There has been a lot of speculation these past few months regarding what will happen in this country after the upcoming November 2nd election. Whatever happens on Tuesday, it is highly probably that the Republican Party will garner enough seats to change the dynamics in both Houses of Congress. Ironically, it was President Obama who ran on a platform of change in 2008 and despite the achievements of the Obama administration against almost insurmountable odds, it appears that is the Republicans, who are about to effect real change,
With the possibility looming that Congress is poised to be shaken up in ways not witnessed for at least 15 years and perhaps as long as 50 years, there has been some discussion on House and Senate Majority leadership changes. Some have questioned the ability of House Republican Minority Leader John Boehner’s to become Majority Leader with so many young Turks coming into the House fresh from their tea party financed success. Also, should Senator Harry Reid lose his close election in Nevada, who would replace him as Democratic leader in the Senate?
For media talking heads, these kinds of inside the beltway maneuverings are interesting, but in reality don’t have much of an impact on the real work of the Congress. For the vast majority of Americans, Congressional leadership roles are far less critical than the White House and its possible reaction to the events of this coming Tuesday. Most Americans are waiting to see how President Obama will respond to what some say is an admonition of his first two years as President. Some, in fact, even refer to this mid-term election as a repudiation of his presidency.
There is really only one of two strategies that President Obama can implement and he has two great historical precedents to look to. First, there was President Clinton. Following this example, the President would have to identify and prioritize those issues where cooperation with the Party of No is possible and despite their visceral unwillingness to compromise, yield results nonetheless. I was talking with a colleague last night and we both agreed that Bill Clinton may be the best politician this country has ever produced. One of his many gifts was his ability to compromise with Republicans without necessarily sacrificing deeply held principles or the core beliefs of the Democratic Party.
Then, there was President Truman whose strategy was pure offense. He attacked the GOP Congress for obstructing his administration’s priorities and sending irresponsible legislation to the White House in an effort to force the President into vetoing them.
Just before I sat down to write this post, I was on the phone with my best friend who shared a wonderful Thomas Jefferson quote with me. Jefferson is reported to have once stated, “Democracy is not like two foxes and a chicken deciding what to have for dinner.” I have written many times this past year that President Obama and the Democratic Congress have attempted to work with Republicans in an almost conciliatory manner. At the beginning of the Obama presidency, I understood the strategy. It would be so much better for the country if Republicans and Democrats could work together to solve the many challenges facing all of us in January 2009.
Once the Republicans decided however to become the Party of No, to reject anything and everything that came out of the Obama administration, the White House and the Democrats should have made the decision right then to eat the chicken. Instead, they allowed it to live and worse yet, permitted that chicken to lay eggs, multiply and move right into the house.
The President’s recent combative posture on the campaign trail, suggesting that a Republican controlled Congress would lead to “hand-to-hand combat” and telling Latino voters on one occasion to “punish their enemies” at the polls, signals that the President has decided to follow the Truman example as opposed to the Clinton one.
Admittedly, President Obama’s interaction with a Congress with more Republicans than now—possibly even a majority—will only be revealed once the 112th Congress has been sworn in. There is enough evidence however, to make the point that the President will make the Republicans in Congress and not policy the issue. And remember, despite national polls, and mistaken journalists, Harry Truman squeaked into a second term—he won!
Despite their victory in 2008 creating a 59-seat majority in the Senate and a 255-seat majority in the House, the Democrats have been unable to successfully pass the agenda they were propelled into office by. Millions of Americans voted for change in 2008, not for a mamby pamby approach to governance. Of course, seeking Republican cooperation and collaboration was the right thing to do initially. But the moment it became apparent that the Republican Party was not going to “roll up its sleeves” with their Democratic counterparts and work in some measure of unison to solve our Nation’s problems, then the Democratically controlled Congress and White House should have made the decision right there and then to seize the moment and govern—even if the change that Americans had demanded had to be accomplished unilaterally.
Resorting to the Clinton model appears to have replaced the initial desire for conciliation. The pressure however, will also be on Republicans to compromise with the White House, but they will just as likely continue their ways of obstruction. The mandate of a 2010 mid-term election that returns the GOP to Congress in significant numbers after two election cycles that produced historical routes for the Republican Party will foster a climate of no compromise. The last two years of Congressional discord will pale considerably with what will happen the next two years.
I wish I could say something positive about what is on the political horizon in our country, but I can’t. To be honest—I am scared to death.
.
Saturday, October 30, 2010
Friday, October 22, 2010
"Did I Say That?"
I was all set to write about the phone call from Ginny Thomas to Anita Hill this past week where Ms. Thomas asked for an apology regarding her decades-old testimony at the confirmation hearings for Supreme Court Justice Clarence Thomas. Then, Juan Williams spoke.
This is tough. My initial reaction to the firing of Juan Williams was “ What is the difference between Juan Williams saying he is uncomfortable when he sees fellow airline passengers in “Muslim garb” and a white person saying, “When I see a black person walking towards me I get uncomfortable and cross to the other side of the street.”
It appears that the right wing’s annoying habit of resorting to the visceral has finally begun to infect the left as they are seemingly sliding into a posture of exhibiting an untoward inclination to suppress the speech of those with whom they do not agree.
This disturbing new impulse of the left manifests itself in myriad ways from screaming uncivilly at Karl Rove in a California bookstore to a bastion of liberalism, NPR, firing a commentator who violates their sensibilities.
As it is the case with reactionaries, the ever growing anger on the left that manifests itself in crude and insulting behavior is not true of all liberals—certainly I hope it is not true of yours truly, but earlier this week, the impulse to silence or censor a line of thought that differs from the liberal mainstream managed to win the hour in a place where I at least, have always thought was an environment where people could speak fearlessly, National Public Radio.
Late this past Wednesday night, when I like many other Americans were engaged in an activity that shows what is really important these days, the Giants-Phillies playoff game. NPR issued a statement announcing its termination of commentator Juan Williams for his comments on the Bill O’Reilly during a discussion of how Muslims are described or referenced in the context of terrorism.
Prophetically in a manner that he could not have imagined, Juan Williams prefaced his remarks on the O’Reilly show by saying, “Political correctness can lead to some kind of paralysis where you don’t address reality.” It was at that point in the discussion that Mr. Williams confessed his own fears at observing fellow airline passengers in “Muslim garb” boarding the same airplane he was about to fly on. To his credit, Juan Williams added quickly that he felt it is terribly unfair to hold all Christians accountable for the horrific behavior of the Wichita “mob” that boycotts the funerals of fallen U.S> troops or the would-be Koran burner from Florida. Williams also quoted, of all people, former President George Bush who once said that the wars in Afghanistan and Iraq are “not a war with Islam.”
Not good enough, Vivian Schiller NPR CEO and Ellen Weis, NPR’s VP for news, announced the firing of Juan Williams stating that “Juan has been a valuable contributor to NPR and public radio for many years and we did not make this decision lightly or without regret.” The statement went on to say, “However, his remarks on the O’Reilly Factor this past Monday were inconsistent with our editorial standards and practices and undermined his credibility as a news analyst with NPR.”
Immediately after the firing of Juan Williams, conservatives, jumped into the controversy with both feet. First, Sarah Pailin weighed in, calling for NPR to lose its federal funding. Former Republican presidential candidate Mike Huckabee, a political rival of Sarah Pailin, voiced that same sentiment and added his own caveat, “I will not longer accept interviews from NPR as long as they are going to practice a form of censorship.”
Former House Speaker Newt Gingrich issued a statement laden with his usual theatrics calling for a congressional investigation into NPR. “The U.S. Congress should investigate NPR and consider cutting off their money. Every listener to NPR should be enraged that there’s this kind of bias against an American.”
These conservative criticisms emanating from the right, however genuine they may be, as usual lack any real factual substance. To begin with, less than six percent of NPR member stations fund their budgets with federal, state and local money combined. As for Mr. Gingrich believing that Americans would be shocked to discover liberals at NPR, everything suggests that much of NPR’s listening audience, who happen to be for the most part left of center, are probably delighted that Juan Williams is “outta there.” They never understood (me included) how Juan Williams could be commentating on both FOX News and NPR in the first place.
By the way, this was not the first time that comments by Williams on Fox News, with whom he has always been employed simultaneous with his contract at NPR, angered NPR listeners. A 2009 appearance on FOX echoed sentiments that appeared in his column at that time comparing Michelle Obama to black 50s radical Stokely Carmichael.
When all has finally been said and done regarding this episode, a better resolution might have been for NPR’s executives to give Mr. Williams a choice—them or Fox News. For his part, Juan Williams has, since his firing, slammed NPR for its “one-party rule” and “one-sided thinking that leads to enforced ideology, speech and writing.” And, full disclosure, Juan Williams has been signed to a $2 million contract with Fox News and tonight, he will actually stand in for Bill O’Reilly.
As always, it never really had to come to this. There are other liberal media bastions where the issue of bias in the media is dealt with more responsibly. Shows such as The Colbert Report and The Daily Show come to mind. While these shows annoy conservatives who say the same things liberal say about Fox in that the hosts are actually skilled partisans who are skilled in the art of twisting the words of those they are not in agreement with.
Right now, at this moment, I am desperately trying to come up with something I can say to get Fox to give me a $2M contract.
This is tough. My initial reaction to the firing of Juan Williams was “ What is the difference between Juan Williams saying he is uncomfortable when he sees fellow airline passengers in “Muslim garb” and a white person saying, “When I see a black person walking towards me I get uncomfortable and cross to the other side of the street.”
It appears that the right wing’s annoying habit of resorting to the visceral has finally begun to infect the left as they are seemingly sliding into a posture of exhibiting an untoward inclination to suppress the speech of those with whom they do not agree.
This disturbing new impulse of the left manifests itself in myriad ways from screaming uncivilly at Karl Rove in a California bookstore to a bastion of liberalism, NPR, firing a commentator who violates their sensibilities.
As it is the case with reactionaries, the ever growing anger on the left that manifests itself in crude and insulting behavior is not true of all liberals—certainly I hope it is not true of yours truly, but earlier this week, the impulse to silence or censor a line of thought that differs from the liberal mainstream managed to win the hour in a place where I at least, have always thought was an environment where people could speak fearlessly, National Public Radio.
Late this past Wednesday night, when I like many other Americans were engaged in an activity that shows what is really important these days, the Giants-Phillies playoff game. NPR issued a statement announcing its termination of commentator Juan Williams for his comments on the Bill O’Reilly during a discussion of how Muslims are described or referenced in the context of terrorism.
Prophetically in a manner that he could not have imagined, Juan Williams prefaced his remarks on the O’Reilly show by saying, “Political correctness can lead to some kind of paralysis where you don’t address reality.” It was at that point in the discussion that Mr. Williams confessed his own fears at observing fellow airline passengers in “Muslim garb” boarding the same airplane he was about to fly on. To his credit, Juan Williams added quickly that he felt it is terribly unfair to hold all Christians accountable for the horrific behavior of the Wichita “mob” that boycotts the funerals of fallen U.S> troops or the would-be Koran burner from Florida. Williams also quoted, of all people, former President George Bush who once said that the wars in Afghanistan and Iraq are “not a war with Islam.”
Not good enough, Vivian Schiller NPR CEO and Ellen Weis, NPR’s VP for news, announced the firing of Juan Williams stating that “Juan has been a valuable contributor to NPR and public radio for many years and we did not make this decision lightly or without regret.” The statement went on to say, “However, his remarks on the O’Reilly Factor this past Monday were inconsistent with our editorial standards and practices and undermined his credibility as a news analyst with NPR.”
Immediately after the firing of Juan Williams, conservatives, jumped into the controversy with both feet. First, Sarah Pailin weighed in, calling for NPR to lose its federal funding. Former Republican presidential candidate Mike Huckabee, a political rival of Sarah Pailin, voiced that same sentiment and added his own caveat, “I will not longer accept interviews from NPR as long as they are going to practice a form of censorship.”
Former House Speaker Newt Gingrich issued a statement laden with his usual theatrics calling for a congressional investigation into NPR. “The U.S. Congress should investigate NPR and consider cutting off their money. Every listener to NPR should be enraged that there’s this kind of bias against an American.”
These conservative criticisms emanating from the right, however genuine they may be, as usual lack any real factual substance. To begin with, less than six percent of NPR member stations fund their budgets with federal, state and local money combined. As for Mr. Gingrich believing that Americans would be shocked to discover liberals at NPR, everything suggests that much of NPR’s listening audience, who happen to be for the most part left of center, are probably delighted that Juan Williams is “outta there.” They never understood (me included) how Juan Williams could be commentating on both FOX News and NPR in the first place.
By the way, this was not the first time that comments by Williams on Fox News, with whom he has always been employed simultaneous with his contract at NPR, angered NPR listeners. A 2009 appearance on FOX echoed sentiments that appeared in his column at that time comparing Michelle Obama to black 50s radical Stokely Carmichael.
When all has finally been said and done regarding this episode, a better resolution might have been for NPR’s executives to give Mr. Williams a choice—them or Fox News. For his part, Juan Williams has, since his firing, slammed NPR for its “one-party rule” and “one-sided thinking that leads to enforced ideology, speech and writing.” And, full disclosure, Juan Williams has been signed to a $2 million contract with Fox News and tonight, he will actually stand in for Bill O’Reilly.
As always, it never really had to come to this. There are other liberal media bastions where the issue of bias in the media is dealt with more responsibly. Shows such as The Colbert Report and The Daily Show come to mind. While these shows annoy conservatives who say the same things liberal say about Fox in that the hosts are actually skilled partisans who are skilled in the art of twisting the words of those they are not in agreement with.
Right now, at this moment, I am desperately trying to come up with something I can say to get Fox to give me a $2M contract.
Thursday, October 14, 2010
"Free at last. Thank God Almighty I am free at last!"
Those words uttered by the late Reverend Martin Luther King, Jr. some 42 years ago, embody the series of events that will no doubt feature significantly on the calendar of the Chilean people as well as the entire global mining community. October 13, 2010 is a day that finally brought to an end the ordeal of 33 miners who were cut off from the earth’s surface after 700,000 pounds of rocks collapsed on top of them on August 5th sealing the men more than 2,300 feet underground.
Before the dust from the collapse had settled, the Chilean authorities were already making frantic efforts to determine the fate of the miners. On August 22nd, the first in a series of many miracles happened when the miners announced to the rescue workers searching for them that they had indeed survived.
Thus began a race against time as the Chilean government began to amass expertise and resources, all designed to facilitate the rescue of the 33 trapped miners. Now, all those efforts have yielded hugely positive results, beginning with the emergence of miner Florencio Avalos, the first miner to be rescued on Tuesday night and ending with the appearance of Luis Urzua, the 54-year old shift foreman that as any captain of a ship would insist on being the last to leave, rose through the tiny hole that housed the ascent of the rescue capsule dubbed “Phoenix) and emerged into the cool, fresh and clean air of the Chilean desert.
For once, the world was united in helping Chile get through this mine disaster as experts from the US and other developed countries brought their expertise and experience to bear on this disaster and while the amount of money and energy that went into the rescue operation may run into hundreds of millions of dollars, they cannot compare with even one life that came out of the mine.
As united as the planet was on the surface, the miners themselves employed survival strategies, even before they knew that their chance of rescue was imminent. Tactics such as team work, fortitude, resilience and courage helped the miners stay alive, 69 days underground. In addition, the support of their families and friends cannot be discounted as hundreds of them camped at nearby Camp Hope praying and waiting for their husbands, brothers, sons, fathers and uncles to re-join them at the surface.
Ultimately, the San Jose Mines in Chile stretched the thinking and operational capacity of those involved in the rescue. Their sense of purpose will hopefully provide a set of best practices as it is almost inevitable that a mining disaster will occur again. More importantly, a lesson learned from this disaster must be that a response to mining disasters from the entire global community is now the rule as opposed to the exception.
In the days and weeks to come, no one knows how these humble working men will cope with the pressures of instant fame after emerging to find themselves at the center of a news story that has captured the attention of the entire world. As some point soon, they will be called upon to share the details of their ordeal. The subsequent reality that their private lives will disappear with full disclosure is virtually guaranteed. But for now, even the most intransigent problems seem capable of solution.
On the evening of October 12th, Chile’s President Sebastian Pinera invited Bolivian Premier Evo Morales to share in the occasion by greeting Bolivian miner Carlos Manamie at the surface. Their two countries have been at odds for decades, beginning with a territorial dispute in the late 19th century. At this time, the two countries do not even recognize each other diplomatically however it seems that the two leaders have now reached enough of a level of friendship that the burying of a hatchet that was grabbed by both countries almost 200 years ago is entirely possible. For last night when the last miner emerged from the doorstep to hell, anything seems possible.
Before the dust from the collapse had settled, the Chilean authorities were already making frantic efforts to determine the fate of the miners. On August 22nd, the first in a series of many miracles happened when the miners announced to the rescue workers searching for them that they had indeed survived.
Thus began a race against time as the Chilean government began to amass expertise and resources, all designed to facilitate the rescue of the 33 trapped miners. Now, all those efforts have yielded hugely positive results, beginning with the emergence of miner Florencio Avalos, the first miner to be rescued on Tuesday night and ending with the appearance of Luis Urzua, the 54-year old shift foreman that as any captain of a ship would insist on being the last to leave, rose through the tiny hole that housed the ascent of the rescue capsule dubbed “Phoenix) and emerged into the cool, fresh and clean air of the Chilean desert.
For once, the world was united in helping Chile get through this mine disaster as experts from the US and other developed countries brought their expertise and experience to bear on this disaster and while the amount of money and energy that went into the rescue operation may run into hundreds of millions of dollars, they cannot compare with even one life that came out of the mine.
As united as the planet was on the surface, the miners themselves employed survival strategies, even before they knew that their chance of rescue was imminent. Tactics such as team work, fortitude, resilience and courage helped the miners stay alive, 69 days underground. In addition, the support of their families and friends cannot be discounted as hundreds of them camped at nearby Camp Hope praying and waiting for their husbands, brothers, sons, fathers and uncles to re-join them at the surface.
Ultimately, the San Jose Mines in Chile stretched the thinking and operational capacity of those involved in the rescue. Their sense of purpose will hopefully provide a set of best practices as it is almost inevitable that a mining disaster will occur again. More importantly, a lesson learned from this disaster must be that a response to mining disasters from the entire global community is now the rule as opposed to the exception.
In the days and weeks to come, no one knows how these humble working men will cope with the pressures of instant fame after emerging to find themselves at the center of a news story that has captured the attention of the entire world. As some point soon, they will be called upon to share the details of their ordeal. The subsequent reality that their private lives will disappear with full disclosure is virtually guaranteed. But for now, even the most intransigent problems seem capable of solution.
On the evening of October 12th, Chile’s President Sebastian Pinera invited Bolivian Premier Evo Morales to share in the occasion by greeting Bolivian miner Carlos Manamie at the surface. Their two countries have been at odds for decades, beginning with a territorial dispute in the late 19th century. At this time, the two countries do not even recognize each other diplomatically however it seems that the two leaders have now reached enough of a level of friendship that the burying of a hatchet that was grabbed by both countries almost 200 years ago is entirely possible. For last night when the last miner emerged from the doorstep to hell, anything seems possible.
Friday, October 8, 2010
The Never Ending Foreclosure Crisis
In a study released just last week, the Center for Responsible Lending (CRL) analyzed the demographics of the current foreclosure crisis and determined that foreclosure in America has disproportionately impacted black and Latino families. The study proved that in the final analysis, a home owned by a black family is 76% more likely to go through foreclosure than a white family. In addition, the CRL study also pointed to troubling evidence that the current foreclosure crisis will destroy a generation of wealth in communities of color while simultaneously exacerbating the existing income and equity gap between white and non-white families.
The CRL study estimated that some 2.5 million homes were foreclosed upon between 2007 and 2009, the “vast Majority” of which were owner-occupied homes with mortgages originated between 2005 and 2008. By the time the current foreclosure relaxes its tentacles on the American economy, as many as 10 million homes will have been through the foreclosure process. In total, this crisis will have cut across demographic and income groups, from mobile homes to “McMansions” and from homes with subprime loans to homes with vanilla mortgages.
But in the end, the crisis will have hit communities of color with a particular viciousness, even adjusting for income. Approximately eight percent of black or Latino homebuyers who took out a mortgage or refinanced between 2005 and 2008 lost their homes between 2007 and 2009 respectively, compared with 4.5 percent of white homebuyers. Since 2007, 17 percent of Latino homeowners, 11 percent of black homeowners and seven percent of white homeowners have either lost their home to foreclosure or are in imminent danger of becoming homeless.
Even more frightening, the CRL study showed that “Racial and ethnic disparities in these estimated foreclosure rates hold even after controlling for differences in income patterns between demographic groups.” Ironically the skew is worse for high-income black and Latino homeowners than for low-income black and Latino homeowners.
Our nation’s newspapers, airwaves and the internet have been overflowing with stories of politicians and government officials screaming for the heads of mortgage bankers and promising one kind of investigation or another to get to the bottom of how this all could have possibly happened.
Generally speaking, not counting the extremists on either end of the political spectrum, there are two competing views on the role of government in these matters. One group maintains that it is the government’s role to redistribute as much income as possible upward to the richest people in the country.
Then there are those of us who believe that government should do everything it can to stimulate and sustain a strong economy that serves an overwhelming number of Americans.
Those who support the first group in both political parties have been firmly in control of government for the past few decades. This is the reality because the way the foreclosure crisis has been managed thus far, proves that point.
By now, we all know what happened. It does not take a master economist to understand the story of the foreclosure crisis in America today. All one has to be is a homeowner and you either know how this nightmare began through personal experience, or you are haunted by the specter of foreclosure from month to month as you struggle to pay your mortgage at all, let alone on time.
The underlying truth is that banks mostly, made trillions of dollars of bad mortgage loans that were then used to buy or refinance houses at “bubble-inflated” prices. With the collapse of that bubble, more than 20% of all mortgages today are underwater—meaning they are worth less than what the homeowners owe on them. Consequently, many homeowners today are struggling to pay mortgages on houses in which they have no equity and have no real prospect of ever acquiring any equity.
Now, let’s return to those two competing viewpoints on the role of the government in this crisis. If the market is allowed to do its thing, millions of homeowners will go belly up on their mortgages, leaving banks and other investors with huge losses.
The most vulnerable in this scenario are the larger banks because they actually own hundreds of billions of dollars in second mortgages. If these second mortgages begin defaulting in significant number, they will not even be worth the paper they are written on because the holder of a second mortgage cannot recoup their investment until the first mortgage is paid in full. If the home is already under water, then legal costs and sales commissions are likely to consume a large share of the sale price, which would not leave enough money on the table to pay for the first mortgage in full. That of course, leaves nothing for the holder of the second mortgage.
Those who believe that government should be doing everything it can to redistribute income and wealth upward, thereby assisting banks in the process, truly want the government to make it possible for people to keep paying on underwater mortgages. Unfortunately, this will frustrate these homeowners because they will be paying a mortgage without accumulating equity, and they will ironically be paying more to retain the title of homeowner than they would have to pay to rent a similar house. It does however help the banking industry’s bottom line. Every month underwater homeowners stay in their homes paying the mortgage, the banks are receiving income that they would not otherwise have access to.
Back in 2004 when I was working for a federal government contractor in Washington, DC I had as a colleague a very bright young man who worked with me on a HUD contract. As the foreclosure crisis was beginning to spread across the land, we talked about a plan that would allow folks facing foreclosure to instead of being evicted and thereby de-stabilizing whole communities, banks should consider renting to the homeowner, allowing the family to stay in the house until their situation stabilized. We played around with the concept, but never really did anything about it.
As it turns out, we were not the only ones thinking along those lines. Since then, Representatives Raul Grigalva and Marcy Kaptur have introduced legislation called “right to rent.” This bill (HR5028) would allow homeowners to retain occupancy of their homes as renters for a period up to five years following a formal foreclosure. During this five year period, the family would pay the bank the Fair Market Rent (FMR) as determined by a third-party assessment of the property.
The Grigalva and Kaptur bill would not only provide a sense of security to homeowners struggling with all the ramifications of foreclosure, it would also prevent whole neighborhoods becoming de-stabilized due to large numbers of foreclosed and abandoned homes on every street. The best part of this bill is that it requires absolutely no new
government agency to manage it and so would be budget neutral.
In fact, the only problem with this bill is that it would require a paradigm shift in how we all perceive the role of government in a crisis such as this one. It would mean that government would have to become a force that is responsible for helping ordinary people as opposed to the rich and powerful and the institutions they hide in.
The CRL study estimated that some 2.5 million homes were foreclosed upon between 2007 and 2009, the “vast Majority” of which were owner-occupied homes with mortgages originated between 2005 and 2008. By the time the current foreclosure relaxes its tentacles on the American economy, as many as 10 million homes will have been through the foreclosure process. In total, this crisis will have cut across demographic and income groups, from mobile homes to “McMansions” and from homes with subprime loans to homes with vanilla mortgages.
But in the end, the crisis will have hit communities of color with a particular viciousness, even adjusting for income. Approximately eight percent of black or Latino homebuyers who took out a mortgage or refinanced between 2005 and 2008 lost their homes between 2007 and 2009 respectively, compared with 4.5 percent of white homebuyers. Since 2007, 17 percent of Latino homeowners, 11 percent of black homeowners and seven percent of white homeowners have either lost their home to foreclosure or are in imminent danger of becoming homeless.
Even more frightening, the CRL study showed that “Racial and ethnic disparities in these estimated foreclosure rates hold even after controlling for differences in income patterns between demographic groups.” Ironically the skew is worse for high-income black and Latino homeowners than for low-income black and Latino homeowners.
Our nation’s newspapers, airwaves and the internet have been overflowing with stories of politicians and government officials screaming for the heads of mortgage bankers and promising one kind of investigation or another to get to the bottom of how this all could have possibly happened.
Generally speaking, not counting the extremists on either end of the political spectrum, there are two competing views on the role of government in these matters. One group maintains that it is the government’s role to redistribute as much income as possible upward to the richest people in the country.
Then there are those of us who believe that government should do everything it can to stimulate and sustain a strong economy that serves an overwhelming number of Americans.
Those who support the first group in both political parties have been firmly in control of government for the past few decades. This is the reality because the way the foreclosure crisis has been managed thus far, proves that point.
By now, we all know what happened. It does not take a master economist to understand the story of the foreclosure crisis in America today. All one has to be is a homeowner and you either know how this nightmare began through personal experience, or you are haunted by the specter of foreclosure from month to month as you struggle to pay your mortgage at all, let alone on time.
The underlying truth is that banks mostly, made trillions of dollars of bad mortgage loans that were then used to buy or refinance houses at “bubble-inflated” prices. With the collapse of that bubble, more than 20% of all mortgages today are underwater—meaning they are worth less than what the homeowners owe on them. Consequently, many homeowners today are struggling to pay mortgages on houses in which they have no equity and have no real prospect of ever acquiring any equity.
Now, let’s return to those two competing viewpoints on the role of the government in this crisis. If the market is allowed to do its thing, millions of homeowners will go belly up on their mortgages, leaving banks and other investors with huge losses.
The most vulnerable in this scenario are the larger banks because they actually own hundreds of billions of dollars in second mortgages. If these second mortgages begin defaulting in significant number, they will not even be worth the paper they are written on because the holder of a second mortgage cannot recoup their investment until the first mortgage is paid in full. If the home is already under water, then legal costs and sales commissions are likely to consume a large share of the sale price, which would not leave enough money on the table to pay for the first mortgage in full. That of course, leaves nothing for the holder of the second mortgage.
Those who believe that government should be doing everything it can to redistribute income and wealth upward, thereby assisting banks in the process, truly want the government to make it possible for people to keep paying on underwater mortgages. Unfortunately, this will frustrate these homeowners because they will be paying a mortgage without accumulating equity, and they will ironically be paying more to retain the title of homeowner than they would have to pay to rent a similar house. It does however help the banking industry’s bottom line. Every month underwater homeowners stay in their homes paying the mortgage, the banks are receiving income that they would not otherwise have access to.
Back in 2004 when I was working for a federal government contractor in Washington, DC I had as a colleague a very bright young man who worked with me on a HUD contract. As the foreclosure crisis was beginning to spread across the land, we talked about a plan that would allow folks facing foreclosure to instead of being evicted and thereby de-stabilizing whole communities, banks should consider renting to the homeowner, allowing the family to stay in the house until their situation stabilized. We played around with the concept, but never really did anything about it.
As it turns out, we were not the only ones thinking along those lines. Since then, Representatives Raul Grigalva and Marcy Kaptur have introduced legislation called “right to rent.” This bill (HR5028) would allow homeowners to retain occupancy of their homes as renters for a period up to five years following a formal foreclosure. During this five year period, the family would pay the bank the Fair Market Rent (FMR) as determined by a third-party assessment of the property.
The Grigalva and Kaptur bill would not only provide a sense of security to homeowners struggling with all the ramifications of foreclosure, it would also prevent whole neighborhoods becoming de-stabilized due to large numbers of foreclosed and abandoned homes on every street. The best part of this bill is that it requires absolutely no new
government agency to manage it and so would be budget neutral.
In fact, the only problem with this bill is that it would require a paradigm shift in how we all perceive the role of government in a crisis such as this one. It would mean that government would have to become a force that is responsible for helping ordinary people as opposed to the rich and powerful and the institutions they hide in.
Saturday, October 2, 2010
The Unthinkable
If Republicans win one or both houses of Congress, all hell will break loose.
Most of us remember myriad hardships created in late 1995 and early 1996 when the Federal Government was shut down during the Clinton administration—and that was under a Democratic administration!
Conservative blogger Erick Erickson, who is sometimes featured on CNN, said early in September that he is “almost giddy thinking about a government shutdown next year. I cannot wait!” Also last month, Dick Morris ranted at the Americans for Prosperity conference that “There’s going to be a government shutdown, just like in ’95 and ’96 but we’re going to win this time and I’ll be fighting on your side.”
A Republican majority in both houses will also see the first attempt on their part to facilitate their long-standing threat to defund the health care law. The logical end point of that ensuing fight with President Obama will lead to a government shutdown, or at least a partial one. Right now, top conservatives are salivating at that possibility.
It is critical for all of us to take a deep breath and think about what the consequences of a government shutdown—even a limited one—would mean for the economy and more importantly, for the country.
Donna Shalala, who served as the Secretary of Health and Human Services during the last government shutdown which ran from December 16, 1995 through January 6, 1996, warns that “It was a mess frankly and devastating to the civil service.” One of Secretary Shalala’s Clinton administration cabinet colleagues, Secretary of Labor Robert Reich shared that “Almost all employees are sent home. Most have no idea when they’ll be paid again.”
And almost as manna from heaven for Republican protagonists who constantly rail against the federal government in general and federal employees specifically, a 2004 report of the Congressional Research Service (CRS) stated, “Government shutdowns have necessitated the furloughing of several hundred thousand federal employees and affect all sectors of the economy.”
Deep down, Republicans probably realize they can’t repeal the health care law, at least not in the foreseeable future, but they have pledged repeatedly that they will do all they can, in the words of House Minority Whip Eric Cantor, “ensure that a trillion dollar takeover of our health care in this county does not occur.” The overall strategy of the Republican Party will be to attack the appropriation of federal dollars, promising that if they gain control of the legislative process in this country, they will defund as Congressman Cantor states, “every bit of the regulation process.”
Even with President Obama’s veto of any attempt by Congress to repeal healthcare reform, Congress only has to target the annual appropriations legislation that funds the Departments of Labor, Education, and Health and Human Services. If Republicans fail to fully fund those departments to budget forcing the President to veto that legislation—look out—government shutdown, here we go.
The initial and the most devastating consequence of a government shutdown are furloughs, hundreds of thousands of workers sent home without compensation. For a government shutdown to happen now, it would send shock waves through an already staggering economy. Social Security payments, Medicare reimbursements and Medicaid dollars to states would cease immediately despite the fact that millions of Americans and every state government in our country depend on these services.
In the same CRS report cited above, “New patients were not accepted into clinical research at the National Institutes of Health (NIH) Clinical Center; the Center for Disease Control and Prevention ceased disease surveillance (information about the spread of diseases such as AIDs and the flu were unavailable); hotline calls to NIH regarding diseases were not answered; and toxic waste clean-up work at 609 sites stopped, resulting in 2,400 Superfund workers being sent home.”
As we are all painfully aware, today’s economy is in much worse shape than it was 15 years ago. The impact of massive amounts of federal employees suddenly out of work and American beneficiaries without income, will impact us in a more devastating fashion than it did under President Clinton.
A Democratic victory on November 2nd will most assuredly cause an increase in all of the hatred, loathing and disgust that has permeated Republican rhetoric these past 23 months, not including the 2008 campaign. In those heady days that immediately followed his inauguration, President Obama was roundly criticized by primarily the Right Wing in this country for taking on too many challenges facing America at one time. Of course, no one can convince me that if he had failed to do so that the criticism would instead have been that he was not doing enough to resolve the crippling number of challenges facing America today.
And yet, in the face of tremendous opposition, this White House managed to get Congress to pass the American Recovery and Re-Investment Act (ARRA) also known as the stimulus. This was the first shot fired to jolt the economy in the short term while also facilitating the long-term reform of health care, education, energy and our financial system. We cannot, as a country, allow this momentum to be stymied by a political party whose rallying cry is “No!”
That said, America is at a critical juncture in its modern history and it is up to you and me, and all of the millions of Americans who demanded change in 2008 to stand together, brush off the negativity and even disappointment that enough has not yet been accomplished, and vote to keep both Houses of Congress Democratic else we revert back to the Republican policies of the eight years leading up to 2008 that has brought about such anger and despair today.
Most of us remember myriad hardships created in late 1995 and early 1996 when the Federal Government was shut down during the Clinton administration—and that was under a Democratic administration!
Conservative blogger Erick Erickson, who is sometimes featured on CNN, said early in September that he is “almost giddy thinking about a government shutdown next year. I cannot wait!” Also last month, Dick Morris ranted at the Americans for Prosperity conference that “There’s going to be a government shutdown, just like in ’95 and ’96 but we’re going to win this time and I’ll be fighting on your side.”
A Republican majority in both houses will also see the first attempt on their part to facilitate their long-standing threat to defund the health care law. The logical end point of that ensuing fight with President Obama will lead to a government shutdown, or at least a partial one. Right now, top conservatives are salivating at that possibility.
It is critical for all of us to take a deep breath and think about what the consequences of a government shutdown—even a limited one—would mean for the economy and more importantly, for the country.
Donna Shalala, who served as the Secretary of Health and Human Services during the last government shutdown which ran from December 16, 1995 through January 6, 1996, warns that “It was a mess frankly and devastating to the civil service.” One of Secretary Shalala’s Clinton administration cabinet colleagues, Secretary of Labor Robert Reich shared that “Almost all employees are sent home. Most have no idea when they’ll be paid again.”
And almost as manna from heaven for Republican protagonists who constantly rail against the federal government in general and federal employees specifically, a 2004 report of the Congressional Research Service (CRS) stated, “Government shutdowns have necessitated the furloughing of several hundred thousand federal employees and affect all sectors of the economy.”
Deep down, Republicans probably realize they can’t repeal the health care law, at least not in the foreseeable future, but they have pledged repeatedly that they will do all they can, in the words of House Minority Whip Eric Cantor, “ensure that a trillion dollar takeover of our health care in this county does not occur.” The overall strategy of the Republican Party will be to attack the appropriation of federal dollars, promising that if they gain control of the legislative process in this country, they will defund as Congressman Cantor states, “every bit of the regulation process.”
Even with President Obama’s veto of any attempt by Congress to repeal healthcare reform, Congress only has to target the annual appropriations legislation that funds the Departments of Labor, Education, and Health and Human Services. If Republicans fail to fully fund those departments to budget forcing the President to veto that legislation—look out—government shutdown, here we go.
The initial and the most devastating consequence of a government shutdown are furloughs, hundreds of thousands of workers sent home without compensation. For a government shutdown to happen now, it would send shock waves through an already staggering economy. Social Security payments, Medicare reimbursements and Medicaid dollars to states would cease immediately despite the fact that millions of Americans and every state government in our country depend on these services.
In the same CRS report cited above, “New patients were not accepted into clinical research at the National Institutes of Health (NIH) Clinical Center; the Center for Disease Control and Prevention ceased disease surveillance (information about the spread of diseases such as AIDs and the flu were unavailable); hotline calls to NIH regarding diseases were not answered; and toxic waste clean-up work at 609 sites stopped, resulting in 2,400 Superfund workers being sent home.”
As we are all painfully aware, today’s economy is in much worse shape than it was 15 years ago. The impact of massive amounts of federal employees suddenly out of work and American beneficiaries without income, will impact us in a more devastating fashion than it did under President Clinton.
A Democratic victory on November 2nd will most assuredly cause an increase in all of the hatred, loathing and disgust that has permeated Republican rhetoric these past 23 months, not including the 2008 campaign. In those heady days that immediately followed his inauguration, President Obama was roundly criticized by primarily the Right Wing in this country for taking on too many challenges facing America at one time. Of course, no one can convince me that if he had failed to do so that the criticism would instead have been that he was not doing enough to resolve the crippling number of challenges facing America today.
And yet, in the face of tremendous opposition, this White House managed to get Congress to pass the American Recovery and Re-Investment Act (ARRA) also known as the stimulus. This was the first shot fired to jolt the economy in the short term while also facilitating the long-term reform of health care, education, energy and our financial system. We cannot, as a country, allow this momentum to be stymied by a political party whose rallying cry is “No!”
That said, America is at a critical juncture in its modern history and it is up to you and me, and all of the millions of Americans who demanded change in 2008 to stand together, brush off the negativity and even disappointment that enough has not yet been accomplished, and vote to keep both Houses of Congress Democratic else we revert back to the Republican policies of the eight years leading up to 2008 that has brought about such anger and despair today.
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