Hi all,

Below is something I researched and wrote for groups fighting foreclosure in Portland OR. Feel free to use it and/or modify it for your area. The idea is to print out the first two pages (one on each side of a sheet of paper) and then let people go to a website for sources.

THE HOUSING CRISIS: WE ARE NOT ALONE

You can’t pay the mortgage or rent without a job. You’re out of work a) because your job was shipped to a low-wage country, and b) because the banks and investment brokers turned healthy economies into gambling casinos.

When their bets turned sour, the politicians bailed out the banks with our tax money. When you lost your job or home, some politicians did nothing. Others called you a moocher. Wall Street, the International Monetary Fund (IMF), and the European central banks propose to fix the economy by imposing austerity on the people who’ve been hit the hardest—which means cutting wages, pensions, and the social safety net.

But wasn’t the housing crisis caused by people buying homes they couldn’t afford?

No. Some people who’ve lost their jobs can no longer afford homes they purchased when times were good. Others were defrauded by predatory lenders.

Aren’t unions and “entitlement” programs the biggest contributors to unemployment?

No. Where unions and social safety nets are strongest (Scandinavian countries, Switzerland, and Germany), unemployment is lowest.

Anyone who works for a living can transition from homeowner to renter to homeless. All it takes is job loss, disability, a medical crisis—or fraud on the part of the banks.

A short history of Austerity:  For many decades, the IMF was the lender of last resort to “Third World” governments that couldn’t pay their debts to the big banks. The condition was always that those governments would impose austerity measures. This meant scrapping development projects and cutting social programs, pensions, and subsidies for food. Malnourishment and mortality rates went up. Nations that had overthrown dictators were forced to repay the debts of their oppressors, who’d flown off to luxurious exile.¹

While continuing to devour what they can of Africa, the poorer Arab nations, Asia, and Latin America, the banks have now turned to Europe and the U.S.²

Spain: 27.5% unemployment as of 12/1/12. 517 foreclosures per day. 6 million homes sitting empty. The government just bailed out one of the banks with ≈4.5 billion Euros. Per Spanish law, even after they throw you out of your home, you still owe the remainder of your mortgage, plus court fees, plus penalty interest, for the rest of your life. There is no rental market to speak of. After evicted homeowners committed suicide, the government imposed a two-year moratorium on foreclosures for people in “extreme hardship.” This will help only a very small segment of homeowners, as being unemployed isn’t enough to qualify.^{3, 4, 5, 6, 7}

Greece: 26% unemployment. Homelessness up 25% per year in the last 2 years. Suicide up 40%. Although much of the problem results from the rich evading taxes, austerity measures were imposed on the poor: pensions cut; public employee salaries cut as much as 45%. The banks will be bailed out to the tune of $64 billion. The government did impose a moratorium on foreclosures, and banks have restructured loans. Renters got no help, even when pensions or salaries were cut nearly in half. ^{8, 9, 10, 11}

Italy:  10.8% unemployment—a record high for that country. 62% of the homeless report being on the street because of job loss or bankruptcy of their small business. Austerity imposed—public payrolls cut, state health care and investments cut, the age of retirement raised. As a result, the economy got worse.

United States:  Real jobless rate—including unemployed, underemployed, and discouraged—14.4% as of 11/30/12. Over 4 million foreclosures completed since 2007. The elderly are at great risk, with an 800% increase in foreclosures since 1975, because of pension cuts and rising medical costs. Vacant homes are being kept off the market. Rents skyrocketing this year: +12.9% in San Francisco, +5% in Portland. ^{12, 13, 14, 15, 16}

The Home Affordable Modification Program (HAMP) was supposed to help 3-4 million distressed homeowners stay in their homes. Only 1 million received permanent modifications. The rest were told they had too little money, too much money, etc. Now the program has been opened to investors who own up to 4 properties. Oregon passed a law requiring lenders to go to mediation if borrowers request it. Lenders are simply ignoring the law. Congress continues to discuss imposing austerity measures on everyone except the rich. Meanwhile, life expectancy for poor people in this country has dropped sharply—but Dick Cheney got a new heart at taxpayers’ expense, despite being over the age limit.^{17, 18, 19, 20}

The rich aren’t just stealing your homes and savings. They’re eating the years off your lives. The politicians you elected do not have your back. They work for the bankers.

THE PEOPLE RESPOND

On September 17, 2011, the Occupy movement took over Zuccotti Park in NYC. By October 9, the protests had spread to 82 countries. The encampments were eventually removed by police, using batons and tear gas. ²¹  

On November 14, 2012, anti-austerity strikes erupted across Europe. Workers took to the streets in Spain, Greece, Portugal, Italy, Belgium, Germany, France, and the U.K. The police met them with batons, tear gas, and rubber bullets. ²²

Here in Portland, we need to recognize that we’re in all this economic mess together—homeowners, renters, and the homeless. We should demand:

1) Criminal prosecution of the banksters

2) A moratorium on foreclosures

3) Police protection for people, not corporate profits

Need help? Want to get involved? Call 971-266-4311.

^1-22For a list of sources, see this article at www.weareoregon.org.

SOURCES

¹Klein, Naomi, The Shock Doctrine, 2007

²Wolff, R.D., “Austerity: Why and for Whom?,” http://www.rdwolff.com/content/austerity-why-and-whom

³NY Times, “In Spain, Homes are Taken But Debt Stays,” 10/27/10, http://dealbook.nytimes.com/2010/10/28/in-spain-homes-are-taken-but-debt-stays/

⁴NY Times, “A Foregone Foreclosure,” 7/18/12, http://www.nytimes.com/2010/10/28/world/europe/28spain.html?pagewanted=all

⁵NY Times, “The Don Quixote of the Spanish Crisis,” 8/22/12, http://latitude.blogs.nytimes.com/2012/08/22/the-don-quixote-of-the-spanish-crisis/

⁶NY Times, “Unemployment in Spain Exceeds 25%,” 10/26/12, http://www.nytimes.com/2012/10/27/business/global/jobs-data-underscore-rajoys-woes.html

⁷Al Jazeera, “Spain unemployment hits record levels,” 12/4/12, http://www.aljazeera.com/news/europe/2012/12/2012124192857939301.html

⁸Washington Post, “Greece’s unemployment rate rises again,” 12/6/12, http://www.washingtonpost.com/business/greece-jobless-rate-up-to-26-percent-as-recession-continues/2012/12/06/1ff8537e-3f93-11e2-8a5c-473797be602c_story.html

⁹International Business Times, “Poverty, Homelessness, and Suicide: Greek Citizens Bludgeoned by Austerity,” 8/24/12, http://www.ibtimes.co.uk/articles/376988/20120824/greece-prime-minister-antonis-samaras-bailout.htm

¹⁰Athens News, “When foreclosure looms,” 7/2/11, http://www.athensnews.gr/issue/13450/44177

¹¹NY Times, “Greek Government and Public at Odds over New Cuts,” 9/5/12, http://www.nytimes.com/2012/09/06/business/global/greek-government-and-public-at-odds-over-new-cuts.html?pagewanted=all

¹²Portal Seven, http://portalseven.com/employment/unemployment_rate_u6.jsp. This site charts unemployment rates from 2000 to present.

¹³CNN Money, “Foreclosures fall to lowest level since 2007,” 1/18/12, http://money.cnn.com/2012/01/12/real_estate/foreclosures/index.htm. “While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the "robo-signing" scandal that broke in late 2010.”

¹⁴NY Times, “Facing Foreclosure after 50,” 7/19/12, http://www.nytimes.com/2012/07/19/us/foreclosure-rates-surge-for-older-americans-aarp-says.html.

¹⁵The Oregonian, “Apartment rents rise and vacancy falls in year’s second quarter,” 7/5/12. http://www.oregonlive.com/front-porch/index.ssf/2012/07/apartment_rents_rise_and_vacan.html.

¹⁶San Francisco Examiner, “San Francisco housing market looms bigger than ever,” 7/17/12, http://www.sfexaminer.com/local/2012/07/san-francisco-housing-market-booms-bigger-ever.

¹⁷Aol Real Estate, “Has HAMP Gotten Any Better at Helping Distressed Homeowners?,” 8/15/12, http://realestate.aol.com/blog/2012/08/15/has-hamp-gotten-any-better-at-helping-distressed-homeowners/.

¹⁸Realty Trac, “HAMP Program Opening Up to Real Estate Investors,” 3/8/12, http://www.realtytrac.com/content/videos/hamp-program-opening-up-to-real-estate-investors-7066.

¹⁹The Oregonian, “Lenders not engaging in Oregon foreclosure mediation program,” 8/29/12, http://www.oregonlive.com/front-porch/index.ssf/2012/08/lenders_not_engaging_in_oregon.html.

²⁰NY Times, “Life Spans Shrink for Least-Educated Whites in the U.S.,” 9/20/12, http://www.nytimes.com/2012/09/21/us/life-expectancy-for-less-educated-whites-in-us-is-shrinking.html?pagewanted=all.

²¹Washington Post, “Occupy Wall Street protests go global,” 10/15/11, http://www.washingtonpost.com/world/europe/occupy-wall-street-protests-go-global/2011/10/15/gIQAp7kimL_story.html.

²²Reuters, “Anti-austerity strikes sweep Europe,” 11/14/12, http://www.reuters.com/article/2012/11/14/us-spain-portugal-strike-idUSBRE8AD00020121114.

Wells Fargo's Crimes Against Women (and Everybody Else)

I was asked to speak at the demo on April 23 in front of Wells Fargo, San Francisco. Below is an expanded and updated version of my remarks.

I was asked to speak here on how Wells Fargo's policies affect women in particular. Before I address that issue, I should say that for the last quarter century I've been working with people who became disabled through motor vehicle accidents, on-the-job accidents, or serious illnesses. First they lost their health, then their jobs and health insurance. After they depleted their life savings, they lost their homes. Seeing one person or family go through this is pretty upsetting. Hearing the same stories for 25 years, in the so-called “richest country in the world,” is enough to make my head explode.

Situations like this don't occur in civilized countries. A friend of mine who spent half her life in Europe says they have social safety nets over there. Disabled people may not live as well as they did when they were working, but they aren't thrown out on the street. Now, of course, it's not just the disabled who are likely to lose their homes.

This brings me to the issue of Wells Fargo's crimes against women. I'm sure you've heard that Wells specifically targeted black and Hispanic communities with subprime loans. Women got the same treatment. According to the Consumer Federation of America, although women and men have roughly the same credit scores, women were 32% more likely to receive subprime loans than men. This was true across the board—within every income and ethnic group. According to Maria Poblet, executive director of Causa Justa (Just Cause), the majority of foreclosures have been on female-headed households.

Men are more likely to divorce or otherwise abandon their families during times of high unemployment, so it should be no surprise that the fastest-growing segment of the homeless population consists of women and their children.

The elderly have also been targeted, and the majority of the elderly are women. If you're on Social Security and need a quick loan to fix your car or pay the 20% of your doctor's bill that Medicare isn't covering, you can get a “direct deposit advance” from Wells. They then take money out of your directly deposited Social Security check until you've paid them back. The catch is that they charge 274% annual interest. One out of four bank payday borrowers are on Social Security.

Wells Fargo has also financed some of the largest payday lenders in the U.S. Even when they aren't making the payday loan themselves, they're still sucking up a percentage of the profit.

Wells invests in for-profit prisons. You probably know that the U.S. imprisons more people than any other nation. We've got less than 5% of the world's population and over 23% of its jail and prison inmates. Over the last 30 years, the number of women prisoners here has increased by 800%. In other words, women are the fastest-growing segment of the prison population.

Wells is a major investor the two largest for-profit prison corporations, the GEO Group and Corrections Corporation of America (CCA). Here's how these corporations work: CCA recently sent letters to 48 states, offering to buy their prisons in exchange for a 20-year management contract, plus an assurance that the prisons would remain at 90% capacity. Even if the crime rate went down, the state would be contractually obligated to provide a steady stream of inmates, and pay for them with your tax dollars.

Guards in private prisons are poorly-paid and poorly-trained, and they don't have unions. According to Amnesty International, imprisoned women in the U.S. are subject to humiliation, rape, and even physical torture. Private prison food is even worse than the food in public prisons, and the medical care is often non-existent. But that's good for the bottom lines of the GEO Group, CCA, and Wells Fargo.

When I told a neighbor about the lack of medical care in prisons, he said, “Lots of people on the outside don't have medical insurance.”

“Yes,” I replied, “but if they're having a heart attack, they can always go to the emergency room. If you're in a cell the guards might just leave you there.” Many people have died this way.

Around one million prisoners of both sexes work in call centers, slaughterhouses, or textile factories, and get paid somewhere between 93 cents and $4.73 per day. They get farmed out to Fortune 500 companies like Chevron, Bank of America, AT&T, and IBM. Another plus for the bottom line, for all these companies and Wells—but not for the American worker, whose wages are being undercut, not just by Chinese slave labor but by slave laborers right here at home.

With all these lucrative investments, 2011 was a banner year for Wells Fargo. Yesterday, April 24, they voted to give CEO John Stumpf an annual salary of $13 million, plus additional compensation worth $7 million.

Foreclosure update: Sen. Shields responds

During the Christmas holidays, I received a phone call from Senator Shields. He was concerned that I had not been aware of his efforts to change the rules on foreclosures, and subsequently sent me an email outlining the work that the legislature had actually done and that he and his colleagues were proposing to do.

If passed, the bills would protect homeowners who have been subjected to the most egregious practices in the past. They would not allow banks to let you go through the process of mortgage modification and, while you think you are in compliance with everything they've asked of you, simultaneously foreclose under your nose. They would stop the banks from charging excessive fees and require pre-foreclosure mediation, etc. I have copied his email below, and request that you read and consider what he says. Together we can discuss whether these bills are worth supporting. And below his email, I have given my own opinion:


First, Sen. Shields:

"The legislature actually did pass SB 628 in 2009, that bill dealt with requiring a meeting prior to foreclosure...at least in its original form.  Here's a link to what that bill and HB 3630 from 2008 did:

http://dfcs.oregon.gov/ml/hb3630.html

"In the 2011 session, we passed SB 827 (summary attached) in the Senate, but it died in the 30-30 split House.

"But perhaps the biggest advance was removing the exemption banks enjoyed from being subject to the state's Unfair Trade Practices Act, which was a relic of 16 years of Republican control of the Oregon House.  It allows the banks to be sued by the Attorney General and/or individuals, if they engage in fraud.  We passed that in the Feb. 2010 session over fierce objection by the big banks. See here:

http://activerain.com/blogsview/2106700/what-if-homeowners-use-tools-like-oregon-house-bill-3706-to-fight-back-

"and here:

http://www.davidsugerman.com/2010/02/24/oregon-legislature-provides-consumers-with-tools-to-fight-bank-fraud/

"I have been a close partner in the foreclosure coalition that includes Economic Fairness Oregon, SEIU Local 503 and the Oregon Law Center (Legal Aid).  We decided through democratic means to go forward with the following bills.  Unfortunately, the group decided to take a different route than the one you proposed.  I encourage you to work closely with We Are Oregon, an SEIU 503 partner, to help steer the direction of the coalition.

"Here is a summary of the bills the coalition decided to pursue.  We considered yours, and I also argued for some other approaches, including making banks prove they had the right to foreclose in court, making Oregon a judicial foreclosure state.  We debated and debated and after that fairly democratic process, the group decided to move forward with the following bills:

"1) Ending the foreclosure dual track.

The dual track is a common situation of that happens when the lender simultaneously pursue loan modification or loss mitigation and foreclosure. The harm occurs when the homeowner is lead to believe the foreclosure sale has been postponed while they complete the loss mitigation review only to be surprised to learn their home was foreclosed.  This is most similar to the bill the Senate passes last session, SB 827. 

"2) Mortgage servicing rules.

These business conduct rules set a standard of good faith and fair dealing, restrict excessive fees and require a single point of contact for borrowers in default. This is most similar to SB 826 from last session.

"3) Pre-foreclosure mediation.

Requiring a review of loss mitigation options in the presence of a neutral third party has proven to be one of the most effective steps states can take to help avoid foreclosures and put both lenders and borrowers in a better financial position. So far, 24 states have adopted some form of pre-foreclosure mediation.

"4) A reintroduction of SB 827.

"I have also enclosed a summary of the first three bills and an endorsement form from Economic Fairness Oregon if you and the petitioners want to sign on.  I know these bills are not what you wanted.  You and the petitioners can decide for yourselves on whether you'd like to work to pass these bills or go another route.  We can use all the help we can get. 

"You can also help to get like-minded people elected against the wishes of the powerful mortgage-banking industry.  The Bus Project is an easy way to plug in to work on electing more progressive representatives:

http://busproject.org/

"I apologize that I didn't communicate as well as we should of.  I take full responsibility for that.

"As always, if I can ever be of service, please don't hesitate to call at 503-231-2564 or email here at my campaign address or at sen.chipshields@state.or.us."

Please note that I was unable to figure out how to link Sen. Shields' summaries of bills to this blog post. If you want those links, please email me.

And now, my comments:

My concern is that the existing and proposed legislation still leave an awful lot of people out in the cold--literally. To paraphrase the late Justice Harry Blackmun, they tinker with the machinery of foreclosure. In the meantime, we have an economy emergency here in Oregon, and everywhere else in the U.S. Millions of people have lost their jobs due to the actions of Wall Street, the big banks, and the multinational corporations. Others have lost their jobs due to illness and/or disability. (Millions of others are one major illness or one layoff away from homelessness.) These people have no way of paying a modified mortgage. Tinkering with the machinery doesn't help those who need it most. 

The current real unemployment rate, per the Bureau of Labor Statistics, is 16.2%. As others have noted, the foreclosure rate is actually higher than it was during the Great Depression.

As we all know, the banks and Wall Street have been bailed out. After exporting tens of thousands of American jobs to China, GE CEO Jeffrey Immelt was named Obama's "jobs czar." And during the last session of the U.S. Congress, Obama pushed through three new "free trade" agreements which would export even more jobs to low wage countries. When he made his speech demanding that Congress pass these agreements, Mr. Immelt stood up and applauded wildly. The point I'm trying to make is that our jobs aren't coming back any time soon. We are looking at a permanent underclass of low-wage and unemployed workers, and an increasingly large homeless population.

The proposal I've made--and the petition many of you signed--asks the legislature to think outside the current rules that box them in. A moratorium on foreclosures isn't a new idea. Many states enacted it during the Great Depression.

In the petition we also asked the state legislature to take over empty homes and fix them up in conjunction with groups like Habitat for Humanity, and make them available as affordable housing. Sen. Shields' aide said that the state can't afford it. I don't know whether Oregon could find the money somehow, but clearly this is way beyond what they would consider. IMO, we need to support the Occupy people who are taking matters into their own hands.

There is nothing sacrosanct about our predatory system of home mortgages. In Europe the government helps disabled or unemployed people stay in their homes rather than kicking them out into the street. Call it socialism if you like. I call it doing unto others.

What happened to your petition

As noted in my post of September 22, I met with State Senator Chip Shields to discuss the foreclosure problem. He noted that two years ago, someone had introduced a bill requiring the banks to meet with a homeowner before they foreclosed on him or her, and to provide documents showing that they actually had title to the home in question. You would think that these are the minimum requirements a lending institution should meet before being allowed to take your home away, but the banks fought the bill tooth and nail, and it went nowhere. He said he was trying to re-introduce this bill.

He encouraged me to write the petition that many of you signed, and intimated that if we got 200-300 signatures, he would introduce legislation in the Oregon State House. I submitted over 200 signatures to him (I would've gotten more, but I came down with pneumonia and was out of commission for a couple of weeks).

I heard nothing back from his office, despite sending emails and making phone calls. MaryAlecia, his aide, did email me to say that he was meeting with Rep. Tina Kotek to craft legislation. After that meeting, I tried reaching the office again to find out what they had decided, and what I could do to help. For instance, did they want more signatures? Again, I heard nothing.

Finally, I told some people from We Are Oregon, and they agreed to call Sen. Shields' office last week. Two days later, I received a call from MaryAlecia, who apologized for not having contacted me sooner. She said that Sen. Shields was going to reintroduce the bill he had described during our first meeting--which in my opinion is too little, too late. He is not going to ask for anything related to our petition, like a moratorium on foreclosures. Why not? I asked. After all, quite a number of states enacted such moratoriums during the Great Depression. She replied that the laws have changed since then, but didn't say in what way. She said that legal counsel to the legislature would have to examine such a proposal. What about taking over abandoned houses? I asked. She said the state couldn't afford to do that.

Then she said that any member of the legislature is only allowed to submit five bills in each session. Three of the ones that Sen. Shields submits have to be co-signed by a Republican member on his committee. The other two were already written up long before I met with him. I got the impression that Sen. Shields will use our petition as support for passing the bill that the banks defeated two years ago. I told MaryAlecia that the housing situation is an emergency--that more and more people are being made homeless. She said that Sen. Shields is a really good guy, that he is on our side, but that he is bound by the rules.

I conclude that we can't expect help from the legislature. If we wait for the government to stand up for us against the 1%, we will starve and freeze. Right now people across the nation are taking matters into their own hands, preventing evictions by surrounding houses when the sheriffs come, or occupying empty houses and moving homeless families in. Of course these actions are illegal and might result in jail time. However, standing by and letting our neighbors be thrown out into the streets is immoral. Those of us who can't risk jail for one reason or another (e.g., health) should support those who are willing to take the risk. To quote a song from the Civil Rights era:

It isn't nice to block the doorway
It isn't nice to go to jail
There are nicer ways to do it
But the nice ways always fail

I met with the Senator. We signed the petition. We did it the nice way. Now let's find an effective way.

Why Joseph isn’t My Hero

Remember the Bible story about Joseph? This wizard of economic interpretation told the king of Egypt that there would be seven good years and seven lean years. Pharaoh put him in charge of taxing the people during the good years. Back then nobody had coins, so the peasants paid in grain. Joseph made sure the grain was stored in vast silos.

Then the lean years came. First Joseph sold the grain back to the peasants for their gold and silver. During the next year he gave them bread in exchange for their horses, cattle, and all their flocks. In the year after that, the destitute people came to Joseph and said, “There is nothing left but our bodies and our lands. Buy us and our land for bread, and we and our land will be servants to Pharaoh.”

In that way all of Egypt became Pharaoh’s, except for the lands that belonged to the priests. All the Egyptians became Pharaoh’s bondsmen—as the Bible says, “until this day.” And the people thanked Joseph for saving their lives.

The important thing to remember is that the grain in those storehouses was produced by those peasants. Pharaoh didn’t produce it and neither did Joseph.

So why is this legend relevant today? Whose tax money bailed out Wall Street? Why are Americans losing our jobs, our health insurance, our pensions, our homes and any equity we had in those homes—what financial wizards drove the economy into the leanest years we’ve seen since the Great Depression? The more we struggle in this quicksand, the deeper we sink. Get behind on one credit card, and the rates on all the rest go up to heights that would make a loan shark blush. Borrow money to go back to school, but don’t expect to find a job that would enable you to pay it back. You will be enslaved by the banking industry forever.

Today’s Josephs are enthroned on the banks of the Hudson River and the Potomac.

How Sus Domestica Came to Wall Street

Archeological research shows that domesticated pigs first appeared in the Tigris basin at least 9,000 and possibly 15,000 years ago. During the dry season, when other types of food were scarce, our Middle Eastern ancestors slaughtered great numbers of pigs. At some point they began using pigs for healing rituals, or to placate the Mesopotamian demon Lamashtu, or as a sacrifice to the Egyptian god Horus.

Later on the Hebrews stopped eating pork, but nobody really knows why. Verses in Leviticus, Deuteronomy, and Isaiah forbade it. The poor animal is considered so “unclean” that a Jew making a religious pilgrimage shouldn’t touch it, lest it contaminate him. It is permitted, however, to use a porcine heart valve to replace a defective human one. Pigskin shoes are also okay—apparently the tanning process removes the impurities. Mohammad, who initially considered himself the last Jewish prophet, adopted this prohibition, and it is repeated four times in the Koran.

I don’t know why Christians started to eat pork again. I suspect that the various pagan peoples they wanted to convert were reluctant to change their diet. After all, most of us do resist giving up favorite foods, even when the doctor warns us that we are (as the saying goes) digging our graves with our spoons. Maybe the early church thought it would be easier to save souls if they didn’t try to police people’s stomachs as well.

Although the Spaniards first introduced pigs to the Americas, the later-arriving Dutch and English colonists no doubt brought their own herds. Free-roaming pigs wandered New York, rampaging through grain fields, until the human residents built a wall along the northern edge of lower Manhattan to keep them out. The street that followed this wall was named…Wall Street.

Well into the 19^th Century, our porcine companions continued to roam the rest of the island. Pedestrians might encounter sows and boars devouring garbage up and down the streets and alleyways. They didn’t join a union or demand a pension plan; the only drawback was that they left a certain amount of their own excrement behind. Eventually, however, this four-legged sanitation department was banished from the city.

But like the pigs in Orwell’s Animal Farm, they stood up and achieved bipedalism. And there have been pigs on Wall Street ever since.

If It's Good Enough for Rockefeller

On Sept. 15 I attended a meeting here in Portland about fighting foreclosure in our neighborhoods. Present were representatives from citizens’ groups and a representative from the attorney general’s office. At the end of it, I had an idea about how we can turn the situation around. It depends on a legal precedent set by the Rockefellers. Hey, if it worked for them, it can work for us!

Facing astronomical foreclosure rates, dropping property values, and still-rising unemployment rates, what can we do? What if we get the states to take foreclosed properties that are sitting empty back from the banks—as they do for large commercial development projects—and fix them up for people who have lost their homes in the current economy? Oregon can’t afford to do this alone, but could partner with groups like Habitat for Humanity. Prospective residents who aren’t disabled could invest via sweat equity.

The Situation 

Even if you can’t stand numbers, please bear with me while I throw a few out there, because this will give you an idea of the size of the problem.

At the Sept. 15 meeting, I was told that the foreclosure rate is three times higher than it was during the Great Depression. Yes, it really is. This is according to the National Consumer Law Center.

The Case-Schiller Home Price Index (published by Standard & Poors) shows a decline in property values of 29% for the Portland area, and a 33% decline for the 20 cities they track. This was as of March 31. According to the Oregonian (March 8, 2011) 23.1 % of Oregonians owed more than their homes were worth. It’s even worse in some other states. Per a Bloomberg report on real estate, on May 9, 2011, 28% of mortgages in the U.S. were underwater. Figures went as high as 85% in Las Vegas and 73% in Reno.

The official unemployment rate is holding steady at 9.1%, while the actual total number of unemployed is 16.2% and rising. What’s the difference? The official rate tracks people who are unemployed and actively looked for work in the last four weeks. Total unemployed includes people who were too discouraged to continue looking and those who took part-time jobs or work well below their capacity (for example, flipping burgers instead of doing construction work).  Both figures are from the Bureau of Labor Statistics, August 2011. There are five unemployed people for every job opening (NY Times, March 11, 2011).

If you’re out of work, you can’t pay the mortgage. That sends the foreclosure rate up, flooding the market with distressed properties.

The federal government made a lot of noise about a program to help homeowners, but they relied on voluntary action from the banks. I was told at the meeting that only 5% of borrowers have had their loans permanently modified.

At this point, it is important to remember that the banks wrote one fraudulent mortgage after another. They continue to write fraudulent foreclosure documents and have them signed by people who don’t even read them. And the government bailed out those same banks with billions of dollars of our tax money.

Even if you aren't out of work, underwater, or facing foreclosure, the situation has consequences for you and your home. When the banks foreclose on a home in your community, and nobody buys it because nobody can afford to anymore, the house sits vacant. The lawn becomes a waist-high jungle of thistles and dandelions. The building deteriorates. Leaks aren’t repaired, so rain may damage walls and floors. Thieves may break in and rip out copper pipe, appliances, or anything they can sell. They may even use the house as a hideout, meth lab, or base for fencing stolen goods. The value of every neighbor’s property continues to plummet, and everyone in the community is endangered, homeowner or not.

If you rent your home, and the bank forecloses on your landlord’s property, you can stay until the end of your lease. If you have no lease, you may have to leave within 90 days. In either case you will not be reimbursed for relocation costs. (This is according to the “Helping Families Save Their Homes Act,” signed by Pres. Obama in 2009.)

Overall, a grim picture. So what can we do?

The Proposed Solution

Not many people know that the land used for the World Trade Center was acquired by eminent domain. David Rockefeller wanted to build the towers, which would increase the value of his other assets in the area, such as the Chase Manhattan Bank building. As his brother Nelson was governor of New York, Rockefeller was able to get the state to take over the properties that were in his way. Hundreds of small businesses were displaced. Some of them fought the proposal all the way to the Supreme Court, but the Court refused to take the case.

What if our state takes over foreclosed-upon houses, and fixes them up for people who need them?

Nobody likes the idea of eminent domain. Very often it displaces homeowners or destroys thriving businesses, as it did in New York City. But the houses lost to foreclosure aren’t thriving. By evicting residents and leaving the houses vacant, the banks are acting to destroy communities.

The State of Oregon, no doubt like many other states, has no money to restore distressed properties. However, the state could cooperate with partners such as Habitat for Humanity, whose purpose is to build housing for, and with, the people who need it. People who want to live in the houses repossessed from the banks could put in sweat equity.

These houses should be reserved for people who have lost their homes through unemployment, disability, or outright fraud by the banks. They should not be made available to speculators—many of whom are already gobbling up foreclosed-upon homes at fire sale prices.

The banks will oppose this project, of course. They are likely to make exorbitant demands, for instance that the taxpayers reimburse them for the total amount of the mortgage rather than the actual value of the slum they’ve created. The mission and purpose of a bank is to conserve, and increase, its profit. They can't, and won't, let one penny go without a fight. In recent years, we have had ample reminders that a bank has no capacity to care whether Americans live on the street, or whether our neighborhoods rot. We can't expect any cooperation from the banks unless there is some way for them to profit from the project, either directly or in terms of marketing and public relations.

At the foreclosure meeting on Thursday, I proposed the idea—of acquiring foreclosed houses by eminent domain and working with Habitat for Humanity—to one of State Senator Chip Shields’ aides, Mary Briggs. She was enthusiastic, and has arranged a meeting for me with Senator Shields on October 12. I will also be sending this proposal to my local Representative, Tina Kotek, and trying to arrange a meeting with her.

What Can You Do to Help?

If you live in Oregon, send an email to Senator Shields at sen.chipshields@state.or.us and tell him you support this idea. Send another to Rep. Kotek, at rep.tinakotek@state.or.us. The more people who support it, the better chance it has of becoming a reality. If you live in another state, meet with one of your legislators and propose something similar.