The Economy
MA successfully sues Goldman Sachs over subprime lending
Published May 12, 2009 @ 01:35PM PT
In the first settlement of its kind in the country, Massachusetts Attorney General Martha Coakley has reached a $60 million agreement with a Wall Street investment bank that helped facilitate the frenzy of subprime lending that saddled so many homeowners with mortgages they could not afford to pay.
Wall Street giant Goldman Sachs Group agreed to reduce the size of subprime loans for some 700 Massachusetts homeowners by up to 35 percent, Coakley said yesterday. The investment bank played a key role in perpetuating sales of subprime mortgages by packaging the loans into securities that were sold to investors, with the proceeds used to fund new rounds of mortgages.
"This is a landmark case. It is one of the few times we've seen somebody who didn't actually originate the loans being held accountable," said Guy Cecala, the chief executive of Inside Mortgage Finance, a mortgage industry newsletter.
Mass. has been investigating the subprime industry for the last two years, starting with mortgage originators and moving on through the chain. Says Coakley: ""We've made the determination, and our courts have agreed, that many of these loans were unfair. They were destined to fail".
Housing advocates lauded the settlement for focusing on financial institutions that played a key part in the nation's housing crisis, which prompted wide-scale inflation in the housing market and then a crash that led to a worldwide financial collapse. At the height of the subprime market in 2006, 82.4 percent of subprime loans were packaged with other loans into securities that were sold to investors, according to Inside Mortgage Finance.
And I'm doubly excited to see an alum from my urban planning department at MIT quoted - Andrew Jakabovics points out that by reducing the loan principal for these 700+ homeowners, they're given a chance to get their "head[s] above water again."
Sometimes I just love my activist blue state!
Inequality Makes People Cruel
Published May 11, 2009 @ 12:02PM PT
Discuss.
Fellow blogger Alana (h/t) comes to that conclusion, with the aid of a Twitter survey (Twurvey?):
...that explains the people on the bottom end of the pyramid forced into cruel actions and cruel choices, and the people on the top end, so far from poverty that poor people and their problems no longer seem real to them. It’s easy to be cruel when you can’t see your victims. Or when you think their problems are inevitable and can’t be solved. Or when you think poor people make themselves poor or even aren’t quite human. Inequality creates the kind of distance that makes that happen.
Or when you're motivated by greed or entitlement.
What's missing here b/w these poles is the middle-class countries like ours possess; what is their role here? I'd venture ignorance or worse, indifference. To be blind to how our world works, or for failing to advocate for change, whether at a micro, personal level or at a collective macro level.
What do you think? It's an interesting discussion in light of recent global survey findings and the increased importance of the federal (central) government right now:
Are non-profits set to spend stimulus weatherization $$?
Published May 11, 2009 @ 06:00AM PT
The state-run Weatherization Assistance Program for low-income families was singled out for big stimulus spending partly because it had worked the same way for nearly 35 years and didn’t need adjustments. But governors in some states are proposing brand new approaches that critics say could derail the tried-and-true home insulation program. [snip]
Targeted for hefty stimulus funding, weatherization has been attacked by members of Congress and taxpayer groups who say the local agencies that run the program won’t be able to spend the windfall fast enough to generate much needed jobs.
This is a fascinating article, because it gets at something I've mentioned here before: so much of our government and social sector infrastructure has been devastated in the last 8 if not 25 years. Now that we've got $$ to spend, we're worried the small but steady non-profits we've counted on to deliver these programs for years aren't up to it.
That's a legitimate point, in my opinion.
Leadership Vacuums in Detroit & New Orleans
Published May 09, 2009 @ 09:48AM PT
Detroit and New Orleans: Two struggling African-American cities with proud pasts and deeply uncertain futures. Now, in addition to their on-going challenges of high poverty and inequality and uneven economic development, both face mayoral contests. In Detroit, it seems no one cares. In New Orleans, most black residents and practically all white residents crow at Mayor Ray Nagin, "Good riddance!"
What's interesting about these two races is how questions of meeting the daily needs of residents matches up against the need for a guiding vision for the future of these two cities.
Tax Credits for Affordable Housing Dry Up
Published May 08, 2009 @ 12:00PM PT
And another limit to market-driven affordable housing production is revealed:
"Mr. Brandt’s experience is being mirrored throughout the nation, demonstrating the shortcomings of a financing vehicle that was conceived more than two decades ago to inject market discipline into the development of income-restricted housing. The theory was that investors would support only those projects likely to be successful.
Many developers are finding themselves either unable to sell tax credits that they have been awarded or short millions of dollars because the price that investors are willing to pay for a tax credit has tumbled from $1 or more to less than 75 cents today.
Today, the total amount of tax credit equity available for low-income housing has shrunk to $4 billion to $4.5 billion, down from about $9 billion in 2007, Frederick H. Copeman, the national director of tax credit investment advisory services at Ernst & Young, said in an interview in his Boston office."
Despite our frequent hand-wrangling over that eyesore public housing, in reality the majority of subsidized housing today is tax-credit financed and produced by private sector developers, for- and non-profit. Yet, the limits to this approach fuel calls for state and federal affordable housing trust funds, to again prioritize the needs of the lowest-income Americans that public housing filled starting in the 1960s.
What If They Gave A Recovery And No One Came?
Published May 07, 2009 @ 12:00PM PT
Given the American short attention span, perhaps the fact that we’ve grown bored with “recession talk” is to be expected. Dealing with foreclosures, the end of debt-fueled excess, and the rest, is not fun and sits uneasily on our usual approach of endless growth and optimism.
That, I think is why the early bleating about “notes of recovery” or a “few small shoots” in the garden of future prosperity is so unsurprising. Businesses and Wall Street investors want an up story, and the idea of a turnaround is good for business, and by the media’s extension, good for all of us.
So what if the facts don’t fit the story?
The Rural Poor and Access To Health Care
Published May 07, 2009 @ 06:00AM PT
Many times when we think of the word "poverty," images of urban slums, soup kitchen lines and the homeless are the first thoughts that pop into our heads.
But as many of you know, poverty has no geographical boundaries. There are many families living in rural America that struggle to survive with less access to poverty-support systems that are often based in cities. One of the most significant challenges these families often face is access to affordable health care.
A new report released by the U.S. Department of Health and Human Services paints a grim picture of rural economies and health care access in communities across the county. Among the findings:
-Rates of poverty are higher in rural areas than in urban areas. While 12% of those in urban areas live in poverty, 15% of rural Americans live below the poverty line.
