Millions of Americans have lost their jobs, aren’t able to pay rent or their mortgages, and therefore face eviction or foreclosure. Yet the best that even “liberal” politicians are offering is a moratorium on evictions until some future point in time.
Odds are, you are poor. Or you’ve been poor.
Conventional wisdom — i.e., what the media says, not what most people think — repeatedly implies that poverty is a permanent state that chronically afflicts a relatively small number of Americans, while the rest of us thrive in a vast, if besieged, middle class. In fact, most Americans between age 25 and 75 have spent at least one year living under the poverty line.
“One of the biggest myths about poverty in the United States is that a relatively small segment of the population is poor, and that this represents a more or less permanent underclass,” Columbia University economist and social work professor Irwin Garfinkel tells Columbia magazine. “But poverty is quite dynamic. Lots of people move in and out of poverty over the course of their lives. And it doesn’t take much for people at the edge to lose their footing: a reduction in work hours, an inability to find affordable day care, a family breakup, or an illness — any of these can be disastrous.”
Even if you bounce back, the effects of these financial setbacks linger. For young adults, attending cheaper colleges or passing up higher education — or being unable to afford to take a low-paid internship — burdens them with opportunity costs that hobble them the remainder of their lives (which will likelier end sooner). Debts accrue with compound interest and must be repaid; damaged credit ratings block qualified buyers from purchasing homes. Diseases go undetected and untreated during periods without healthcare. Gaps on resumes are a red flag for employers.
Americans pay a price for the boom-and-bust cycle of capitalism. To find out exactly how high the cost is, Professor Garfinkel and his colleagues at Columbia have created the Poverty Tracker, dubbed “one of the most richly detailed studies of poverty ever undertaken in the United States.” The Poverty Tracker is “a meticulous long-term survey of 2,300 New York households across all income levels…for at least two years” that aims “to create a much more intimate and precise portrait of economic distress than has ever been conducted in any US city.”
Initial findings were distressing: “While the city’s official poverty rate is 21%, the Columbia researchers found that 37% of New Yorkers, or about 3 million people, went through an extended period in 2012 when money was so tight that they lost their home, had their utilities shut off, neglected to seek medical treatment for an illness, went hungry, or experienced another ‘severe material hardship,’ as the researchers define such extreme consequences.”
Wait, it’s even worse than that:
“Even the 37% figure understates the number of New Yorkers who endured tough times in 2012. The researchers estimate that two million more endured what they call ‘moderate material hardship,’ which, as opposed to, say, losing one’s home or having the lights shut off, might involve merely falling behind on the rent or utility bills for a couple of months. Many others were in poor health. Indeed, the researchers found that if you add together all of those who were in poverty, suffered severe material hardship, or had a serious health problem, this represented more than half of all New Yorkers [emphasis is mine].”
The researchers hope that “they will have enough data to begin helping public authorities, legislators, foundations, nonprofits, philanthropists, and private charities address the underlying problems that affect the city’s poor” by the end of 2014.
What can be done?
Under this system? Not much. Democrats, who haven’t even proposed a major anti-poverty program since the 1960s, aren’t meaningfully better on poverty than Republicans.
As things stand, the best we can hope for from the political classes are crumbs: a few teeny-weeny proposals for wee reforms.
Like expanding day-care programs. More school lunches. Housing subsidies. “Additional investments in food programs.”
A drop in the bucket in an ocean of misery.
The Poverty Tracker shows that poverty is a huge problem in the United States. Unfortunately its authors, who draw their salaries from an institution intimately intertwined with monied elites, dare not openly suggest what they know to be true, that the key to eliminating poverty is to get rid of its root cause: capitalism.
(Ted Rall, syndicated writer and cartoonist, is the author of “After We Kill You, We Will Welcome You Back As Honored Guests: Unembedded in Afghanistan,” out Sept. 2. Subscribe to Ted Rall at Beacon.)
COPYRIGHT 2014 TED RALL, DISTRIBUTED BY CREATORS.COM
As a news junkie and student of the human condition, it takes a lot to make my blood come to a full boil. It takes even more to make me sympathize with wealthy corporations. Hand it to Gov. Jerry Brown — he managed to pull off both feats with the news that he diverted $350 million from California’s share of the 2012 national mortgage settlement in order to reduce the state’s 2013 budget deficit.
By 2010 a political consensus had formed. Though politicians were partly to blame, the worst offenders were the giant “too big to fail” banks that had knowingly approved loans to homebuyers who couldn’t afford to pay them back, sold bundles of junk mortgage derivatives to unsuspecting investors and secretly hedged their bets against their clients. After the house of cards came down, they played the other side. They cashed in their chips, refused to refinance mortgages even though interest rates had fallen and deployed “robo-signers” to illegally evict hundreds of thousands of homeowners — including people who had never missed a payment — to ding them with outrageous late fees on their way to profitable (for the banks) foreclosure.
On the Left, anger at the banks coalesced around the Occupy Wall Street movement. Though less widely reported, anti-bank sentiment also found a home in the Tea Party.
Politics ultimately play out in the courts. Lawsuits filed by state attorney generals forced the banks to the bargaining table. In 2012 they agreed to cough up $26 billion as penance.
The money was supposed to compensate people who had lost their homes and to help those who were hanging on by a thread avoid eviction, either by refinancing at lower rates or writing down principal to reflect lower real estate prices.
Enter the governors.
Jerry Brown wasn’t unique. Cash-hungry states siphoned off half of their share of the mortgage settlement to plug holes in their budgets.
We will never know how many families became homeless as a result.
The more you think about it, the more disgusting it is. Obviously it’s important for the state to get its fiscal house in order. But not at the expense of those least able to bear the burden. Desperate families lost — and are still losing — their homes so that holders of California’s state debt, much of it held by the same banks who caused the mortgage crisis, can be repaid.
This outrage is not without precedent.
Rather than the anti-smoking and health campaigns they were supposed to launch, the states siphoned off 47% of the $7.9 billion they received from the 1998 tobacco settlement for general budget purposes.
How many kids might have been reached by tobacco education programs that never got off the ground? How many will die of lung cancer? “Fifteen years after the tobacco settlement, our latest report finds that states are continuing to spend only a miniscule portion of their tobacco revenues to fight tobacco use,” the Campaign for Tobacco-Free Kids said in 2014. In Fiscal Year 2014, the states will collect $25 billion in revenue from the tobacco settlement and tobacco taxes, but will spend only 1.9 percent of it – $481.2 million – on programs to prevent kids from smoking and help smokers quit. This means the states are spending less than two cents of every dollar in tobacco revenue to fight tobacco use.”
This is the kind of behavior that prompts conservatives to characterize these settlements as government shakedowns of big business. It’s hard to disagree. As slimy as the banksters were and are — they’re sabotaging political solutions to the foreclosure crisis — they’re just greedy bastards doing what greedy bastards do. Public officials, on the other hand, are supposed to be on our side.
What Brown and his fellow governors have done with the mortgage settlement money is even more nauseating.
Why Aren’t Rioters Burning Down the Banks?
One in ten Americans take such antidepressants as Prozac and Paxil. Among those in their 40s and 50s, it’s 23%. Maybe that’s why we’re so passive.
Like the blissed-out soma-sucking drones of Huxley’s “Brave New World,” we must be too drugged to feel, much less express, rage. How else to explain that furious mobs haven’t burned the banks to the ground?
Last week, as the media ginned up empty speculation about Hillary Clinton’s presidential prospects, and wallowed in nuclear cognitive dissonance — Iran, which doesn’t have nukes and says it doesn’t want them, is repeatedly called a grave threat worth going to war over, while North Korea, which does have them and won’t stop threatening to turn the West Coast of the U.S. into a “sea of fire,” is dismissed as empty bluster, nothing to worry about — the Office of the Comptroller of the Currency and the Federal Reserve released the details of the settlement between the Obama Administration and the big banks over the illegal foreclosure scandal.
Citibank, JPMorgan Chase, Bank of America, Wells Fargo and other major home mortgage lenders foreclosed upon and evicted millions of homeowners between the start of the housing collapse in 2007 and 2011. Millions of families became homeless, including 2.3 million children. The vast majority of these Americans are still struggling; many fell into poverty from which they will never escape.
Disgusting, amazing, yet true: the banks had no legal right to evict these people. In many cases, the banks didn’t have basic paperwork, like the original deed to the house. They resorted to “robo-signing” boiler room operations to churn out falsified and forged eviction papers. In others cases, people could have kept their homes if they’d been allowed to refinance — their right under federal law — but the banks illegally refused, giving them the runaround, repeatedly asking for the same paperwork they’d already sent in. Soldiers fighting in Afghanistan and Iraq, protected from foreclosure under U.S. law, came home to find their homes resold at auction. In other cases, banks even repossessed homes where the homeowner had never missed a mortgage payment.
The foreclosure scandal helped spark the Occupy Wall Street movement.
Promising justice and compensation for the victims, President Obama’s Justice Department joined lawsuits filed by the attorneys general of several states.
Last year, Obama announced that the government had concluded a “landmark settlement” with the banks that would “deliver some measure of justice for those families that have been victims of their abusive practices.” The Politico newspaper called the $26 billion deal “a big win for the White House.” $26 billion. Sounds impressive, right?
So…the envelope, please.
How much will the banks have to pay? What will people whose homes were stolen — there is no other word — receive? Now we know the details.
Remember what we’re talking about. Your house is your biggest asset. You own tens of thousands, in some cases hundreds of thousands of dollars in equity. One morning the sheriff comes. He throws you and your family out on the street. Your possessions are dumped on the lawn. You have nowhere to go. Your kids are crying. If you were struggling before, now you’re completely screwed. And the bank that did it had no legal basis whatsoever to do what they did.
They took your house, sold it, and pocketed the profits.
What would happen to you if you walked into Tiffany’s and stole a $200,000 necklace?
- Even though they qualified for federal loan modifications, the banks seized 1.1 million homes, making 1.1 million families homeless after they were approved for refinancing. Since the average foreclosed home was worth $191,000, the banks stole $210 billion in homes. Under the “landmark settlement,” these wrongfully evicted Americans will receive $300 or $500 each, the value of a modest night out at a nice restaurant in Manhattan (two tenths of one percent of their loss).
- 900,000 borrowers who were entitled under Obama’s Make Home Affordable program to refinancing were denied help and lost their homes. They get $300 or $600.
- 420,000 homeowners who lost their homes while the banks intentionally dithered and “lost” their paperwork get $400 or $800.
- 28,000 families who were entitled to protection against foreclosure under federal bankruptcy law, but got thrown out of their homes anyway, get $3,750 to $62,500.
- 1,100 soldiers entitled to protection against foreclosure because of their military status get $125,000.
- 53 families who weren’t late on their mortgages, never missed a payment, but got thrown out anyway, get $125,000.
So we’ve got more than 2.4 million families — that’s 5 million people — whose homes got bogarted by scumbag banksters. They’re getting a thousand bucks each on average. A thousand bucks for a two hundred thousand dollar theft! Not to mention the heartbreak and stress they suffered.
Why aren’t those five million people stringing up bank execs from telephone poles? It’s gotta be the Paxil.
But what really gets me is the 53 families who are getting $125,000 payouts for losing homes they were 100% up to date on.
Even if you’re a heartless right-winger, you’ve got to have a problem with a bank taking your house when you never missed a payment. Sorry, but these are multinational, multibillion dollar banks. They should pay these families tens of millions of dollars each.
Those 53 families should own Citibank, JPMorgan Chase, Bank of America and Wells Fargo.
Citigroup CEO Vikram Pandit received $260 million in pay between 2007 and 2012, the height of the foreclosure scandal.
In 2011 alone, JPMorgan Chase CEO Jamie Dimon was given $23 million. In 2012, the company’s board of directors “punished” him for a $6 billion loss in derivatives trading by paying him “merely” $18.7 million.
In 2012 alone, Bank of America paid CEO Brian Moynihan $12 million; Wells Fargo paid $23 million to CEO John Stumpf.
Not bad for some of the worst criminals in history.
That’s how things work in the United States: the criminals get the big payouts. The people whose lives they destroy get $300.
(Ted Rall’s website is tedrall.com. His book “After We Kill You, We Will Welcome You Back As Honored Guests: Unembedded in Afghanistan” will be released in November by Farrar, Straus & Giroux.)
COPYRIGHT 2013 TED RALL
Obama tried to finesse his response to the housing crash, rejecting a bailout of homeowners facing foreclosure in favor of a limited aid program and a bet that a recovering economy would take care of the rest. Millions of people lost their homes and the recovery never materialized. The economy is now the primary threat to Mr. Obamaâs bid for a second term, and economists and political allies say the Obama’s non-response to the housing crisis was the administrationâs most significant mistake.
Voters Turn Against Pols’ Follow-the-Polls Strategy
In order to be a good leader, Disraeli said, “I must follow the people.”
Aided and abetted by toe-sucking pollster Dick Morris, Bill Clinton finessed the art of leading from the rear, relying on Morris’ tracking surveys to help him decide everything from whether to bomb Serbia to when and if to take a vacation.
By definition, however, leaders point where their followers should go. Americans haven’t seen much real leadership on the federal level since Reagan. Where there’s been progress, such as on gay rights, the President only stepped forward after public opinion had shifted enough to make it safe.
For the first time in 30 years, Dick Morris’ follow-the-voters strategy appears to be running out of steam. This year, the electorate seems to be hungering for presidents in the mold of TR, FDR and LBJ—old-school leaders who painted ambitious visions of where America could go and why it should, who took political gambles that the people might not be ready for what they had in mind, who anticipated crises and challenges before anyone else, and explained why we had to act sooner rather than later.
The craving for leadership is evident in the polls. Though personally popular and enjoying the advantages of incumbency, President Obama is running neck and neck against Mitt Romney, an awkward candidate from a minority religion who has trouble connecting with, and is seen as out of touch by, ordinary voters.
Democrats must be worried. Historically, Republican presidential nominees typically gain on Democrats throughout the fall. At this point in the game, Democrats need a substantial lead in order to emerge victorious in November.
What’s going wrong? Mainly, it’s the economy. It sucks. Still. Democrats say the President inherited the meltdown from Bush. But Americans blame Obama.
“The nation’s painfully slow pace of growth is now the primary threat to Mr. Obama’s bid for a second term, and some economists and political allies say the cautious response to the housing crisis was the administration’s most significant mistake,” reports The New York Times. Obama’s big screw-up: “He tried to finesse the cleanup of the housing crash, rejecting unpopular proposals for a broad bailout of homeowners facing foreclosure in favor of a limited aid program—and a bet that a recovering economy would take care of the rest.”
Recovery? What recovery?
The depressed housing market, coupled with the reduced purchasing power of tens of millions of Americans who lost their homes to eviction and/or foreclosure, makes recovery unlikely to impossible for the foreseeable future.
Many people, including yours truly, warned that the millions of Americans who were evicted under foreclosure, many of them illegally, were more “too big to fail” than Citigroup. Some, like former Congressman Jim Marshall (D-GA), voted for TARP, but urged the Obama Administration to condition the bailout on forcing the banks to refinance mortgages and write down principal to reflect the new reality of lower housing prices. “There was another way to deal with this, and that is what I supported: forcing the banks to deal with this. It would have been better for the economy and lots of different neighborhoods and people owning houses in those neighborhoods,” Marshall says.
Voters aren’t mad at Obama for not being clairvoyant. They’re pissed off because he ignored people who were smart and prescient in favor of those who were clueless and self-interested, like Tim Geitner. He may be about to pay a price for that terrible decision.
Tens of millions of Americans already have.
Speaking of leadership—the art of seeing what comes next and doing something about it—what looming problems are the political class ignoring today?
It’s too late to stop the 2008-to-2012 economic meltdown. But it’s still possible for Obama (or, theoretically, Romney) to get ahead of the economy—permanent unemployment benefits, anybody?—and other pressing issues.
Americans want leaders who point the way forward, to anticipate monsters we can’t yet imagine. For example, there is a huge looming crisis: pensions. In 10 to 15 years, Generation Xers will hit traditional retirement age. How will they eat?
Close to none have traditional defined-benefit pension plans. Gen Xers, who earn far less than the Baby Boomers at the same age, have been shunted into 401(k)s, which turned out to be a total ripoff: the average rate of return between 1999 and 2010 was 0.3 percent.
And much of that was withdrawn—under penalty—to subsist after layoffs.
“[Gen Xers] have no savings, and what they had was devastated by two market crashes,” said Andrew Eschtruth of the Center for Retirement Research. “They never got off the ground.”
If you’re 45 years old now and just beginning to save for retirement, financial planners say you should save 41 percent of your income annually (if you haven’t gotten laid off again). As if. Half of Gen Xers live hand to mouth; the rest save a piddling six percent a year.
The Gen X retirement crisis represents 46 million people waiting for a savior—and 46 million potential votes.
Attention Mssrs. Obama, Romney and anyone else presenting yourself as a would-be leader: Don’t just read the polls. Don’t follow us. Show that you care about, and have a credible plan to confront, the problems of the future. If you do that—and we’re not holding our breaths—we’ll pay attention to you.
(Ted Rall’s new book is “The Book of Obama: How We Went From Hope and Change to the Age of Revolt.” His website is tedrall.com. This column originally appeared at NBCNews.com’s Lean Forward blog.)
COPYRIGHT 2012 TED RALL
Mortgage Settlement a Sad Joke
Joe Nocera, the columnist currently challenging Tom Friedman for the title of Hackiest Militant Centrist Hack—it’s a tough job that just about everyone on The New York Times op-ed page has to do—loves the robo-signing settlement announced last week between the Obama Administration, 49 states and the five biggest mortgage banks. “Two cheers!” shouts Nocera.
Too busy to follow the news? Read Nocera. If he likes something, it’s probably stupid, evil, or both.
As penance for their sins—securitizing fraudulent mortgages, using forged deeds to foreclose on millions of Americans and oh, yeah, borking the entire world economy—Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo have agreed to fork over $5 billion in cash. Under the terms of the new agreement they’re supposed to reduce the principal of loans to homeowners who are “underwater” on their mortgages—i.e. they owe more than their house is worth—by $17 billion.
Some homeowners will qualify for $3 billion in interest refinancing, something the banks have resisted since the ongoing depression began in late 2008.
What about those who got kicked out of their homes illegally? They split a pool of $1.5 billion.
Sounds impressive. It’s not. Mark Zuckerberg is worth $45 billion.
“That probably nets out to less than $2,000 a person,” notes The Times. “There’s no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file.”
Readers will recall that I paid more than that for a speeding ticket. 68 in a 55.
This is the latest sellout by a corrupt system that would rather line the pockets of felonious bankers than put them where they belong: prison.
Remember TARP, the initial bailout? Democrats and Republicans, George W. Bush and Barack Obama agreed to dole out $700 billion in public—plus $7.7 trillion funneled secretly through the Fed—to the big banks so they could “increase their lending in order to loosen credit markets,” in the words of Senator Olympia Snowe, a Maine Republican.
Three years after TARP “tight home loan credit is affecting everything from home sales to household finances,” USA Today reported. “Many borrowers are struggling to qualify for loans to buy homes…Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits. Even then, they may not qualify for the lowest interest rates.”
Financial experts aren’t surprised. TARP was a no-strings-attached deal devoid of any requirement that banks increase lending. You can hardly blame the bankers for taking advantage. They used the cash—money that might have been used to help distressed homeowners—to grow income on their overnight “float” and issue record raises to their CEOs.
Next came Obama’s “Home Affordable Modification Program” farce. Another toothless “voluntary” program, HAMP asked banks to do the same things they’ve just agreed to under the robo-signing settlement: allow homeowners who are struggling to refinance and possibly reduce their principals to reflect the collapse of housing prices in most markets.
Voluntary = worthless.
CNN reported on January 24th: “The HAMP program, which was designed to lower troubled borrowers’ mortgage rates to no more than 31% of their monthly income, ran into problems almost immediately. Many lenders lost documents, and many borrowers didn’t qualify. Three years later, it has helped a scant 910,000 homeowners—a far cry from the promised 4 million.”
Or the 15 million who needed help.
As usual, state-controlled media is too kind. Banks didn’t “lose” documents. They threw them away.
One hopes they recycled.
I wrote about my experience with HAMP: Chase Home Mortgage repeatedly asked for, received, confirmed receiving, then requested the same documents. They elevated the runaround to an art. My favorite part was how Chase wouldn’t respond to queries for a month, then request the bank statement for that month. They did this over and over. The final result: losing half my income “did not represent income loss.”
It’s simple math: in 67 percent of cases, banks make more money through foreclosure than working to keep families in their homes.
This time is different, claims the White House. “No more lost paperwork, no more excuses, no more runaround,” HUD secretary Shaun Donovan said February 9th. The new standards will “force the banks to clean up their acts.”
Don’t bet on it. The Administration promises “a robust enforcement mechanism”—i.e. an independent monitor. Such an agency, which would supervise the handling of million of distressed homeowners, won’t be able to handle the workload according to mortgage experts. Anyway, it’s not like there isn’t already a law. Law Professor Alan White of Valparaiso University notes: “Much of this [agreement] is restating obligations loan servicers already have.”
Finally, there’s the issue of fairness. “Underwater” is a scary, headline-grabbing word. But it doesn’t tell the whole story.
Tens of millions of homeowners have seen the value of their homes plummet since the housing crash. (The average home price fell from $270,000 in 2006 to $165,000 in 2011.) Those who are underwater tended not to have had much equity in their homes in the first place, having put down low downpayments. Why single them out for special assistance? Shouldn’t people who owned their homes free and clear and those who had significant equity at the beginning of crisis get as much help as those who lost less in the first place? What about renters? Why should people who were well-off enough to afford to buy a home get a payoff ahead of poor renters?
The biggest fairness issue of all, of course, is one of simple justice. If you steal someone’s house, you should go to jail. If your crimes are company policy, that company should be nationalized or forced out of business.
Your victim should get his or her house back, plus interest and penalties.
You shouldn’t pay less than a speeding ticket for stealing a house.
COPYRIGHT 2012 TED RALL