Community Activists And Senator Warren Persuade HUD Sec. Julian Castro To Help Homeowners And Reign In Wall Street Speculators
Community Activists And Senator Warren Persuade HUD Sec. Julian Castro To Help Homeowners And Reign In Wall Street Speculators
Last September 30, community activists and local officials from around the country came to Washington, DC to protest...
Last September 30, community activists and local officials from around the country came to Washington, DC to protest HUD’s pro-Wall Street policies.
Two years ago, community organizing groups around the country, with the key support of Senator Elizabeth Warren (D-MA), began pressuring HUD Secretary Julian Castro to stop selling delinquent mortgages to Wall Street investors and help nonprofit organizations to purchase the loans, help homeowners keep their homes, and expand the supply of affordable housing.
On Thursday, they won. Castro announced a set of policy changes to its Distressed Asset Stabilization Program (DASP) that activists had labeled a “Wall Street giveaway.” Last year, for example, 98% of the mortgages HUD sold went to Wall Street firms, at discounts averaging nearly 50%. Castro pledged to fix the program to triple the sales of delinquent mortgages to nonprofit community groups with experience in stabilizing neighborhoods and helping homeowners and to put more restrictions on foreclosures.
The policy fix was needed because some of the same Wall Street firms that precipitated the housing crash have been buying up distressed housing assets in bulk, including delinquent mortgages and vacant houses that are a product of the crash.
Both Sen. Elizabeth Warren and HUD Secretary Julian Castro are frequently mentioned a potential VP running mates with Hillary Clinton.
The campaign’s victory is the result of a perfect political storm. The organizers mounted a savvy grassroots organizing campaign that built on the momentum of the Occupy Wall Street movement that began in 2011. In the current political season, no politician, especially a Democrat, wants to be too closely identified with Wall Street’s financial industry, which most Americans still blame for the 2008 economic tsunami from which the country still hasn’t recovered. During this presidential season, both Hillary Clinton and Bernie Sanders vied to be the champion of Wall Street reform. HUD Secretary Castro, a former San Antonio mayor, has been auditioning for the role of Clinton’s vice presidential running mate, but many pundits view him as too conservative and cautious — and too pro-business — to help Clinton galvanize both Latino voters and Bernie Sanders’ supporters in the contest with Donald Trump. With his announcement this week, Castro can claim to be on the side of homeowners and communities against Wall Street speculators.
HUD’s DASP program, started by the Obama administration in 2012, became a part of the larger problem by auctioning off its distressed mortgages to the highest bidder, which allowed Wall Street firms to take ownership and accelerate foreclosures.
“This whole process shows just how tilted the playing field is for the big banks and hedge funds,” said Warren, who has been the Senate’s most vocal critic of Wall Street abuses, last year. “Many of these banks and funds were responsible for fueling the housing bubble in the first place — leading to the crash that hit these families like a punch to the gut. Now these same banks and funds are turning around and scooping up these loans at bargain-basement rates so they can profit from them a second time.”
The new HUD policy changes to fundamentally reform the program, resulting in more mortgage pools being sold to non-profits, more foreclosures avoided, and more vacant property turned into affordable housing. The changes include:
Help existing homeowners facing foreclosure remain in their homes by modifying their mortgages to reflect current market values — a strategy called “principal reduction.” Until now, both HUD and Fannie Mae, under pressure from the banking industry, had resisted this approach. Now, even private equity firms and hedge funds will have to use that strategy in reworking troubled mortgages.
Increasing the sale of HUD’s distressed mortgages to non-profit organizations
A commitment to work with local governments and non-profits to target sales to those who will help homeowners keep their houses and expand the supply of affordable housing.
Far greater provisions for transparency in the sale process
“These recent HUD changes move in the direction of common sense policy,” said Maurice Weeks of the Center for Popular Democracy, one of the groups that coordinated the nationwide grassroots campaign. “We shouldn’t be handing over our neighborhoods at bargain basement prices to Wall Street.”
“HUD’s bulk mortgage sale program has been fueling the speculator buy-up of our neighborhoods,” observed San Francisco Supervisor John Avalas, one of many local elected officials who supported the campaign. “Finally, HUD is making changes to this mortgage sales program that better prioritize what our communities need — saving more homes from foreclosure and creating more affordable housing. It’s about time!”
Sarah Edelman, director of housing policy for the Center for American Progress and coauthor of a new report on the problem, told the New York Times that the policy changes “significant improvements” in the loan sale program.
“The policies announced today are a promising step toward more responsible loan auctions,” she said.
Millions of homeowners are still delinquent on the mortgage payments, many through no fault of their own, but because of predatory and reckless lending practices as well as the sluggish recovery of the economy in terms of restoring the incomes of working families. As a result, federal officials and community activists expect there to be many more sales of troubled mortgages that were guaranteed by the federal government.
The policy changes are a culmination of several years of research and activism by grassroots groups on the front lines of the nation’s housing and banking crisis.
Several years ago, different community groups began noticing the growing presence of Wall Street speculators in their neighborhoods, one of the aftershocks of the epidemic of foreclosures. Several local groups examined records, interviewed tenants, and issued reports documenting that in areas where Wall Street investors own a significant number of these single-family homes — including Atlanta, Las Vegas, Phoenix, Miami, Tampa, Orlando, Charlotte, Dallas, Chicago, Detroit, Denver, and Los Angeles and nearby Riverside — their practices have harmed tenants and undermined long-term neighborhood stability.
The activists discovered that HUD, Fannie Mae, and Freddie Mac — which own or guarantee the distressed mortgages on many single-family homes — were part of the problem. Over the past few years, they’ve auctioned off about 150,000 non-performing loans that they want to get off their books. Of these loans, fewer than two percent have gone to nonprofit buyers. The rest (98 percent) have gone to Wall Street companies. As of last fall, five Wall Street firms — Lone Star, Blackstone Group, Angelo, Gordon & Co., Selene Residential Partners, and the Royal Bank of Scotland — accounted for 64 percent of all the public loan sales. Last year, Goldman Sachs popped up on the purchaser list for the first time, buying loans from Freddie Mac.
The community organizers and their researchers also exposed a double standard. Although Fannie Mae and Freddie Mac have been unwilling to offer principal reduction to struggling homeowners, and HUD has been unwilling to require principal reduction as part of its program, these agencies often offer steep discounts when they sell these mortgages to Wall Street speculators, who typically foreclose on the homeowners, adding to their inventory of homes scooped up in private foreclosure sales. In unloading these mortgages, the federal agencies often ignored the housing needs of local communities.
The grassroots groups enlisted the help of two national umbrella organizations — the Center for Popular Democracy (a network of community organizing groups) and Local Progress (a network of progressive local elected officials) — as well as Senator Elizabeth Warren, who championed the cause in Congress. These used a variety of tactics — protest actions, internet petitions, and muckraking research — to generate media attention and put pressure on the Obama administration.
These groups — many of which had been working on banking issues for over a decade — launched their national campaign in September 2014. They were relentless in pressuring HUD, Fannie Mae and Freddie Mac to prioritize non-profits over speculators in their sales of troubled mortgages. In particular, they demanded that these agencies prioritize sales to non-profit Community Development Finance Institutions (CDFIs) that have the capacity to purchase large inventories of underwater mortgages and distressed properties — including vacant houses that owners lost through foreclosure and occupied homes where underwater borrowers are on the brink of foreclosure — and stabilize them as affordable housing. The CDFIs were being crowded out by hedge funds working hand in hand with HUD, Fannie Mae, and Freddie Mac.
At the start of the campaign, the activists released a report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities, that explained why HUD’s policy of favoring Wall Street investors was exacerbating the nation’s housing crisis.
A week before Christmas in 2014, at rallies outside local HUD offices, community groups in Los Angeles, San Francisco and Boston presented HUD with their “Grinch of the Year” award for refusing to fix the DASP program.
“By auctioning pools of delinquent loans to the highest bidders — vulture capitalists — HUD is driving unnecessary foreclosures and contributing to the rise of ‘Wall Street Landlords,’” said Gisele Mata, an organizer with the Alliance of Californians for Community Empowerment, a statewide organizing group that played a key role in the national campaign, at the press conference.
In June 2015, the campaign released another report, Do Hedge Funds Make Good Neighbors? How Fannie Mae, Freddie Mac and HUD are Selling Off Our Neighborhoods to Wall Street, at a protest rally in front of the Santa Monica office of the Blackstone Group, the private equity giant (with over $300 billion in assets under management), which had become the largest landlord of single-family rentals in the country by gobbling up distressed mortgages - including many sold by HUD — at bargain-basement prices. Since 2012, the report found, federal agencies had sold over 120,000 delinquent mortgages to Wall Street hedge funds and private equities firms. Bayview Acquisitions, largely owned by Blackstone, has bought 24,000 of these mortgages. The report unearthed an array of disturbing business practices, including failure to make repairs and the harassment and illegal eviction of occupants. An investigation by the New York Times published last week confirmed earlier findings of abusive practices. The Times revealed, for example, that Lone Star had pushed thousands of borrowers into foreclosure and failed to negotiate with homeowners to modify their mortgages so they could remain in their homes.
Through Local Progress and 17 progressive mayors from across the county,, the campaign persuaded the U.S. Conference of Mayors to pass resolution asking HUD to change its policy.
Last September, community activists and local elected officials from around the country converged in Washington, D.C. to bring the cause directly to federal officials. After a rally at which Senator Warren and Congressman Michael Capuano (D-Mass) demanded that HUD curb its mortgage sales to Wall Street investors, the activists met with senior officials at HUD and the Federal Housing Finance Agency, which oversees the mortgage giants Fannie Mae and Freddie Mac. A few weeks later, the New York Times published an editorial, “Foreclosure Abuses, Revisited,” calling on HUD to suspend its sales of distressed mortgages until federal agencies adopt significant reforms.
By March of this year, the campaign had built enough momentum to get 45 members of Congress to send a letter to HUD and FHFA in support of the campaign’s demands.
In April, Rep. Raul Grijalva (D-Arizona) wrote to Castro - by then on many lists of potential vice presidential candidates - criticizing HUD for worsening the housing crisis with its favorable treatment of Wall Street investors and urging him to “end to the days of casino-level gambling with other peoples’ livelihoods.” That same month, the campaign sent Castro a petition with over 100,000 signatures, demanding that he change HUD’s policies on disposing troubled mortgages.
Along with the changing political climate and Castro’s ambitions, the community organizing groups’ persistence paid off.
With more homes in the hands of non-profits instead of Wall Street speculators, communities will gain further control over their neighborhoods and be less at the mercy of Wall Street. Community groups now plan to work city by city, and state by state, to make sure that HUD sells delinquent mortgage pools to mission-driven purchasers, and to continue the fight for housing justice and community control to strengthen and protect neighborhoods across the country.
By PETER DREIER
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Time for a Moratorium on Charter Schools
Al Jazeera America - April 14, 2015, by Amy Dean - Charter schools are everywhere. Not long ago, these publicly funded...
Al Jazeera America - April 14, 2015, by Amy Dean - Charter schools are everywhere. Not long ago, these publicly funded but privately run institutions were a relative rarity. Those that existed served mostly as experimental academies whose successful lessons could be applied elsewhere in their host school districts. But in the last 15 years, swaths of the U.S. public education system have been turned over to charters. In fact, they are being used as a means to crush teachers’ unions and to pursue high-stakes testing.
Charter advocates justify this ascent by promising an antidote to the disappointing outcomes of traditional public schools in segregated and underfunded urban districts. But the research is in: Charter schools have failed to deliver on their promises.
It is time lawmakers freeze their growth and consider how to provide the best education possible for all students.
Underwhelming performance
There are recent precedents for a moratorium on charter schools. Philadelphia, which issued dozens of charter licenses before 2008, did not allow any new ones from 2008 to 2015. The Chicago School District declared a freeze on charters for the 2015–16 school year. Connecticut and Delaware are considering similar actions. Other school boards and states should follow suit.
As a bevy of recent studies prove, charter schools are not substantially outperforming neighborhood public schools. In Arizona, for example, “on average, charter schools in Arizona do no better, and sometimes worse, than the traditional public schools” according to a study by the Brookings Institution. A similar study in Ohio showed that public schools were producing better results than their charter peers in most parts of the state. In Illinois the Institute on Metropolitan Opportunity found that Chicago’s charter schools are “less likely to be racially or ethnically diverse” than and “consistently underperform” their public school peers.
That charter schools are not doing better than traditional public schools is particularly disturbing, since they have a host of advantages. Notably, many charters cherry-pick their students. A 2013 study by Reuters found that charter schools employ complicated screening mechanisms to admit only students who are most likely to succeed. This ensures that students from deeply impoverished families or households where English is not spoken at home are less likely to gain admission. These methods include using English-only documents, demanding proof of citizenship (which is illegal) and narrowing application windows to a few hours.
Charters also regulate the composition of their student bodies through expulsions. In 2014 the Chicago School District reported that public schools expelled 182 students out of 353,000. By contrast, charter schools booted 307 students out of 50,000. The expelled students end up back in the public schools, which become the institution of last resort. Charter schools should in theory register superior test scores, since they are not serving some of the highest-need students. Yet that has not been the case on the whole.
Charters have fallen short in terms of transparency and accountability too. A 2010 review from the Philadelphia controller’s office found that the city’s charter schools had little oversight from the understaffed and underfunded school district. Numerous charter operators have been charged with corruption and misuse of funds.
A national moratorium on charter schools would stop the hemorrhaging of funds from traditional public schools.
A 2014 report by two anti-education-privatization organizations, the Center for Popular Democracy and Integrity in Education, found $136 million in fraud and abuse in 15 states. A follow-up study (PDF) in Pennsylvania revealed “charter school officials have defrauded at least $30 million intended for Pennsylvania schoolchildren since 1997.” Some of the questionable dealings may not be illegal because of the intricacies of state laws, but there is little doubt that public money is being wasted.
A recent review of charter school scandals in Florida and Michigan by The Washington Post listed numerous cases of real estate flipping, in which charter schools were used as vehicles for exorbitant profits. Michigan’s largest charter operator, National Heritage Academies gets a 16 percent return on its investment in rent from the state — nearly twice what most commercial properties receive.
A nationwide moratorium
Chicago and Philadelphia provide good examples for setting moratoriums on charter schools, but the freeze has been limited in both cities. Philadelphia’s School Reform Commission did not approve a new charter school in the last seven years. But the number of students enrolled at the existing charters continued to grow, doubling from 2007 to 2015. This year the commission approved five new charters — a regrettable reversal of the moratorium.
Chicago Mayor Rahm Emanuel has declared that no new charter schools will be funded during the 2015–16 year. However, there is good reason to believe that he is simply playing politics and that he will not extend the moratorium. He faced a tough re-election battle, and the temporary halt was seen as an attempt to lure supporters of public education back into his camp. His poll numbers plunged in 2013 when he closed 50 neighborhood public schools, mostly in black and Hispanic neighborhoods that turned out for him in the 2011 election. His attempts to use the moratorium to appeal to disaffected voters shows that black and Latino parents, whom advocates of the charter industry insist want more charter schools, are hardly as enamored with charters as previously thought.
Nationwide, the expansion of charter schools continues unabated. Charter advocates report that 500 new charter schools opened during the 2014–15 school year, enrolling 348,000 students. One in 20 American students is enrolled in a charter school.
It is time for this to stop.
Charter advocates claim that they are data-driven technicians who pay attention to evidence of what works. But research does not support their preferred education policies. A national moratorium on charter schools would stop the hemorrhaging of funds from traditional public schools. It would also allow time to address the corruption that has plagued the charter industry. This would create an opportunity for some reflection on what actually works best for educating our children.
Amy B. Dean is a fellow of the Century Foundation and a principal of ABD Ventures, a consulting firm that works to develop innovative strategies for organizations devoted to social change. She is a co-author, with David Reynolds, of “A New New Deal: How Regional Activism Will Reshape the American Labor Movement.”
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera America's editorial policy.
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Two weeks before hurricane season, Puerto Rico is not ready, groups warn
Two weeks before hurricane season, Puerto Rico is not ready, groups warn
“One thing is evident at the core of the response,” said Ana Maria Archila, co-executive director at the Center for...
“One thing is evident at the core of the response,” said Ana Maria Archila, co-executive director at the Center for Popular Democracy and a part of the Power 4 Puerto Rico coalition. “There is a crisis of democracy. The federal government is acting as if the people of Puerto Rico are not constituents.”
Read the full article here.
NY Fed names Williams to top post amid political backlash
“Yet the drum beat of criticism in recent weeks, including a demonstration outside the New York Fed and letters from...
“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.
MSNBC - The ED Show - Boehner pushes exclusionary school legislation
MSNBC The ED Show - May 9, 2014 - John Boehner pushed the charter school agenda one step further by supporting...
MSNBC The ED Show - May 9, 2014 - John Boehner pushed the charter school agenda one step further by supporting legislation to pour even more funding into the program. Ed Schultz, Ruth Conniff, and St. Rep. Dwight Bullard discuss.
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Issue committees pump $86M into Colorado election
For some corporations and advocacy groups, Colorado's jam-packed ballot has meant opportunity. And they don't just care...
For some corporations and advocacy groups, Colorado's jam-packed ballot has meant opportunity.
And they don't just care about political candidates. In fact, issue committees — which stand on the front line of fights over proposed amendments and propositions — have raised more than 10 times the amount of money of Colorado Democrats and Republicans seeking state or local office. These committees have drawn in more than $86 million, a staggering difference when compared to the approximately $7.3 million raised by state and local Democrats and Republicans.
These statewide issue fights — this year races concerning ColoradoCare, the minimum wage and a so-called "right to die" proposition have dominated much of the conversation — can give out-of-state groups a chance to get more bang for their buck and jump into statewide elections, which might affect their bottom line more than federal races, Colorado State University political science professor Bob Duffy said. States like Colorado are less expensive to campaign in than, say, California, which makes it appealing for groups looking to affect legislation without breaking the bank, he said.
ELECTION: Haven't voted yet? Here's what to know
"Typically those elections are cheaper and also low-information elections," he said, pointing out that sometimes people have less information about statewide ballot measures than more high-profile races. "So a little money can go a long way. A big fish can have a much bigger impact in a small pond than they can in a big pond."
In the fight over Amendment 72, for example, the parent company of tobacco giant Philip Morris has bankrolled No Blank Checks in the Constitution, a group fighting against the proposed hike in cigarette taxes. Philip Morris is one of the largest tobacco companies in the world, and is known for products including Marlboro cigarettes. It has so far spent more than $16 million on the campaign. That alone is more than Democrats and Republicans running for state and local offices have raised.
"Obviously cigarette sale declines puts a real crimp in their bottom line, and they have an opportunity (to fight it), and it's probably cheaper to do it here than in California, for example," Duffy said.
Oftentimes out-of-state groups will use statewide races as a test case to see how effectively they can influence it — and again, it makes most sense to do that in a less-expensive race than in a large state with lots of media markets — and sometimes it's meant as a warning shot to groups who might be considering similar legislation in other states, Duffy said.
Opponents of the "right to die" proposition have gotten much of their funding from Catholic groups. The Archdiocese of Denver, for example, has contributed more than $100,000 to the campaign fighting Proposition 106, which would allow physicians to prescribe lethal doses of medication to terminally ill patients who met certain criteria so they could end their own lives.
Colorado Families for a Fair Minimum Wage, a group advocating for Amendment 70, which would raise the state's minimum wage to $12 an hour by 2020, has raised almost $5 million, including more than $1 million from the Center for Popular Democracy Action, a New York-based advocacy group which focuses on several social justice issues. Keep Colorado Working, a group opposing the hike, has raised about $1.7 million, and has also received out-of-state support, including $50,000 from Florida-based Darden, the company that owns Olive Garden and LongHorn Steakhouse, among other brands.
"Especially after 2010, some federal election rulings unleashed some money," Duffy said, referencing a few court decisions on campaign finance, included Citizens United. "The floodgate really opened up."
By Alicia Stice
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Americans Don’t Miss Manufacturing — They Miss Unions
Filed under In Real Terms This is In Real Terms, a column analyzing the week in economic news. Comments?...
Filed under In Real Terms
This is In Real Terms, a column analyzing the week in economic news. Comments? Criticisms? Ideas for future columns? Email me or drop a note in the comments.
U.S. manufacturing jobs, I argued a few weeks ago, are never coming back. But that doesn’t stop politicians from talking about them. Donald Trump scored his knockout blow in Indiana in part by railing against the decision by Carrier, a local air-conditioning manufacturer, to shift production to Mexico. Bernie Sanders and Hillary Clinton have sparred throughout their race over who would best protect manufacturing jobs. And the man they are all trying to replace, President Obama, pledged during his reelection campaign to create a million manufacturing jobs during his second term; he’s still about 700,000 jobs short of that goal.
Candidates talk about manufacturing because of what it represents in the popular imagination: a source of stable, well-paying jobs, especially for people without a college degree. But that image is rooted more in nostalgia than in reality. Manufacturing no longer plays its former role in the economy, and not only because there are far fewer factory jobs than in the past. The jobs being created today often pay less than those of the past — sometimes far less.
A new report this week from the Labor Center at the University of California, Berkeley, found that a third of production workers — non-managers working on factory floors and in related occupations — earn so little that their families receive some form of public assistance such as food stamps or the Earned Income Tax Credit. Many of those workers are temps, who account for a growing share of factory employment. The median wage for a manufacturing production worker, according to separate data from the Bureau of Labor Statistics, was $16.14 an hour in 2015, below the $17.40 an hour for all workers.
On average, manufacturing jobs still pay better than most jobs available to people without a college degree. The median manufacturing worker without a bachelor’s degree earned $15 an hour in 2015, a dollar more than similarly educated workers in other industries.1 But those averages obscure a great deal of variation beneath the surface. Average manufacturing wages are inflated by high-earning veterans; newly created jobs tend to pay less. And there are substantial regional variations. The average manufacturing production worker in Michigan earns $20.80 an hour, vs.$18.86 in South Carolina, according to data from the Bureau of Labor Statistics.
Why do factory workers make more in Michigan? In a word: unions. The Midwest was, at least until recently, a bastion of union strength. Southern states, by contrast, are mostly “right-to-work” states where unions never gained a strong foothold. Private-sector unions have been shrinking across the country for decades, but they are stronger in the Midwest than in most other parts of the country. In Michigan, 23 percent of manufacturing production workers were union members in 2015; in South Carolina, less than 2 percent were.2
Unions also help explain why the middle class is healthier in the Midwest than in the Southeast, where manufacturing jobs have been growing rapidly in recent decades. A new analysis from the Pew Research Center this week explored the state of the middle class in different parts of the country by looking at the share of households making between two-thirds and double the national median income, after controlling for the local cost of living. In many Midwestern cities, 60 percent or more of households are considered “middle-income” by this definition; in some Southern cities, even those with large manufacturing bases, middle-income households are now in the minority.
Even in the Midwest, however, unions are weakening and the middle class is shrinking. In the Indianapolis metro area, where the Carrier plant Trump talks about is located, the share of households in the middle tier of earners has shrunk to 54.8 percent in 2014 from 58.9 percent in 2000. And unlike in some parts of the country, the decline in the middle class there has been primarily driven by people falling into the lower tier of earners, not moving up. The Carrier plant, where workers make more than $20 an hour, is unionized.
Cause and effect here is complicated. Unions have been weakened by some of the same forces that are driving down wages overall, such as globalization and automation. And while unions benefit their members, economists disagree over whether they are good for the economy as a whole. Liberal economists note that overall wages tend to be higher in union-friendly states; conservative economists counter that unemployment tends to be higher in those states, too.
But this much is clear: For all of the glow that surrounds manufacturing jobs in political rhetoric, there is nothing inherently special about them. Some pay well; others don’t. They are not immune from the forces that have led to slow wage growth in other sectors of the economy. When politicians pledge to protect manufacturing jobs, they really mean a certain kind of job: well-paid, long-lasting, with opportunities for advancement. Those aren’t qualities associated with working on a factory floor; they’re qualities associated with being a member of a union.
#FedSoWhite
When the Federal Reserve’s policy-making Open Market Committee meets next month to decide whether to raise interest rates, every one of the 10 voting members will be white. Eleven of the 12 regional Fed bank presidents, who rotate voting responsibility, are white, and not one is black or Latino. (Minneapolis Fed President Neel Kashkari is Indian-American.) The Fed does a bit better when it comes to gender balance — Chair Janet Yellen is a woman, as are three other voting FOMC members. But overall, the people making U.S. monetary policy are disproportionately white men.
Does that matter? More than 100 members of Congress think so. In a letter to Yellen on Thursday, 11 senators and 116 members of the House of Representatives — all of them Democrats — wrote that they are “deeply concerned that the Federal Reserve has not yet fulfilled its statutory and moral obligation to ensure that its leadership reflects the composition of our diverse nation.” The letter is only the latest effort to draw more attention to the Fed’s lack of diversity: A report earlier this year from the liberal Center for Popular Democracy highlighted the issue, and several members of Congress also asked Yellen about it when she testified on Capitol Hill in February. (Bernie Sanders signed the letter. Hillary Clinton, who wasn’t eligible to sign since she isn’t in Congress, said she agreed with the message.)
It isn’t clear whether policy would be any different if the Fed were more diverse. But the letter writers and their allies argue that at the very least the Fed’s lack of representation could be skewing the way policymakers view the economy. By law, the Fed must balance two competing goals: maintaining stable prices (which the Fed defines as inflation of about 2 percent per year) and promoting full employment. In recent months, Yellen and her colleagues have begun the process of raising interest rates — concluding, in effect, that with the unemployment rate down to 5 percent, the “full employment” part of their mandate is largely complete. But the unemployment rate for African-Americans was 8.8 percent in April, as high as the white unemployment rate was in the middle of the recession. For them, “full employment” remains a long way off.
The long road back
Last week I noted that Americans who graduated from college during the recession are still struggling to make up for the slow start to their careers. The Wall Street Journal this week told the even more harrowing tale of people who lost jobs during the recession, many of whom still bear deep financial and psychological scars.
That isn’t surprising. Losing a job is a significant setback in any context, but it is far worse when a bad economy makes it hard to get back to work quickly. People who are laid off in a recession are far more likely to become unemployed for more than six months, which can then make it harder to find a job even once the economy improves. One estimate cited by the Journal found that people who lose jobs during a recession continue to make 15 to 20 percent less than their peers who kept their jobs, even a decade or more after the recession ended. And that is just in the typical recession; the most recent downturn was far worse.
Number of the week
Just under 8 million Americans were looking for work in March, and employers had 5.8 million jobs available to be filled. Economists look at the ratio of those numbers as a gauge of the health of the labor market, and by that measure, the economy is looking good: There were 1.4 unemployed workers for every open position in March, the fewest since 2001.
Don’t take the workers-per-job ratio too literally, though. The official definition of “unemployment” leaves out plenty of people who want jobs, and the government count of job openings is also incomplete, counting only positions for which companies are actively recruiting. But alternative measures of both unemployment and openings show the same trend: There are more jobs and fewer workers to fill them. That’s good news for workers who want jobs, and also for those who already have them — at some point, companies that want to attract workers will have to start offering higher pay.
Elsewhere
Americans are having fewer babies. Janet Adamy looks at the causes and consequences of the U.S. “baby lull.”
Eduardo Porter argues the government should do more to create good jobs for those displaced by the transition toward a service-based economy.
Timothy O’Brien, who saw Donald Trump’s tax returns as part of a lawsuit a decade ago, provides some hints as to what voters might learn if Trump ever releases the documents publicly.
Lam Thuy Vo and Josh Zumbrun dive into the data on the jobs created since the start of the recession.
In much of the country, poor people don’t have access to broadband internet, according to a Center for Public Integrity investigation.
By Ben Casselman
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Scarlett Johansson and Her Fellow Avengers Raise $500,000 for Puerto Rico Relief
Scarlett Johansson and Her Fellow Avengers Raise $500,000 for Puerto Rico Relief
Johansson and the John Gore Organization partnered for a benefit performance of Our Town in Atlanta....
Johansson and the John Gore Organization partnered for a benefit performance of Our Town in Atlanta.
Read the full article here.
Liberals turn to Fed in populist push
Left-leaning groups and lawmakers are taking their populist economic fight to the Federal Reserve, as they seek to...
Left-leaning groups and lawmakers are taking their populist economic fight to the Federal Reserve, as they seek to exert new influence over key monetary decisions and a pair of vacancies at the central bank.
The Fed has faced heavy criticism from the right for years, but the other side of the aisle is now beginning to publicly push the institution for preferred policies. With Congress and the White House seemingly set to butt heads for the next two years, left-leaning community and labor groups are turning to the Fed in an attempt to get an economic policy boost for middle- and working-class Americans.
“In the face of the fiscal side not being really a realistic option to promote an economic recovery, the most important economic policymaker in the United States is the Federal Reserve,” said Shawn Sebastian, policy advocate for the Center for Popular Democracy.
And after successfully driving President Obama to nominate Janet Yellen to lead the Fed, some Senate Democrats are again pressing the administration about openings at the central bank. Sens. Elizabeth Warren (D-Mass.) and Joe Manchin (D-W.Va.) are vocally calling on Obama to nominate tough-nosed Wall Street watchdogs to fill out two board spots that often are filled by academics or economists.
The resurgence of left-leaning interest in the Fed’s operations further complicates the bank’s efforts to remain above the political fray. The Fed has weathered years of criticism from the right, which argues its unprecedented foray into monetary stimulus after the recession was a recipe for disaster.But now, with the Fed preparing to finally dial back years’ worth of quantitative easing, it’s the other side that is airing concerns. This time, the worry is that the Fed could tighten policy too quickly, even as millions of Americans still are looking for work or grappling with stagnant paychecks.
“I have been concerned for some time that when the Federal Reserve began to tighten policy that they would be subject to considerable pressure from people who don’t want them to do that,” said Donald Kohn, a former Fed vice chairman now with the Brookings Institution.
A host of left-leaning groups, including the AFL-CIO and the Economic Policy Institute, have joined forces to take a populist message directly to the Fed. The groups have protested a central bank powwow in Jackson Hole, Wyo., and have held public protests outside the institution’s headquarters in Washington.
The leftward push on the Fed follows those groups notching a major victory at the central bank in 2013. With Obama reportedly favoring economic adviser Lawrence Summers to replace the outgoing Ben Bernanke as head of the Fed, Democrats on and off Capitol Hill embarked on a concerted campaign to get Yellen nominated for the top job instead.
Democratic lawmakers took the rare step of publicly advocating for Yellen, then the Fed’s vice chairwoman, before a nomination was made, effectively announcing opposition to Summers in the process. Though Obama defended Summers in public, he ultimately deferred to that pressure and nominated Yellen for the job.
Now, Warren and Manchin are hoping to exert more influence, calling on Obama to fill two openings at the seven-member board with tough supervisors who “have a demonstrated commitment to not backing down when they find problems.”
Fed governors are given a 14-year term, so if those two find success on that front, the end result could be a considerable shift in how the central bank operates as a financial regulator. And any new voices would likely receive an open hearing from Yellen, whose background is as an economist, not a regulator.
“My impression is that Chair Yellen is running the system by consensus in a considerable way, she consults widely,” said Kohn.
Since taking the job, Yellen has made a concerted effort to place the Fed’s deliberations within the context of the working class. One of her first acts as the Fed’s new leader was to address at a Chicago event how the central bank hoped to boost jobs, and she has agreed to meet with left-leaning protestors to hear their concerns.
But Yellen’s openness to those new voices is leaving some unsettled.
“There’s a trend here that’s pretty clear and pretty concerning,” said Steven Lonegan, director of monetary policy at American Principles in Action, which advocates for tighter Fed policy, including a return to the gold standard.
“You can’t start manipulating the value of our money because you have a specific political agenda,” he added.
But these new advocates argue the Fed has always been subject to politics. Sebastian argued that Fed officials and those that track Fed policy skew heavily from corporate and banking interests, leaving a “Main Street” voice out of the picture.
“Every person carries political baggage,” he said. “All we’re trying to do is have that conversation reflect reality.”
But even the people behind the new leftward push on the Fed acknowledge advocacy of the publicly mysterious institution is somewhat novel. Conservative criticism of the Fed has been around for years, first helmed by former Rep. Ron Paul (R-Texas), but a more liberal effort for influence has not been seen in decades.
“This is a new space for us,” said Sebastian. “We don’t know what the effect of this type of engagement will be.”
Source: The Hill
Janet Yellen Was A Great Fed Chair. So Why Is The Economy Still Broken?
Janet Yellen Was A Great Fed Chair. So Why Is The Economy Still Broken?
When President Barack Obama reluctantly nominated Janet Yellen to the most powerful economic post on the planet in...
When President Barack Obama reluctantly nominated Janet Yellen to the most powerful economic post on the planet in October 2013, Republican Party leaders, backed by much of the economics establishment, warned of looming economic ruin. As Federal Reserve chair, Yellen would lead the country into a hyperinflation calamity on par with Weimar Germany or, at least, a return to the misery and malaise of the Jimmy Carter years.
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