Fed moves to quell charges of opacity, lack of diversity
Fed moves to quell charges of opacity, lack of diversity
The Federal Reserve has rolled out a series of announcements, online forums and meetings with Americans this year in...
The Federal Reserve has rolled out a series of announcements, online forums and meetings with Americans this year in response to outspoken civic groups and many Democrats, including Hillary Clinton, calling for a more transparent and inclusive U.S. central bank.
The latest critique came this week when Fed Up, a labor-affiliated coalition pushing for reforms, said it was "disappointing" that Nicole Taylor, a black woman and dean of community engagement and diversity at Stanford University whose term as director at the San Francisco Fed soon expires, would be succeeded on the board by Sanford Michelman, a white man who is co-founder of law firm Michelman & Robinson LLP.
"It's definitely a step back in terms of what I'd like to see on our board. We're working actively to build representation of women and minorities," John Williams, president of the San Francisco Fed, said on Wednesday in response to reporters' questions, noting the decision was made by private banks in his district.
After years of resisting more overt political efforts to curb its independence, the Fed this year has appeared willing to shine a light on its historically opaque process of choosing district Fed presidents, and also to show it is more sensitive to racial and gender diversity.
After the Philadelphia, Dallas and Minneapolis Fed banks last year all chose as presidents men with past ties to Goldman Sachs, the Atlanta Fed hosted a public webcast this month and said it seeks a "diverse set of candidates" for its new chief, raising hopes it would name the first black or Latino Fed president in the central bank's 103-year history.
"It's not just because we want to go and say we're diverse," Loretta Mester, Cleveland Fed president, said at a meeting with workers a day after her bank launched online applications for the public to recommend directors and advisers. "It's about getting different view points that are very helpful to us in ... thinking about the economy and understanding the trends."
The regional Fed presidents have rotating votes on policy, except for the head of the New York Fed who has a permanent voting role. Unlike Fed governors who are selected by the White House and approved by the Senate, the presidents are chosen by their district directors, half of whom are themselves picked by private local banks that technically own the Fed banks.
Critics say the dizzying structure leaves the Fed beholden to bankers who do not represent the public, and they point out that 11 of 12 district presidents are white while 10 are men.
By Jonathan Spicer and Dion Rabouin
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Equal pay is widely understood to be a feminist issue — so why isn't the Fight for $15?
Equal pay is widely understood to be a feminist issue — so why isn't the Fight for $15?
The idea that men and women should receive equal pay for equal work is probably among the least controversial feminist...
The idea that men and women should receive equal pay for equal work is probably among the least controversial feminist positions because, in 2017, it's pretty difficult to argue against.
Hollywood actresses like Patricia Arquette have traded in their standard acceptance speeches for impassioned calls for wage equality, while Facebook COO Sheryl Sandberg created a whole new brand of feminism when she began coaching women on how to combat workplace inequality by "leaning in," making equal pay part of a mainstream dialogue...
Read full article here.
Chicago's minimum wage fight officially kicks off with $15 proposal
Crain's Chicago Business - May 27, 2014, by Greg Hinz - Ending months of preliminaries, a group of 10 or more Chicago...
Crain's Chicago Business - May 27, 2014, by Greg Hinz - Ending months of preliminaries, a group of 10 or more Chicago aldermen tomorrow is expected to introduce legislation to bring a $15 minimum wage to Chicago.
But at least for now, the measure faces a very uphill road, with Mayor Rahm Emanuel believed to favor some increase but not one of that size.
News of tomorrow's development came from Ald. Roderick Sawyer, 6th, who in a conference call with reporters today said that the measure raising the rate from the current $8.25 statewide figure would be phased in over time.
Mr. Sawyer did not provide further details but suggested that small businesses might be given more time to adapt than large companies.
He said "about 10" aldermen will co-sponsor the ordinance, most of them members of the City Council's progressive caucus. Another member of that group, Rick Munoz, 22nd, said he believes that, once introduced, the measure eventually will get support "in the high teens."
"In the high teens" is not enough to pass a bill in the 50-member City Council, where 26 votes are needed for a majority.
Mr. Emanuel last week appointed eight other aldermen to a panel that will recommend within 45 days how much to hike the minimum wage.
In announcing that move, the mayor did not say how much the wage should go up, only that it should rise because "Chicagoans deserve a raise." But, given Mr. Emanuel's extensive backing from business as he nears re-election, my suspicion is that he will end up favoring a hike that's less than that pushed by the Sawyer group. That would allow Mr. Emanuel to present himself as a moderate of sorts — someone who's for the working person but not an extremist.
Mr. Sawyer's announcement came at an event at which Raise Chicago, an advocacy group, released a report suggesting that a $15 minimum wage would bring substantial benefits.
Specifically, it said, the hike would boost wages in the city by a collective $1.5 billion, stimulating economic activity that would create 5,300 new jobs and $43 million in new tax revenue, while slashing job turnover rates "as much as 80 percent."
The move for an increase in the Illinois minimum wage is stalled, at least for now, but the issue has become a very hot subject nationally.
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Ten Ways to Combat Upward Redistribution of Income
Moyers & Co - January 1, 2015, by Dean Baker - The big gainers in the last three decades (aka the one percent) like...
Moyers & Co - January 1, 2015, by Dean Baker - The big gainers in the last three decades (aka the one percent) like to pretend that their good fortune was simply the result of the natural workings of the market. This backdrop largely limits political debate in Washington. The main difference is that the conservatives want to keep all the money for themselves, while the liberals are willing to toss a few crumbs to the rest of the country in the form of food stamps, healthcare insurance, and other transfers.
While the crumbs are helpful, the serious among us have to be thinking about the unrigging of the economy so that all the money doesn’t flow upward in the first place. Here are 10 ways in which we should be looking to change the structure of the market in 2015 so that all the money doesn’t flow to the one percent.
In all these areas changes will be difficult, since the one percent will use their wealth and power to ensure that the rules not be rewritten to benefit the bulk of the country. However, this list should provide a useful set of market-friendly policies that will lead to both more equality and more growth.
1. Expanded Trade in Medical Care
The Affordable Care Act extended coverage to millions of people and, for the first time, allows people the freedom to quit jobs they don’t like and still have access to insurance. Nonetheless, we still pay close to twice as much per person for our health care as people in other wealthy countries.
If our trade policy were not dominated by protectionists, it would be directed toward making it easier for qualified foreign physicians to practice in the United States, potentially saving patients tens of billions every year. Even with the federal government committed to protectionist policies, nothing stops state governments from seeking out lower-cost care for Medicaid patients in other countries. The savings, which can run into the hundreds of thousands of dollars in some cases, can be shared with beneficiaries.
2. Prescription Drugs
This is part of the healthcare story, but a big-enough part to deserve a separate mention. Patent monopolies can allow drug companies to charge prices that are 100 times higher than the free-market price. The hepatitis-C drug Sovaldi sells in the United States for $84,000. The generic version is available in India for less than $1,000. State Medicaid programs can pay to send patients to India, along with one or more family members, and still have tens of thousands of savings that can be shared with beneficiaries.
3. Wall Street Sales Tax
The financial sector continues to rake in money at the expense of the rest of the country, courtesy of bailouts, too-big-to-fail insurance, and being largely exempt from taxes applied to other industries. Even the IMF argues that the financial sector is undertaxed.
While most members of Congress and presidential candidates are too indebted to Wall Street to push for a financial-transactions tax, states can get a foot in the door. It is possible to tax the transfer of mortgages on property within the state. A modest tax of 0.2 percentage points won’t affect normal mortgage issuance, but it will discourage the shuffling of mortgages and raise some serious revenue. This money can be used to fund needed public services and, in part, to support lower taxes in other areas.
4. Limiting CEO Pay
CEOs are able to arrange paychecks in the tens of millions of dollars in large part because corporate directors are effectively paid off to look the other way. The incentives can be radically altered if directors stood to lose their stipends if a say-on-pay vote by the shareholders was defeated.
State governments can put this into law for corporations chartered in their state. Also, any corporation can put this rule into their own bylaws. Since fewer than three percent of pay packages are voted down, any director who is confident enough that they will not be in the bottom three percent should be happy to support such a change in bylaws.
5. Limiting Pay at Nonprofits
Nonprofit organizations like universities, hospitals, and charities are hugely subsidized by taxpayers. Since most of their contributions come from people in the top income bracket, the ability to deduct charitable contributions effectively means that taxpayers are paying 40 cents of every dollar a rich person contributes.
Since taxpayers are out for much of the cost, it seems only fair to put some rules in place. (Actually, we already do.) How about a pay cap of $400,000 for any employee of a nonprofit? This is twice the pay of a cabinet officer. If a university or other nonprofit can’t find competent people who are prepared to work for twice the pay of a cabinet secretary, perhaps it is not the sort of organization that taxpayers should be supporting.
States can also get into the act on this one. Most states offer special tax treatment to nonprofits. They could apply the two-times-a-cabinet-member’s-pay rule to the nonprofits within their state.
6. Applying Sales Tax to Internet Sales
Jeff Bezos has become one of the richest men in the world because he was successful in expanding Amazon into a huge retailer that doesn’t have to collect the same sales taxes as corner grocery stores. There is no excuse for giving special exemptions to Amazon and other Internet retailers. The states that don’t yet tax Internet sales in their state should move quickly to do so. It makes no sense to subsidize giant retailers like Amazon at the expense of traditional mom-and-pop retail outfits.
7. Democratizing the Sharing Economy
Start-ups like Airbnb and Uber have quickly turned into multi-billion-dollar businesses, in large part by evading the regulations that apply to their traditional competitors. The plan here should be to modernize the rules for taxis, hotels and other outposts of the “sharing” economy and be sure they apply to everyone equally. You don’t get to operate an unsafe taxi driven by an alcoholic just because it’s ordered over the Internet.
In the case of Airbnb, local governments could quickly add some new competition by having local websites where people could list available rooms without paying fees to Airbnb. The advantage to the cities is that they could be sure that these rooms met fire safety and other requirements. Then the only people who listed on Airbnb would be people renting fire traps or other illegal units or who were too ill-informed to save themselves the Airbnb commission. (This gives “sharing” economy a whole new meaning.)
8. The Overvalued Dollar
Our economists are learning and have discovered the problem of secular stagnation. This means that many economists now recognize that the economy can suffer from a persistent problem of inadequate demand, leading the economy to run at below-potential levels of output and to have excessive unemployment.
Unfortunately, most economists still don’t feel they can talk about the most obvious cause of the lack of demand: the country’s large trade deficit. The annual deficit is currently more than $500 billion (at three percent of GDP). This has the same effect on the economy as if consumers were to massively cut back their annual consumption by $500 billion and instead put this money under their mattress. The lost demand translates into more than six million jobs.
The obvious solution is to reduce the value of the dollar against other currencies in order to make US goods and services more competitive internationally. The value of the dollar is a matter that is determined at the national policy level. In principle the United States could be negotiating for a lower-valued dollar in a big trade agreement like the Trans-Pacific Partnership. Instead it is pushing for stronger patent protection for Merck and Pfizer, stronger copyright protection for Disney and Mickey Mouse, and a system of business-friendly courts that can override laws in the United States and elsewhere.
9. Shorter Work Years and Work Weeks
If we can’t directly increase demand in the economy through lowering the value of the dollar, we can still increase the number of jobs by reducing the amount of time that people work on average. This is the secret of Germany’s economic miracle. It has had slower growth than the United States, yet it has seen a huge increase in employment in its recession recovery. The average work year in Germany has 20-percent fewer hours than in the United States.
One of the policies that has helped bring about job growth in Germany is work sharing. This policy encourages companies to cut back hours instead of laying off workers. Workers are compensated for their lost wages through the unemployment insurance system. Most states have work-sharing programs as part of their unemployment insurance system. The compensation rate is generally lower in the United States than in Germany (typically 50 percent, compared with 60 to 80 percent in Germany), but it still beats losing a job.
Other policies that go in the same direction are paid family leave and paid sick days. These policies are important in their own right but can help better divide the available work among those who want jobs. Another great feature of these policies is that we don’t have to wait for the president and Congress to take action. They can be implemented at the state and even local level.
10. The Federal Reserve Board
The last and possibly most important item on the list is the Federal Reserve Board. It will be coming under pressure from the Wall Street types to raise interest rates. The point of higher interest rates is to slow the economy and keep people from getting jobs. The Fed would do this because more jobs will mean that workers have more bargaining power and would be in a position to raise wages. In short a Fed move to raise interest rates is very directly about keeping workers from getting higher wages. (Most workers have only been able to achieve real wage gains when the unemployment rate has been low.)
Fortunately, there are efforts to apply some pressure in the opposite direction, most importantly by the Center for Popular Democracy. They aim to let the Fed governors in Washington and presidents of 12 district Fed banks know that people who care about jobs are watching the Fed’s actions. This should make it harder for the Fed to take steps to deliberately throw people out of work and reduce workers’ bargaining power.
That’s my list of the top 10 places where progressives can focus in 2015 on restructuring the economy in ways that prevent income from flowing upward. The list is hardly exhaustive, and I left out some obvious important areas, like strengthening unions, because everyone should know them. Let’s hope for a good year and some real progress in turning the economy around.
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Hold the Fed Accountable: Opposing View
USA Today - March 17, 2015, by Mark Weisbrot - Should the Federal Reserve raise interest rates in order to create more...
USA Today - March 17, 2015, by Mark Weisbrot - Should the Federal Reserve raise interest rates in order to create more unemployment and keep wages from rising? If the question were asked that way, the vast majority of Americans would say, "No!"
It is not posed in this manner, even though economists — including Fed economists — and many journalists who write for the business press know that this is exactly what the Fed will be doing when it raises interest rates.
Of course, the justification is that we "need" to do this in order to keep inflation from rising to harmful levels. But the Consumer Price Index is actually down slightly for the year ending in January; in other words, inflation is in negative territory. Why should anyone want to increase unemployment just to keep inflation down?
OUR VIEW: Why it's good news if Fed loses 'patience'
When the Fed increases unemployment, it increases it twice as much for African Americans as for everyone else. And higher unemployment also reduces wage growth much more for African-American workers and lower-wage workers. Across the board, more unemployment translates very directly into more income inequality.
This is no time to be increasing unemployment and inequality, and pushing down wages. Median household income in the U.S. is still down about 3% since the recession ended in mid-2009. For the vast majority of the workforce, wages have stagnated or declined since 1979. Meanwhile, in the first three years of the current economic recovery, the top 1% of Americans received 91% of all income gains.
Fortunately, for probably the first time in the Fed's century of existence, there is a grass-roots movement to hold America's central bank accountable to the voters, citizens and working people of this country. A coalition led by the Center for Popular Democracy is "Fed Up" and trying to make sure that the Fed doesn't cut off wage growth before it even gets rolling.
If America is to shed the title of "Land of Inequality," this is how it is going to happen: by more people becoming aware of how the Fed's monetary policy affects them and demanding that it change.
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Progressive Activists Take A Seat For The People At Federal Reserve Retreat
Progressive Activists Take A Seat For The People At Federal Reserve Retreat
Two years ago this week, the nonprofit Center for Popular Democracy and allied groups launched the Fed Up campaign,...
Two years ago this week, the nonprofit Center for Popular Democracy and allied groups launched the Fed Up campaign, aimed at making the Federal Reserve more accountable to workers and communities of color. They converged then on the Jackson Lake Lodge in Wyoming, where Fed officials decamp every year to discuss policy and hobnob with the economic elite.
How much political headway has the campaign made since then? This year, Fed Up activists were essentially put on the schedule for senior Federal Reserve officials, with a major meeting at the Jackson Hole summit.
The group met Thursday, the first day of the summit, with eight of the 12 presidents of the regional Federal Reserve banks and two members of the Federal Reserve Board of Governors.
Fed Up activists have met individually with the governors and regional bank presidents before; they spoke with some Fed officials less formally at the past two Jackson Hole gatherings. This is the first time, however, that their delegation of some 120 rank-and-file activists had met with so many of the central bank’s decision-makers in one place.
“It is kind of like a mini-FOMC,” said Fed Up campaign manager Jordan Haedtler prior to the event, likening it to a meeting of the Federal Open Market Committee, the Fed’s policymaking body.
The progressive campaign is calling for the central bank to wait for the economic recovery to reach more broadly across America before raising its benchmark interest rate again, a move that slows the pace of economic growth to head off price inflation.
It has also criticized the Fed for the lack of racial, gender and professional background diversity among its senior officials, arguing that only a central bank that looks like America can craft policy in the best interests of all citizens.
The Fed officials at the meeting were Esther George, president of the Federal Reserve Bank of Kansas City, which hosts the annual symposium; New York Fed president William Dudley; Dallas Fed president Robert Kaplan; Minneapolis Fed president Neel Kashkari; Cleveland Fed president Loretta Mester; Boston Fed president Eric Rosengren; San Francisco Fed president John Williams; Richmond Fed president Jeffrey Lacker, and Fed governors Stanley Fischer and Lael Brainard.
“They were really impressed with how well prepared we were,” said Haedtler after the meeting. “They were heartened by the discussion.”
“We’ll see how things go in September,” he added, referring to the next opportunity for an interest rate hike.
Bill Medley, a spokesman for the Kansas City Fed, also gave positive feedback about the meeting.
“It was a productive dialogue, as it always is, and we look forward to continuing the conversation,” Medley said.
Fed Up has had a banner year so far. Democratic presidential nominee Hillary Clinton embraced the broad contours of its platform in May after weeks of private discussion with group representatives.
“Secretary Clinton believes that the Fed needs to be more representative of America as a whole as well as that commonsense reforms — like getting bankers off the boards of regional Federal Reserve banks — are long overdue,” a Clinton spokesman said at the time.
But Clinton stopped short of signing on to a bolder reform proposal that Fed Up rolled out in April, which would turn the central bank system into an entirely public institution. The Federal Reserve Board of Governors is already a federal agency, whose top officials are nominated by the president and confirmed by the Senate. But the 12 regional banks it supervises are owned by the private financial institutions they serve. (Fed Up released a more detailed version of its idea on Monday.)
The private nature of these banks is a major reason why they are run overwhelmingly by white men with backgrounds in finance, Fed Up argues. There has never been a black or Latino president of one of the regional banks, the group notes in its reform proposal, and one-third of the current bank heads are alumni of Wall Street power player Goldman Sachs.
Fed Up’s moment at this year’s Jackson Hole symposium was not without its hiccups.
Earlier this month, Fed Up were informed that the Jackson Lake Lodge had canceled over a dozen of its room reservations. The hotel said a “computer glitch” had led to the overbooking of 18 rooms. But the fact that 13 of those rooms were booked by Fed Up raised concerns that they were being targeted.
Although the activists found lodging at a nearby resort, Fed Up filed a complaint with the U.S. Department of Justice, and members of Congress sympathetic to their cause sent Fed Chair Janet Yellen a letter asking for an explanation.
In an apparent gesture of detente, George, the Kansas City Fed president, offered Fed Up the big meeting, and the campaign withdrew its objections to the lodging snafu.
Fed Up agreed also to limit its presence in the lodge’s halls during a scheduled cocktail hour. In the past, activists have clustered inside the hotel to confront Fed officials in person. The group held a press conference-cum-rally outside the lodge before Thursday’s meeting. It also plans to run teach-in seminars and to canvass the city’s low-income neighborhoods to spread the word about Fed reform.
But Haedtler, Fed Up’s campaign manager, wanted to focus on Thursday’s meeting. It is evidence, he said, that his fledgling movement’s priorities have made it into the mainstream.
“We have clearly reshaped the discourse,” Haedtler said.
By Daniel Marans
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Wells Fargo’s at the Bottom of the Heap
BeyondChron - March 14, 2013, by Christina Livingston - When it comes to foreclosing on Californians, it looks like...
BeyondChron - March 14, 2013, by Christina Livingston - When it comes to foreclosing on Californians, it looks like Wells Fargo may take the prize. According to a report released this week, Wells Fargo is responsible for more homes in the foreclosure pipeline in California than any other single lender.
Wells Fargo is servicing the most loans, but they are providing less principal reduction to struggling borrowers than either Bank of America and Chase – who themselves should be doing more! Wells Fargo trails behind Bank of America and Chase when it comes to the amount of principal reduction given with first lien loan modifications, according to the Monitor of the multi-state Attorneys General settlement with the five big mortgage servicers.
This is the very same Wells Fargo that just had its most profitable year ever in 2012, with earnings of $19 billion.
The report, California in Crisis: How Wells Fargo’s Foreclosure Pipeline Is Damaging Local Communities, by ACCE (Alliance of Californians for Community Empowerment), the Center for Popular Democracy and the Home Defenders League, shows the harm coming to homeowners, communities and the economy unless Wells Fargo reverses its course and averts some or all of the impending foreclosures.
Click here to download the report.
The report uses data from Foreclosure Radar to look at loans currently in the foreclosure pipeline in California – meaning loans that have a Notice of Default or Notice of Trustee Sale. Of the 65,466 loans in the foreclosure pipeline, close to 20% of them are serviced by Wells Fargo.
If Wells Fargo’s 11,616 distressed loans go through foreclosure, California will take a next $3.3 billion hit: Each home will lose approximately 22 percent of its value, for a total loss of approximately $1.07 billion; homes in the surrounding neighborhood will lose value as well, for an additional loss of about $2.2 billion; and government tax revenues will be cut by $20 million, as a result of the depreciation.
And not surprisingly, African American and Latino communities will be particularly hard-hit. The report includes maps for seven major cities showing minority density and dots for each of Wells Fargo’s distressed loans. In city after city, they are heavily clustered in neighborhoods with high African American and Latino populations.
“My community has been absolutely devastated by the foreclosure crisis, and I put a lot of the blame at the doorstep of Wells Fargo,” says ACCE Home Defenders League member Vivian Richardson. “Wells Fargo’s heartless and unfair foreclosure practices are sending far more homes into foreclosure than is necessary.”
“Our communities and our entire State are still reeling from the housing crisis, and will be for years to come,” said San Francisco Supervisor David Campos. “As this report shows, the numbers of homes still facing foreclosure is enormous. Principal reduction is clearly a critical strategy for saving homes and stabilizing the economy. Wells Fargo and the other major banks should be doing more of it.”
The report recommends:
1. Wells Fargo should commit to a broad principal reduction program. This means that every homeowner facing hardship should be offered a loan modification, when Wells has the legal authority to do so. The modification should be based on an affordable debt-to-income ratio, achieved through a waterfall that prioritizes principal reduction and interest rate reductions. Junior liens must also be modified.
2. Wells Fargo should report data on its principal reduction, short sales, and foreclosures by race, income, and zip code. Wells Fargo must be more transparent about its mortgage practices. The bank has an egregious history of harming California’s African American and Latino communities through predatory and discriminatory lending. To show the public that it has reformed, Wells Fargo must make this data available. The people of California need to know that Well Fargo is no longer discriminating against people of color and is fairly and equitably providing relief to homeowners and to the hardest hit communities.
3. Wells Fargo should immediately stop all foreclosures until the first two demands are met In the event that it takes a few months to set up a fully functioning principal reduction program, Wells Fargo needs to immediately stop all foreclosures. Wells Fargo has done enough harm. It’s time to stop. California deserves a break.
ACCE is waging a campaign to push Wells Fargo to be a leader in California, their home state, in saving homes – beginning with their performance to comply with the Attorneys General Settlement and with the Homeowner Bill of Rights, but not ending there.
Click here to sign on to a letter to Wells Fargo CEO John Stumpf to support the campaign demands.
Author info: Christina Livingston is the Executive Director of the Alliance of Californians for Community Empowerment. ACCE is a multi-racial, democratic, non-profit community organization building power in low to moderate income neighborhoods to stand and fight for social, economic and racial justice. ACCE has chapters in eleven counties across the State of California. For more information visit http://www.calorganize.org/ or follow ACCE on twitter@CalOrganize
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Communities Lose When HUD Sells Loans to Wall Street
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived...
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived in their Rosedale, New York home for the past five years. Like many Americans, they struggled during the recent economic downturn and have been trying to get a modification on their mortgage.
The bank that held their mortgage JPMorgan Chase, agreed to provide borrowers like them relief under a multi-billion dollar settlement with the Justice Department last year. But the Cheesemans' mortgage was insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). And before they could work out a deal with Chase, the bank had the FHA sell their loan to a new investor as part of a program, called the Distressed Asset Stabilization Program or DASP.
The program is supposed to have a dual purpose. First, the federal agency hopes to be able to use the funds received by DASP to right the balance sheet of the Federal Housing Authority’s mortgage insurance program. Second, the program is intended to “encourage public/private partnership to stabilize neighborhoods and home values in critical markets.”
According to HUD’s own data and reports, DASP is meeting the first objective and failing miserably at the second. Almost all loans sold through the DASP program went to for-profit firms and only a tiny handful (around 3 percent) of families whose loans were sold ended up with deals that kept them in their homes.
For homeowners like the Cheesemans, that failure has real-life consequences. When HUD, through DASP, sold their mortgage to another servicer, the Cheesemans lost their protections under the FHA program mandating an effort to modify the mortgage. Their new servicer, BSI Financial, was under no requirement to consider a mortgage modification. BSI doesn’t even participate in HAMP, a post-bailout program for major banks that facilitates loan modifications to keep families in their homes. The result? The Cheesemans and thousands of other homeowners throughout the country are at serious risk of losing their home.
A recent report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities, published by the Right to the City Alliance and Center for Popular Democracy cited serious problems with DASP. First, the current structure of most DASP auctions considers only the highest bid without weighting the bidder’s track record of good outcomes for homeowners and communities. Secondly, the groups found that the current outcome requirements and reporting structure fail to hold purchasers accountable. Third, the current pre-sale certification phase does not ensure that the FHA modification process has been followed.
Organizations called “Community Development Financial Institutions” with a track record of helping consumers stay in their homes stand ready to be a part of an improved version of this program. If a reformed DASP program incentivized it, investors with a social purpose could also make money by negotiating win-win, sustainable mortgage modifications with homeowners.
But community-friendly organizations can’t even get to the table with the auction overheated by well-heeled Wall Street firms and private equity “vulture capital” firms.
When the highest bidder places profits first, homeowners and neighborhoods come last. The result: more and more American homeowners losing their homes to unnecessary foreclosures and more and more corporate landlords leasing homes at rates few of these former homeowners, let alone anyone else, can afford.
All of this is the consequence of a program developed and managed by HUD, a federal agency with a stated mission to advance affordable housing and sustainable communities.
This week, HUD plans to sell off another 15,000 American homes to Wall Street investors. These are 15,000 families, 15,000 neighbors and 15,000 futures. Many if not all of these homeowners will lose their share of the American dream as a result of these auctions.
HUD can and should halt this week’s sale and must implement the necessary reforms that have been proposed by a range of community and advocacy groups.
As we consider the results of the economic collapse and what has been called by some a recovery, it is important to note once again that many neighborhoods, especially in communities of color, haven’t bounced back.
Too often our government has put the interests of Wall Street above the needs of struggling families. HUD can do better by fixing the “Distressed Assets” program now.
Laforest is executive director of the Right To The City Alliance, based in New York City. Whelan is National Campaign director of the Home Defenders League. He lives in Minneapolis.
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Recaudan fondos para Puerto Rico con fiesta en el Museo PS1
Recaudan fondos para Puerto Rico con fiesta en el Museo PS1
El Museo de Arte Moderno (MoMA, por sus siglas en inglés) recibió en su sede en Long Island City a la comunidad...
El Museo de Arte Moderno (MoMA, por sus siglas en inglés) recibió en su sede en Long Island City a la comunidad artística puertorriqueña, en un esfuerzo de recaudación de fondos organizado por la sociedad civil en apoyo a la comunidad afectada por el huracán María.
Lea el artículo completo aquí.
AG-elect Ellison announces transition team
AG-elect Ellison announces transition team
Minnesota Attorney General-elect Keith Ellison announced a 36-member transition advisory board on Monday that includes...
Minnesota Attorney General-elect Keith Ellison announced a 36-member transition advisory board on Monday that includes state legislators, prominent attorneys, union members — and even a past political opponent.
Read the full article here.
1 month ago
1 month ago