quarterly earning reports of Emeryville’s global retail chains. Sales tax revenue in Emeryville was up 2.4 percent in 2015 compared to the previous year according to the city’s Finance Department. Retail vacancies in the region are at a post-recession low of 6 percent. And of course, there are growing lines of cars and customers coming in and out of Emeryville’s shopping centers.

While business is thriving, working people have waited long enough for something so very basic: a single job that pays enough with enough hours to allow folks to meet their basic needs.

Raising the minimum wage helped struggling workers. Now we must finish the job by providing reliable, predictable hours. This economic boom shouldn’t just be a boon for shareholders. It should also lift the working people who are the backbone of our economy.

By Jennifer Lin

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