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mostlysignssomeportents · 1 year

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Biden set to appoint mass foreclosure cheerleader to the Fed

Personnel are policy, something that the Biden administration has proved again and again since the 2020 election. Biden himself is a kind of empty vessel into which different wings of the Democratic party pour their will, yielding a strange brew of appointments both great and terrible.

If you’d like an essay-formatted version of this post to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/03/06/personnel-are-policy/#janice-eberly

On the one hand, you have progressive appointments like Jonathan Kanter at the DoJ and Lina Khan at the FTC, leaders who are determined to challenge and curb corporate power:

https://pluralistic.net/2022/01/10/see-you-in-the-funny-papers/#bidens-legacy

On the other hand, you have deferential leaders like Pete Buttigieg, who fill their own staff with status quo counsel, and then let those timid corporate apologists run the show, leaving the substantial enforcement powers of a powerful agency to gather dust:

https://pluralistic.net/2023/01/10/the-courage-to-govern/#whos-in-charge

While the Democrats’ anti-corporate wing got to drive the administration’s competition agencies, the corporate wing has enjoyed near-total dominance over finance regulations (with notable exceptions, e.g. Rohit Chopra), starting with Trump’s Jerome Powell, a bloodletting monster happy to shovel workers into their bosses’ crushers all day long:

https://pluralistic.net/2023/01/19/creditors-vs-workers/#finance-colored-glasses

Corporate Dems continue to flex their muscle. A seat has just opened up on the Federal Reserve Board, and the WSJ is pretty sure the seat is going to Janice Eberly, a corporate ghoul who helped Obama Treasury Secretary Timothy Geithner steal Americans’ houses on behalf of the bankers who destroyed the world economy in 2008:

https://www.wsj.com/articles/white-house-considers-two-economists-for-fed-vice-chair-58f13344

A quick refresher: Obama inherited the Great Financial Crisis, a massive global asset crash that followed from a decade of real-estate and derivatives deregulation that saw the world’s largest banks issuing mortgages they knew would fail, and then placing massive bets on “collateralized debt obligations” that were supposed to offset the risk.

The banks gambled trillions, nearly destroyed the world’s economy, and then blamed it all on reckless borrowers — mortgage holders who had been mis-sold predatory mortgages that were designed to trigger defaults thanks to low “teaser rates” that later “ballooned” into monthly payments the banks knew the borrowers couldn’t afford.

Geithner was Obama’s go-to guy for the GFC. It was under his leadership that billions were handed out to the banks to bail them out and keep them solvent during the crisis — and it was also under his leadership that bank execs were able to pay themselves millions in bonuses using that public money.

When the banks were in trouble, Geithner leapt into action. When the banks’ customers faced crises, he was MIA — especially during the foreclosure epidemic that followed, as the banks stole our homes out from under us, often forging the paperwork. No bank was seriously punished for this policy.

Back to Janice Eberly, who served as Geithner’s assistant secretary of the Treasury for economic policy — his hatchet-woman, in other words. Now, sometimes people in senior government roles stick around because they disagree with their bosses and want to mitigate the harm of their bosses’ policies.

That’s not why Eberly took the job. In 2014, she and Arvind Krishnamurthy co-wrote a Brookings Institute paper called “Efficient Credit Policies in a Housing Debt Crisis,” that explained why Geithner had it right all along — bailing out the banks and leaving homeowners in foreclosure is “efficient”:

https://www.brookings.edu/wp-content/uploads/2016/07/fall2014bpea_eberly_krishnamurthy.pdf

Writing in The American Prospect, Max Moran from the Revolving Door Project breaks down “Efficient Credit Policies,” explaining how Eberly’s stated views should disqualify her from sitting on the Fed board, especially as we teeter on the brink of a deep financial crisis:

https://prospect.org/economy/2023-03-06-janice-eberly-fed-nominee-mortgage-crisis/

The first thing you need to understand here is HAMP, the Home Affordable Modification Program, which received the $100b Congress allocated to help homeowners whose mortgages were “underwater” — that is, whose houses were worth less than they owed for them.

That money could have gone to “principal reduction” — that is, to paying off part of your loan. If you owned $350,000 on a house that was now worth $300,000, the Feds could give the bank $50k and you wouldn’t be underwater anymore. The FDIC proposed just this, in a plan that would have required homeowners to pay back the US government if the price of their homes rebounded.

If you want to keep Americans from losing their homes, principal reduction is a straightforward and reliable approach. But the banks hated this — and that meant Geithner wouldn’t do it. Banks don’t like principal reduction because it means that they’ll lose out on future payments: reducing your principal by $50k now means that the banks won’t get hundreds of thousands of dollars over the 30 years of your mortgage.

Using the money for principal reduction would have meant the banks’ balance sheets would have looked a little worse — which, as Moran points out, is a perfectly fair outcome for banks that had just come close to destroying the world economy, especially since many of these underwater borrowers were destined to lose their houses and would never make those payments.

But Geithner didn’t do principal reduction. Instead, he did HAMP, which was just a way to temporarily lower borrowers’ monthly payments so they could stay in their homes. Geithner sold Obama on this plan, convincing him to renege on his election promise to support a “cramdown” on the banks, which would have saved homeowners:

https://www.propublica.org/article/dems-obama-broke-pledge-to-force-banks-to-help-homeowners

HAMP was full of the kinds of complex requirements and paperwork that the professional managerial class love, rules that made it almost impossible for homeowners to invoke HAMP and improve their payments. Meanwhile, the banks got “investor incentive payments” that let them take in public money even as they foreclosed on the public:

https://www.irs.gov/newsroom/principal-reduction-alternative-under-the-home-affordable-modification-program

HAMP was a disaster. Almost no one managed to use it, and even among the lucky few who did manage to do so, many were tricked into foreclosure.

https://www.theguardian.com/money/2014/mar/30/government-program-save-homes-mortgages-failure-banks

This is the policy that Eberly and Krishnamurthy defend in their paper: rather than reducing debt, just temporarily restructure mortgage payments. One reason they defend this: it’s cheaper, and Congress didn’t allocate enough money to help everyone who needed principal reduction. But, as Moran points out, Geithner’s anemic response to the crisis caused Congress to claw back $225b of the money allocated to deal with it — enough to do $50k principal reductions for 4.5m households. Under Geithner, HAMP only spent $10b.

But of course, the US government didn’t need to pay the banks off to do principal reduction. They could simply order the banks to take a loss. That’s how lending usually works: lenders who originate bad loans have to eat them — they don’t get made whole by Uncle Sucker.

But when Eberly was working for Geithner, “federal officials convinced themselves this was impossible.” Rather than hold banks to account for their reckless speculation, Geithner announced that he was going to “foam the runway” for the banks, pureeing Americans’ homes to make the foam.

But Eberly’s tenure coincided with the banks’ rebound — by the time she went to work for Geithner, they were rolling in dough, posting massive profits. As @[email protected] put it, “If you force them to eat a bunch of foreclosure losses, maybe a few hundred billion over several years, it probably wouldn’t have been that bad.��

https://www.youtube.com/watch?v=pPLbnr1mxBs

Moran nails it here: “When a bad loan is made, it is both prudent and fair for the lender to bear the most responsibility. They are supposed to be wise stewards of their own capital. Instead, ordinary homeowners who did the least of any actor to cause the financial crisis ended up eating the losses.”

Eberly and Krishnamurthy claimed that Geithner’s policy would be efficient, and that it wouldn’t lead to mass foreclosures. As neoclassical economists love to do, they “proved” this using elaborate mathematical models. And, also in the grand neoclassical tradition, they didn’t bother to check whether their model was correct.

To quote Ely Devons: “If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’”

https://pluralistic.net/2022/10/27/economism/#what-would-i-do-if-i-were-a-horse

Here’s what Eberly and Krishnamurthy missed: the choice to foreclose wasn’t being made by the lenders, they were being made by the mortgage servicer, a kind of consequence-free middleman who made more money by foreclosing on homeowners, even if the lenders lost more money over the long term:

https://www.researchgate.net/publication/228125783_Why_Servicers_Foreclose_When_They_Should_Modify_and_Other_Puzzles_of_Servicer_Behavior_Servicer_Compensation_and_its_Consequences

Eberly and Krishnamurthy barely mention the existence of servicers, but another researcher was keenly aware of them: a law prof named Katie Porter, who delved into the servicers’ role in foreclosure in a report for the California AG:

https://oag.ca.gov/sites/all/files/agweb/pdfs/mortgage_settlement/01-report-waiting-for-change.pdf

Porter identified the servicers’ “dual track” approach to distressed mortgage borrowers: on the one hand, they slow-walked HARP-based changes to payments, and on the other hand, they raced to foreclose on those borrowers who were waiting for their payments to reset.

The servicers’ hunger to throw people out of their homes knew no bounds: they set up massive robo-signing boiler-rooms where low-waged employees forged deeds to plug the paperwork holes created by the high-speed, unregulated speculation on mortgages that precipitated the Great Financial Crisis:

https://www.reuters.com/article/robosigning-plea/ex-mortgage-document-exec-pleads-guilty-in-robo-signing-case-idUSL1E8ML0C120121121

Eberly knew about robo-signing, she knew about servicers, she knew about foreclosures. It was her job to know. But she still wrote her paper defending Geithner’s runway-foaming and all those ruined lives:

Principal reduction can be helpful, but it is a less efficient use of government resources, since it back-loads payments to households that cannot borrow against these future resources to support consumption today, and also because it is most helpful in reducing strategic default, rather than payment-distress-induced default,

This is just means-testing by another name, a fetish for separating the “deserving poor” from “moochers” (AKA “strategic defaulters”). The PMC loves means-testing, but only for poor people. As Moran points out, rich people like Trump use strategic defaults all the time:

https://www.nytimes.com/2016/06/12/nyregion/donald-trump-atlantic-city.html

Elite economists and finance ghouls convinced themselves that helping people stay in their homes would enable waves of crooked “strategic defaulting” but there’s no evidence this was ever widespread — rather, it was a fairy tale that justified mass foreclosure:

https://www.nber.org/system/files/working_papers/w27585/w27585.pdf

Eberly helped throw millions of Americans into the street in order to reward reckless banks, already wildly profitable banks, with even more profit. And far from regretting this, she went on to write elaborate justifications for the cruel policies she helped administer.

The historian Michael Hudson describes debt and debt cancellation as a key determinant of whether a given civilization survives. In every venture, producers have to borrow capital from lenders — farmers, for example, must borrow to pay for seed and fertilizer and labor. When the ventures are successful, the borrowers pay back the lenders.

But not every venture can succeed. There will always be blights, droughts, fires and other risks that can’t be fully mitigated. When failure occurs, borrowers can’t pay back creditors. If you farm long enough, you’ll eventually lose a crop, and have to roll over your debts next year. Eventually, you’ll owe so much that you can’t even make the interest payments.

In the absence of some structured, periodic debt cancellation — such as the Bronze Age tradition of Jubilee — creditors eventually end up controlling the work of the entire productive sector. When that happens, your society stops producing what everyone needs, and instead just makes the things that rich people want:

https://pluralistic.net/2022/07/08/jubilant/#construire-des-passerelles

A civilization can’t survive if all of its farmers are growing ornamental flowers for rich creditors’ villas instead of staple crops. It can’t survive if every productive worker is stuck in a dead-end job or a dead-end place because of medical or student debt.

Personnel are policy. Eberly has explained, in excruciating detail, exactly what policy she favors — policy that rewards reckless speculation by incinerating the life chances of everyday Americans. Appointing her to the Federal Reserve board would be a giant Fuck You from the Biden admin to every person who got their home stolen by a bank.

Tomorrow (Mar 7), I’m doing a remote talk for TU Wien.

On Mar 9, you can catch me in person in Austin at the UT School of Design and Creative Technologies, and remotely at U Manitoba’s Ethics of Emerging Tech Lecture.

On Mar 10, Rebecca Giblin and I kick off the SXSW reading series.

Image: Medill DC (modified) https://commons.wikimedia.org/wiki/File:Timothy_Geithner_in_2011.jpg

CC BY 2.0 https://creativecommons.org/licenses/by/2.0/deed.en

[Image ID: A bombed out neighborhood. Over the crumbling houses is the 'HOPE' wordmark from Shepard Fairey's Obama campaign posters. On the right is the grinning face of Obama Treasury Secretary Timothy Geithner, colorized to match the Fairey posters. On the left is an ogrish, top-hatted capitalist figure, chomping a cigar and disdainfully holding aloft a single-family home between a gloved forefinger and thumb. He stands before a podium bearing the Citibank logo. The podium has a lever in the shape of a golden dollar-sign, which he is yanking with his free hand. He, too, has been colorized in the mode of the Fairey poster.]

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mapsontheweb · 1 year

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US Eviction Prevalence: 2000 - 2018

by u/RestlessAmbivert

#maps #RestlessAmbivert #us #evictions

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gwydionmisha · 8 months

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#Rents #Evictions #Rent Control #housing Crisis #News

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nando161mando · 5 months

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Torontonians, please join me in signing this No Homeless Evictions letter to Toronto Mayor Olivia Chow: #Toronto #TOpoli

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eaglesnick · 10 months

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Those That Have Will Receive More

In December 2022, the Guardian carried this headline:

“Soaring rents making life ‘unaffordable’ for private UK tenants, research shows." (01/12/22)

A few months later and the BBC ran a news report informing us that rents had increased by over 11.1% compared to the previous year. And in June we read that official government figures showed:

“The median monthly rent in England between October 2021 and September 2022 was £800 – higher than at any other point in history, according to the Office for National Statistics.” (The Big Issue: 19/06/23)

The government response to these massive increases in private rental charges has been to do NOTHING After all, people that rent are far more likely to vote Labour than Tory so there is no gain to be had by offering them rent relief. Indeed, government ministers have gone out of their way to insist there will be no rent price controls.

“Minister confirms government will not consider rent controls in England." (propertyindustryeye: 16/11/22)

Fast forward to yesterday and the Bank of England’s 0.5% lending rate rise and everyone is suddenly concerned about the cost to house owners of future mortgage payments. Homeowners DO tend to vote Tory so Jeremy Hunt has summoned the heads of banks and building societies to a special meeting to see what can be done to help property-owning householders.

I do not for one second underestimate the financial hardship that can be brought about by increases in mortgage repayment loans. What I do object to is a Tory government who does absolutely nothing to help the poorest in society facing an 11% increase in rent rises, but who feign concern for house owners, many of whom are still on fixed rate mortgages, and therefore still protected from immediate increased costs.

Here are some simple facts and figures from the government.

61.5% of the UK population are house owners.

27.1% of the UK population are owner-occupiers without a loan or mortgage.

37.5% of the UK population are owner-occupiers with a loan or mortgage.

34.9 % of the UK population are non-owner-occupants.

In other words the number of households facing massive rent rises is almost the same percentage as those facing higher mortgage repayments.

According to “Money”:

“The cost of renting appears to be significantly greater than mortgage payments throughout the UK. In England, the average monthly mortgage payment is £753 compared to a larger £795 average monthly rent payment.” Money: March2023)

So, renters are already paying a higher proportion of their income on rents than owner-occupiers, yet they are to receive no help.

The population of the UK, is estimated to be just below 69 million. If 34.95% of those are non-owner occupiers, that is a total of 24,080,999 who live in rented accommodation.

As stated earlier many of those who are owner-occupiers and paying monthly mortgage repayments are on fixed rate deals and therefore will experience no immediate rises in their monthly repayments. According to government figures:

“1.4 million households facing bigger mortgage repayments in 2023” (Mortgage Strategy: 09/01/23)

If we assume each household has five persons (an over-estimation) then the total number of people living in a property facing a mortgage increase this year is 7 million. The number of people living in rented accommodation facing rent increases is, as already demonstrated, 24 million.

These 24 million are amongst the poorest in society and moral justice would demand they receive as much (if not more) help from government as owner-occupiers.

Today, (23/06/23) after meeting with the Chancellor of the Exchequer, Jeremy Hunt:

“Mortgage lenders and the UK chancellor, Jeremy Hunt, have agreed that people should be given a 12-month grace period before repossession proceedings start, following yesterday’s shock interest rate hike to 5%” (Guardian: 23/06/23).

Meanwhile renters who fall behind on payments have been facing an entirely different reality:

“Rental evictions in England and Wales surge by 98% in a year… a survey by homelessness charity Crisis indicated that nearly 1 million low-income households across Britain feared eviction in the coming months.” (Guardian: 09/02/23)

The figures, and the government’s callous attitude towards renters, speak for themselves.

#uk politics #renters #owner occupiers #mortgages #Jeremy Hunt. rishi sunak #unfair #evictions #mortgage relief

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if-you-fan-a-fire · 11 months

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"The release of the Ontario Ombudsman’s new report on the province’s Landlord and Tenant Board (LTB) warrants reflection on the primary role of the tribunal: evictions.

The Ombudsman wrote that tenants and landlords share a common interest in making the LTB run smoothly. In truth, a more efficient approach to processing cases at the LTB will only further speed up evictions and serve to facilitate the profit-making of landlords who can raise rents on vacant units once sitting tenants have been removed.

Despite the LTB’s many internal issues, the main reason the tribunal is overwhelmed is due to the sheer volume of eviction cases landlords file against tenants. Tribunals Ontario reported that in 2021-2022, 88 per cent of all applications received by the LTB were filed by landlords against tenants, and in 89 per cent of those applications (more than 48,500), landlords sought to evict tenants.

Landlords also added to the much-discussed backlog of cases at the LTB throughout the entirety of the pandemic, as the Ontario government allowed them to continue to file for eviction against tenants uninterrupted. In fact, the Ombudsman reported that during the first pandemic lockdown in March 2020, when eviction hearings were paused for a short time, the LTB still struggled to process the high number of applications it continued to receive.

The discussion surrounding the problems at the LTB often neglects to mention the political history of the tribunal. In 1997, the Mike Harris Conservative government enacted the Tenant Protection Act, which eliminated rent control on vacant units between tenants, instituting what is known as vacancy decontrol. At the same time, the law removed landlord-tenant cases from the provincial court system and created the precursor to the LTB to handle them, the Ontario Rental Housing Tribunal.

During the legislative debate at the time, the minister of housing said that his government’s goal was to create favourable conditions for investment in housing. In reality, his government made it more potentially profitable for landlords to evict tenants, and failed to encourage the construction of any significant amount of new, purpose-built rental housing."

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A friend added this:

"According to this article and the Ombudsman's report, in 2021-22, 88 percent of applications to LTB were by landlords against tenants. Of that 88 percent, 89 percent were landlords seeking evictions. In other words, 78 percent of all LTB applications are for evictions!

I can hear the cries now: "If tenants have problems, they can also file with the LTB!" The vast majority of tenant problems are immediate problems, like shit that needs fixing and harassment and illegal behaviour by landlords. Most tenant problems are not solved by the LTB and often not even solved by landlords. Many tenants fix their own problems because waiting for the landlord is a hassle. The LTB is a virtual non-factor in the lives of tenants, but the landlord's means of getting rid of tenants they don't want or who stand in the way of a profitable new redevelopment.

The above numbers put into perspective the grievance of landlords that the LTB has too long a backlog. It is the volume of eviction applications that is the source of the backlog. And by pure coincidence we've been pelted with news story after story since the start of the pandemic of the worst possible tenants living rent-free for many months while the poor landlord's family is caught in the lurch while establishing their little neo-feudal exploitation scheme. You don't even need to read the press. The Terrorizing Tenant is a story you'll hear often enough.

Are the landlords calling for the LTB to be expanded to meet needs? No, their intimate collaborators in government are seeking efficiencies! You see, the the backlog is a problem to be solved by efficiency! Never mind the avalanche of eviction applications from landlords!

How many of these evictions are the disgusting and widely-abused practice of renovictions? Aren't renovictions an unnecessary burden to the LTB? And if the LTB is so burdened, why isn't it the LTB expanded to meet the demand? None of it makes sense because what's really at play here is setting up a public institution to fail because it insufficiently serves the interests of those parasitically profiting off other people's wages and basic need for shelter.

The pattern is pretty similar in healthcare and education and numerous other public institutions that are starved into failure, populated with wrecker-managers, and then reorganized (or contracted out) in the interests of profit-seeking sections of the business class.

Combined with a raft of new developer-demanded rules on housing (the end of municipal oversight in the development of new buildings of 12 or fewer units; the end of environmental protection and conservation), the renoviction blitzkrieg will only continue to throw thousands of people out of their homes while spoiling the environment - all for the profit and power of people who are driving this province to hell.

The landowning class won decisive battles in the 1990s and now we live in the aftermath of their class war victory. A new and restored publicly-financed co-operative and public housing program is decades overdue. The abolition of landlordism is centuries overdue."

#landlordism #landlords #evictions #tenants' rights #landlord and tenant board #renovictions #ontario politics #canadian politics #housing #housing crisis #tenants #renting #rental housing #class war #covid19 #coronavirus pandemic

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