At this week’s AFL-CIO Executive Council meeting, representatives from the organization’s member unions issued a strong statement laying out a vision for the economy and how to fix it.
The first step, of course, is admitting we have a problem. For years, the economy has been re-engineered in ways that benefited a tiny minority of the wealthy and powerful, rather than sharing prosperity broadly. Bank deregulation, outsourcing-friendly trade policy, shifts in the tax burden and the abandonment of the right to collectively bargain all had an impact on an increasingly unequal, and increasingly unstable, economy. Instead of wages that reflected their growing productivity, America’s working people relied on credit bubbles and mortgage debt to get by—and the financial sector grew ever further out of control as a result.
What’s worse is that, instead of changing gears and trying to build a stronger, fairer economy, many politicians are pushing to repeat the same old mistakes. This is true of some politicians in both parties, but it’s especially prevalent among the Republicans who won control of the U.S. House and many governors’ offices in 2010 and among the frontrunners for the Republican nomination for president. They explicitly look to arrest what progress has been made in reining in Wall Street, and to cut taxes even further for the very wealthiest, even as they look to erode the programs working-class families and retirees depend on. They’re pushing for cuts that would hurt health care, our schools and our infrastructure. The AFL-CIO statement says there’s a better path for our economy.
The statement offers these principles for what fixing our economy will look like:
• Public investment in infrastructure, energy, job training and education
• Tackling inequality by restoring the right to collectively bargain, increasing the minimum wage and making full employment the center of our economic agenda
• Restoring U.S. manufacturing and fixing unfair trade laws
• Reining in the financial sector so it supports the economy rather than risking another financial collapse
• Improving standards and wages for workers around the world to end the “race to the bottom”
Read the whole thing here. It’s a valuable summation of how we got here and where we still need to go.
Tags: economy, fiance, Housing, Jobs, tax fairness, taxes, Wall Street
There are very few people who could boost the economy on their own. But Edward deMarco could.
DeMarco, the acting chief of the Federal Housing Finance Agency, oversees Fannie Mae and Freddie Mac, which in turn own a large portion of the nation’s mortgages. And he could use these two organizations to “write down” the value of mortgages on underwater homes. But will he?
If you ask many homeowners’ advocacy organizations—and a growing number of public officials—he ought to, and if he won’t, he should go. California Attorney General Kamala Harris, for example, said this week that deMarco needs to act now to help out the millions of homeowners who are paying down mortgages that are way more expensive than the actual value of their home. She says he should reduce the principal on these mortgages and suspend foreclosures. And Reps. Keith Ellison of Minnesota and Raul Grijalva of Arizona, who head the Congressional Progressive Caucus, are the latest lawmakers to make the same call.
In a statement yesterday, Reps. Grijalva and Ellison made the argument well:
Underwater homeowners need justice. Write downs are about keeping families in their homes and saving taxpayers money by preventing foreclosures. Simple, straightforward principal reductions are a good way to prevent the foreclosure crisis anchor from dragging down the U.S. recovery.
DeMarco, a holdover from the Bush administration, may not listen. And given the unprecedented obstruction of presidential nominees by the Senate’s Republican minority, it will be challenging for Obama to replace him.
But given how disappointing the recent mortgage-fraud settlement with major banks was, it’s important to press forward on all fronts to fix the problems in the housing market. The enormous sums families are paying on underwater homes are holding back the economy, and the risk of foreclosure still hangs over millions of families.
And so we wait on Edward deMarco—who may just be the most powerful man you’ve never heard of.
Tags: Corporate Accountability, Housing
In case you couldn’t tell from the 20 debates, constant news coverage and firehose-like flow of ads, there’s a Republican presidential primary underway. But to listen to the candidates—particularly on the economy—you’d think they were running for president of a different planet, one eerily like ours but facing totally different problems.
Let us count the ways that the Republicans’ economic conversation is totally out of touch with actual reality here on Earth.
Clap louder, Mitt.
- Jobs. At Wednesday’s debate, the word “jobs” was uttered hardly at all, and zero times by candidate Rick Santorum. In a larger sense, when these candidates talk about “creating jobs” they mean one thing: directing more money to the very wealthiest and to big corporations—through tax cuts or through removing regulations designed to protect consumers and workers. This might make a little bit of sense if the biggest problem facing the economy were corporations not having enough money. It’s not. The problem is a lack of consumer demand, because too few people have jobs and wages are falling behind.
- Debt and Deficits. These aren’t the most important economic issue we face—continued too-high unemployment is. But by the standards of the Republicans’ own rhetoric, they’re important enough to serve as the basis for attacks and talking points. So it seems strange that the plans proposed by Romney, Santorum and Gingrich would increase the debt—and, more specifically, increase the debt by more than Obama’s proposals would. And they don’t build up this debt by investing in long-term needs: they do it by demolishing revenue through massive tax cuts aimed mostly at the wealthiest. Which brings us to…
- Taxes. The public consensus is overwhelmingly clear—to afford the things we need, we should be able to ask a little bit more from the very richest than the current historic low rates. All of the Republican plans do exactly the opposite. For example, Romney’s plan would deliver a $264,000 tax cut to the top 0.1%. As economist Justin Wolfers noted, “Romney’s new tax plan is massively regressive relative to current code. Most of the spoils are going to the rich” – and the same is true of the other Republican candidates. And even as they propose these massive tax cuts for the wealthy, they propose devastating cuts to Medicaid and other programs that working-class people rely on. It’s redistribution, upwards.
- Housing. In many ways this is the most baffling omission of all. In recent days, Republican candidates have been avoiding the subject entirely even as it’s clearly one of the most important factors in the financial crisis. A few months back in Nevada, Romney offered up “let it run its course and hit the bottom” as his solution to the foreclosure crisis (the housing version of “let Detroit go bankrupt”), though he softened how he talked about it in Florida a few weeks later. But mostly it’s been crickets and tumbleweeds. Forgive me if I’ve missed this, but has any Republican candidate, or even any Republican in Congress, weighed in on the mortgage-fraud settlement or the underlying issue of mass abuse of the foreclosure process?
Let’s not get into issues like the minimum wage, rebuilding infrastructure, keeping teachers in classrooms or protecting the freedom to form a union and collectively bargain—all issues that matter to our economy. We’d be naïve to expect this batch of Republican candidates to say anything constructive.
During Republican primaries, the candidates are pitching to a small audience, and their proposals are kept in line by harshly ideological enforcement mechanisms like talk radio’s Rush Limbaugh and the Wall Street-funded Club for Growth. But with their pledges and proposals now, they’re committing themselves to a totally fictional vision of the economy in the fall.
Out in the real world, Working America staff talk to around 20,000 people every week in neighborhoods across the country and stay in close contact with our members, so we have a pretty good sense of what a broad group of working- and middle-class people care about in this critical year. They want to make sure they can get and keep a good job, be covered if they get sick, send their kids to good schools, stay in their homes and retire with some security. I don’t know what world the Republican primary is taking place in, but it’s not the one where our members live.
(Image via Gage Skidmore on Flickr.)
Tags: Barack Obama, economy, elections, Housing, Jobs, taxes
San Francisco recently carried out an audit on a number of foreclosures. Their findings were released in a report this week that shows just how rampant mortgage fraud has been. From Reuters:
The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.
Similar studies around the country show comparable results. These numbers are astounding. And worse, they’ve essentially gotten away with it.
In many cases during the housing bubble that burst in 2008, original mortgages were repackaged and sold to so many investors that it is now unclear who actually holds the loans. O’Brien could only find the current owners of the mortgages he studied in 287 out of 473 cases.
In the San Francisco study, which studied properties subject to foreclosure sales between January 2009 to November 2011, 45 per cent were sold to entities improperly claiming to be the owner of the loan.
“It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans,” the report stated.
This should be unimaginable. Instead it is chilling – the story of a largely unregulated financial industry gone amuck. The consequences to homeowners and their families is devastating. Of course the most chilling aspect of the whole mess is that the banks have never admitted to any wrongdoing. There have been no prosecutions. No banksters are wearing orange prison jumpsuits as a result of their role in defrauding millions of US homeowners.
Seth is right. The banks did get off too easy in the foreclosure/fraud settlement.
Tags: economy, Housing
This morning, the federal government and state Attorneys General announced a major settlement through which big banks will offer some compensation for fraud and consumer abuses that helped cause the financial crisis. Holding the banks responsible for their misconduct is a good thing—but, unfortunately, this settlement is disappointing in its scale and in the leeway it gives to these banks.
The settlement is set to include 49 states (all but Oklahoma, whose Attorney General, Scott Pruitt, apparently objects to the idea that banks who broke the law should face any penalty whatsoever).
Here’s what we do know about the deal. It represents about $26 billion coming from the banks, of which the majority will be used to reduce the principal on underwater mortgages. For homes that are underwater, that’s a good thing—but the housing collapse led to $700 billion in lost home value, far beyond what this settlement will cover.
Some homeowners affected by specific abuses of the foreclosure process, like “robo-signing,” will be compensated—but not much, certainly far less than the loss represented by a hasty or unjust foreclosure.
The remainder of the money from the settlement will go to other forms of homeowner assistance, like helping mortgage-holders refinance at lower rates.
The amount of money we’re talking about here will be a help to some hard-hit homeowners, but it’s way out of scale to the size of the problem.
The other question about the settlement is one of responsibility and justice, not just monetary compensation. On the bright side, the settlement comes alongside a new task force to investigate misconduct in the housing market—but, unfortunately, it also releases the banks from liability for many of the most destructive foreclosure-related practices. We have laws against fraud for a reason, and it’s the responsibility of our officials to actually see to the enforcement of those laws.
For now, the first part of this fight has come to a close—and, despite the flaws in this settlement, working people have won some victories over the banks along the way. But here are the questions we’ll be asking as we move forward. Will homeowners who need it actually get the help this settlement provides in a timely manner? Will the investigation task force be able to uncover and actually penalize misconduct on the part of the banks? And, most importantly, will the settlement and the next steps have enough force to prevent large-scale abuses like this from happening again?
(Image via Felix Salmon)
Tags: Corporate Accountability, foreclosure crisis, Housing
The following is AFL-CIO President Richard Trumka’s statement on President Obama’s proposed housing agenda, announced today:
Today President Obama proposed welcome new assistance to homeowners who cannot refinance their mortgages because the bursting of Wall Street‘s real estate bubble has led to the precipitous decline of their homes’ value. These underwater mortgages are hampering America’s economic recovery by preventing homeowners who are current on their mortgage payments from taking advantage of today’s low interest rates.
Without a path to refinance their underwater mortgages, millions of working families are trapped paying inflated mortgage payments. We need to ensure that the Federal Reserve’s monetary policy of maintaining low interest rates helps all Americans, not just the big banks. That’s why today’s announced plan is so important to getting our economy working again.
The jobs crisis and the foreclosure crisis are two sides of the same coin – we need to tackle both to repair our economy. We applaud the President’s leadership in offering jobless homeowners at least 12 months of forbearance on their mortgage payments to get back on their feet. And Congress must act now and enact President Obama’s Project Rebuild to invest $15 billion in construction jobs to renovate homes and businesses in communities where foreclosures are most concentrated.
As proposed by the President, a Homeowner Bill of Rights will protect working families from abusive mortgage servicing practices. Principal reduction will offer genuine help to homeowners who are struggling with their mortgage payments. The big banks that caused the financial crisis now need to pay their fair share to help homeowners refinance their underwater mortgages. We strongly support the President’s commitment to hold the banks accountable by partnering with state Attorneys General to investigate wrongdoing in the creation of mortgage backed securities.
Tags: foreclosures, Housing
A new report by the Corporation for Enterprise Development (CFED)shows a major increase in what they call “asset poor” households:
In the United States, 27 percent of all households are “asset poor,” meaning they lack the savings or other assets to cover basic expenses for just three months if a layoff or other emergency leads to loss of income, according to the 2012 Assets & Opportunity Scorecard, released today by the Corporation for Enterprise Development (CFED). Since the release of the 2009-2010 Assets & Opportunity Scorecard, the number of asset poor families has increased by 21 percent from one in five families to one in four families. The asset poverty rate is now nearly twice as high as the Census Bureau’s official income poverty rate of 15.1 percent.
An increase of 21% is certainly significant.
“Growing numbers of families have almost no savings or other assets to see them through if they lose their jobs or face a medical crisis,” said Andrea Levere, president of CFED. “Without savings, few will be able to build a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.”
Levere added that the Scorecard findings are “particularly disturbing in the context of precipitous drops in incomes for many Americans and widening of the wealth gap between the richest and poorest households.”
Last year Business Insider provided us with fifteen graphs looking at income inequality and wealth in the US. Graph #5 above illustrates the flat wages many of us have experienced since at least 1990.
A look at key findings from the report shows something of crucial importance:
One in five jobs (22 percent) is low wage and nearly half of employers (46 percent) do not offer health insurance. Most workers (55 percent) do not have or participate in retirement plans. These low- quality jobs make it harder for families to both meet their needs today and create a reserve for tomorrow.
As wages continue to stagnate, good paying jobs are replaced with low wage jobs, and the costs of housing, food, transportation, heating oil, and everything else continue to rise, how will people save for the future, when they can’t even make ends meet in the present?
And why aren’t the presidential candidates talking about this?
Photo by woodleywonderworks on Flickr, via Creative Commons
In July I wrote about folk stampeding for Section 8 housing vouchers in Dallas, when thousands of people showed up, some waiting all night, to get vouchers for subsidized housing. It was a terrible story.
Since then, nothing much has changed, other than the fact that even more people are in need of affordable housing. From The Nation:
In Oakland, California, which opened its waiting list in January, officials expected as many as 100,000 people to apply for 10,000 vouchers. In Atlanta, sixty-two people were injured in 2010 at an East Point shopping center where 30,000 lined up after the local housing authority opened its waiting list for the first time in eight years. Even small communities like Aiken, South Carolina, saw hundreds queuing up in October for a chance at housing aid about as likely as seeing three cherries in a row on a Vegas slot machine.
Another way you can find tangible evidence of the housing affordability crunch is by visiting one of New York City’s exploding number of homeless shelters, where a record 41,000 homeless people bed down each night, including more than 17,000 children. The New York Times recently told the story of one of those children, fourth-grader N-Dia Layne, who travels two and a half hours each day between her Upper Manhattan shelter and her school in Brooklyn’s Brownsville neighborhood. In Cleveland, the number of homeless families and kids grew so rapidly this past summer that for the first time shelters were forced to eliminate daytime meals, housing-search assistance and other services in order to move workers to the overnight shifts, according to Brian Davis of the Northeast Ohio Coalition for the Homeless.
I had to read those New York numbers a few times. I can’t imagine that there are over 17,000 homeless children in New York City and this isn’t an issue being discussed in the endless presidential debates?
By nearly any measure, there are fewer and fewer homes affordable to working-class and poor Americans. The federal housing agency’s annual assessment finds that “worst-case housing needs” grew by 42 percent from 2001 to 2009, and nationwide there is a shortfall of nearly 3.5 million housing units for the poorest households. According to Harvard University’s Joint Center for Housing Studies, the share of renter households with the most severe cost burdens—that is, where more than half of income goes to rent and utilities—grew from a fifth to a quarter over the past decade and has doubled in the past half-century. And as household incomes stagnated for most of the past decade and then dropped during the economic crisis, the nation saw its already inadequate stock of cheap rental housing shrink even faster.
It’s pretty simple, really. The cost of living is increasingly high, while wages are increasingly low. It’s not a recipe for keeping a roof over one’s head.
All of the plans to “end homelessness in 10 years,” either are, or will be abject failures. The programs were all underfunded, and as the budget for federal housing programs continues to shrink, their failure is guaranteed. In the name of “deficit reduction” these programs are being cut, and cut again – with the goal being to eliminate them all together.
Despite the bleak policy landscape and the worsening affordability crisis, many local advocates and people working on the front lines talk about the renewed energy and hope generated by the nascent Occupy movement and the revived national discourse about income inequality. Donovan talks hopefully about the “other 1 percent”—the homeless and poor—saying that the concentration of wealth and power in the hands of the superrich 1 percent is “causing the other 1 percent to agitate, and to show that homeless people are something other than a herded mass. They’re saying, Enough is enough.”
The Occupy movement changed the national discussion when it began last fall. Instead of deficits and debt, we’re now hearing about income inequality, joblessness, and a host of other issues that weren’t even on the horizon over the summer. It is my hope (as someone living with housing insecurity) that Occupy brings housing to the forefront of our national dialogue.
Tags: California, Housing, New York
Last night’s State of the Union address revolved around themes of fairness and rebuilding America’s middle class. As in any speech of this size, there was a lot to absorb. What we found most interesting was President Barack Obama’s emphasis on not repeating the mistakes that led us to the economic catastrophe of the past few years.
It’s encouraging that President Obama paid special attention to the issue of housing and financial-sector fraud. Tens of thousands of Working America members and union members called for a real investigation into banks and their role in causing the housing crisis, and the President announced the creation of a new task force to investigate fraud in his speech last night.
We will have to watch this task force closely. We can’t have an investigation just for show, one that doesn’t take a comprehensive look at wrongdoing and impose real penalties. What powers will the investigators have, and who are they? The co-chair of the panel is Eric Schneiderman, the New York state Attorney General who has led opposition to a bad deal, which is encouraging. But David Dayen, a close observer, is skeptical of the panel and thinks it may be a way to ease us into an insufficient settlement. As we’ve said before, we can’t accept a deal that lets big banks break the law and abuse consumers without being held responsible.
We’ll also be looking closely at the President’s pledge to help homeowners refinance, which could provide some much-needed assistance to struggling families.
The State of the Union message showed that, in many ways, President Obama is attuned to the economic crisis that’s still ongoing in our country. His insistence on extending the payroll tax cut for working families is important, as is his attention to investing in infrastructure jobs and schools, which creates jobs now and builds economic strength for the future. His proposals on job training and support for companies that “insource” good jobs to America’s communities are encouraging as well.
Our members understand that politics is about priorities. With limited resources, we have to choose whether to keep tax breaks for the very wealthiest and for corporations that outsource jobs, or whether to use those revenues to support programs that seniors, students and families depend on. President Obama showed that, like most Americans, he’d choose the latter. Now it’s up to Congress to decide where they stand.
Tags: Housing, Jobs, Retirement, unemployment
A draft settlement between five big financial institutions and the U.S. states was distributed earlier this morning. It calls for the banks – Bank of America, Wells Fargo, Citigroup, J.P. Morgan Chase, and Ally Financial – to settle with homeowners to the tune of $25 billion dollars.
The Associated Press estimates this will translate into 750,000 Americans getting checks for $1,800. That’s about half the number of Americans eligible for assistance under the deal.
$25 billion sounds like a lot of money. It is, don’t get us wrong. It’s the biggest settlement with a single industry since the 1998 multistate tobacco deal. But when there’s $700 billion worth of money owed on underwater mortgages, and when these Big Banks are handing out enormous sums in bonuses to their executives, you realize how much of a slap on the wrist this really is for them.
Not only is that a tiny amount in the eyes of a Bank of America or a Wells Fargo – settling also potentially avoids a full-scale investigation into the nastiness they’ve been pulling on the American homeowner for decades.
We know about robo-signing, which we’ve written about. We’ve also received letters from our members describing absolutely despicable treatment at the hands of these banks. It’s common knowledge that these five banks make it their mission to extract money from American workers, not get them into homes. It would be an incredible travesty of justice for them to get immunity from further investigation while paying a mere pittance to the homeowners whose lives they ruined.
This is not change we can believe in. The White House needs to know we’re watching.
Use our tool to call the White House now – tell them they can’t rush into a settlement. An investigation of the deceptive mortgage practices that caused millions of Americans to lose their homes needs to be part of any agreement with the banks.
Tags: Corporate Accountability, foreclosures, Housing