The Poverty Center is tapping into Big Data, learning more about the
housing crisis and its impact on American children. |
Well over 80 million people
tuned in for the face off, setting a new record in the sixty-year history of
televised presidential debates. Among
them, 62% are still “with her,” standing by her man, to make America “Stronger
Together.” Contrary to populist
perception, scientific polling suggests that only 22% are still in that “basket
of deplorables” with him to “Make America Great Again.” According to National
Public Radio, actual scientific polls have shown that Clinton was the clear
winner in Monday night’s televised debate.
The presidential hopefuls’
quest to occupy public housing at 1600
Pennsylvania Avenue rent-free has some beleaguered homeowners wondering if
the two-party system has run its course. This
is just one reason why voters need to see all candidates’ income tax returns.
The current residents at The
White House, an upwardly mobile African American family, will be headed back to
the block with a handful of explanations as to why simple stuff like the
mortgage crisis has yet to be resolved for everyday Americans.
One could claim that as the
first African American president, Barack Obama did all he could to restore
America’s economy. He counseled his
predecessor on the Wall Street Bail Out, super-glued Freddie Mac’s and Fannie
Mae’s brokenness, and got the auto industry back up and running--ALL without
urgently needed appropriations bills from Congress.
But, a decision not to
investigate, prosecute and imprison former Vice President Dick Cheyney, select
cabinet members and advisors from a previous administration may prove to be the
one executive action defining two otherwise productive terms. Both the Bush and the Obama Administrations
knew about Cleveland,
Ohio’s housing problem.
The
American Mentor Wire Service, a program of Youth Achievers USA Institute, started
observing economic trends and behaviors as far back as 1998. That was the year young Americans called for
a 10-year Million
Youth Movement. They met in Atlanta,
GA and set goals around their individual and collective visions for the
future. Among the less than a million
committed souls were beneficiaries of an American Civil Rights era. They were banking on an inheritance that somehow
resulted instead in a compromise on a long-overdue
promissory note.
By 2008, the hope of
disadvantaged Americans owning their first homes had faded in the cloud of a
seven-year mortgage crisis. Two
government-sponsored enterprises (GSE), Fannie
Mae and Freddie Mac,
suffered large losses and were seized by the federal government the summer of
2008 as two-party presidential campaigning shifted into business as usual. President Bush attempted to ease concerns with
an observation that “the
economy is fine.”
Earlier, in order to meet
federally mandated goals to increase homeownership, Fannie Mae and Freddie Mac
had issued debt to fund purchases of subprime mortgage-backed securities, which
later fell in value. In addition, the
two government enterprises suffered losses on failing prime mortgages, which
they had earlier bought, insured, and then bundled into prime mortgage-backed
securities that were sold to investors.
Historically, potential
homebuyers found it difficult to obtain mortgages if they had below average
credit histories, provided small down payments or sought high-payment loans. So, as some wealthy Americans benefitted from
the G.W. Bush era tax cuts, few of them ever bothered to follow through on
their obligations through the New Market
Tax Credits Act.
Not everybody is an economist,
and most economists you meet are more concerned with their next paycheck than
your bottom line. But, in a nutshell, the
September 6, 2008 conservatorship to balance Freddie and Fannie’s books cost
taxpayers bigtime. Freddie and Fannie
are "independent" corporations and not federal agencies. Their combined balance sheet obligations were
just over $5 trillion, a significant amount when compared to the $9.5 trillion
of officially reported United States public debt at the time of the
Freddie-Fannie takeover.
It appears that none ($0) of
the U.S. Treasury’s infusion of capital for Freddie and Fannie helped folks
that could not qualify for Freddie and Fannie’s help in the first place. HARP seemed to be a necessary first step
toward doing the right thing, but imagine being told you don’t qualify for a
mere $100,000.00 in relief after Freddie and Fannie denied you a
government-backed loan. Then, go back
and review half the political promises made to get you a job or help you start
a business. Factor in some seemingly
unrelated issues such as implicit
biases and racial anxiety. Finally,
you’ll want to multiply your own undervaluation by 240 years of economic
compromise.
This is just one formula, to
begin quantifying a debt due to historically disadvantaged Americans. Just imagine what might have been achieved
had the U.S. Congress approved the President’s budgets over the last eight
years.
Several government agencies under
the Obama Administration took steps to increase liquidity within Fannie Mae and
Freddie Mac.
· Federal Reserve purchases of $23 billion in GSE debt
(out of a potential $100 billion) and $53 billion in GSE-held mortgage backed
securities (out of a potential $500 billion).
· Federal Reserve purchases of $24 billion in GSE debt.
· Treasury Department purchases of $14 billion in GSE
stock (out of a potential $200 billion).
· Treasury Department purchases of $71 billion in
mortgage backed securities.
· Federal Reserve extension of primary credit rate for
loans to the GSEs
Keep in mind that government-sponsored
enterprise (GSE) is a financial services corporation created by the United
States Congress. Their intended function is to enhance the flow of credit to
targeted sectors of the economy and to make those segments of the capital
market more efficient and transparent, and to reduce the risk to investors and
other suppliers of capital.
Meanwhile, way too many
Americans are still struggling with upside down mortgages, limited job
opportunities and almost no understanding of their unique small business
needs. There has always been some logic
in the belief that poor people can stop being poor as rich people are willing
to become even richer at a slower pace.
But, more than 4 million Americans don’t own homes, they own
mortgages!
According to one real estate
source, American “homeowners” owe at least 20% more than their homes are worth,
totaling $579 billion of so-called negative equity. The next President of the United States will
need to forgive
some citizens of that debt instead of compounding the issue with more empty
promises and ineffective programs. Too
many families are in serious financial crisis, while our political candidates,
members of Congress, and other elected or appointed officials mimic episodes of
“Scandal,” “Survivor,” “Empire,” or even “The Apprentice.” It’s time to stop stalling critical funding,
projects, legislation and appointments. And,
it’s past time for Congress to approve a budget.