(Note: Gotham Gazette reached out to a number of people hoping they would present an opposing points of view on the aspects of foreclosure discussed below. We could not find anyone who would do that but would still welcome comments from other sides on this issue.)
It was not all that long ago when the conventional wisdom among America’s working families was that owning a home provided the key to economic security and a life of prosperity. But now, too many families across New York and America live in fear of foreclosure. Since 2007, nearly 8 million homes have entered a foreclosure process.
We can't forget that this situation was not a sudden, unexpected disaster. It was not inevitable. Instead America's mortgage crisis was the direct result of the greedy, immoral and possibly illegal actions by the largest mortgage banks. These companies intentionally pillaged the assets of working families to enhance their own profits, with no regard for the broader good of our communities or our economy.
In order for the American economy to recover and for working families to get back on their feet, two things must happen. First, real relief must be provided to those who predatory mortgage banks preyed upon. Second, those responsible for the mortgage crisis must be held accountable.
As has been widely reported in the press, New York's attorney general, Eric Schneiderman, has been removed from a committee of state attorneys general that the Obama administration convened to take enforcement action against mortgage servicers. The settlement that this committee is close to reaching with the banks -- a settlement supported by many powerful Washington politicians, including Treasury Secretary Timothy Geithner -- would require the banks to pay up to $20 billion. In return, though, the banks would be immune from further prosecution.
By standing against this settlement and ensuring that he can complete his own comprehensive investigation into the fraud and abuse that these banks perpetrated against the public, Schneiderman is doing exactly what we elected him to do: fighting for justice.
This settlement is a bad deal for New Yorkers. Amnesty for those banks that acted with the most egregious depravity will do absolutely nothing to prevent them from acting the same way again. America can no longer trust massive corporations to police their own practices, especially when they have made skyrocketing profits just two years after enjoying billions in taxpayer bailouts. There is no doubt -- no question -- that these very same banks are responsible for the recession that still grips many of New York's working families. The CEOs of these banks have not even gotten a taste of the economic calamity that they have caused.
New York deserves a seat at the table when it comes to ensuring that a fair settlement is reached. In fact, according to the FBI, New York was among the top 10 states for known or suspected mortgage fraud. Since this story broke, over 1,600 New Yorkers have signed Citizen Action's petition in support of Schneiderman’s pursuit of justice.
Some (ahem -- the New York Post) have argued that if the banks had not proceeded with so many foreclosures, thereby reducing their risk of financial losses, then those banks would have been hesitant to issue more mortgages. While it may be true that banks are not usually willing to take risks unless they have a scheme to ensure their financial success, I think that we can all reach for a higher standard for our corporations.
Schneiderman is seeking a full investigation, a reasonable (i.e., more than $20 billion) settlement and the ability to continue to prosecute illegal activity as it is discovered. Without that kind of approach we will no doubt be in the same situation once again. With it, we can have a society where lenders act responsibly and working families can get the loans they need to build their futures.
For far too long, those who have been elected to represent us in government have coddled the super-wealthy while leaving working families to foot the tab. It’s time for our government to protect those who elect them -- not just those who finance their elections. We believe that if justice is achieved, then everyone will be better off. America needs more elected officials like Schneiderman - willing to stand up to the most powerful special interests in the pursuit of justice.
Karen Scharff is executive director of Citizen Action of New York.
We're excited to announce that, with the support of a new grant from the Knight Foundation, we're gearing up to develop a new round of games for GothamGazette.com. And, we hope our readers can help us make these new games thoughtful, informative and engaging.
These games will let you — the reader — make policy. What problems would you like to take on as a virtual policy-maker? The fate of the city's garbage? The right way to balance civilliberties and security in an Emergency? Developing a balanced land use plan for a neighborhood?
This time around we're planning to add a new element to the games: We will take note of the decisions you make and encourage players to offer explanations of the solutions you've proposed.
Switch It On!
September 28, 2009 — With gadgets guzzling electricity, New York faces a looming energy gap. How would you fix it? Ban air conditioning? Harness the tides? Go nuclear? Play Gotham Gazette latest game and plan our energy future.
Bump the Birds
July 07, 2009 — Candidates have until Thursday to file petitions to get on the primary ballot. Do you have what it takes to get on the ballot and stay there? Play 'Bump,' our latest game, and find out.
Fix the Budget
February 09, 2009 — Play Balance, Gotham Gazette's new game and see if you can fill New York's $4 billion budget gap. Cut, tax or spend -- as long as you make it balance.
The Budget Maze
May 19, 2008 — As politicians debate city spending for 2009, what can advocates do to fight school cuts or fund a neighborhood sports program? Our new game takes through to the budget labyrinth.
The Garbage Glut
November 13, 2007 — How would you keep New York City from drowning in its own refuse? Play Gotham Gazette's new Garbage Game -- and decide what to do with more than 3 million tons of trash a year.
NYC Preservation Game
October 03, 2005 — Church or skyscraper? Summer cottage or million dollar home? "Masterwork" or "world's greatest urinal?" In this interactive game about the city's historic landmarks, you decide.
Budget Quiz
July 11, 2005 —
Campaign 2005 Quiz
June 13, 2005 — Two new transcripts of mayoral forums (one about housing; the other, the budget), an article on the candidates for Gifford Miller's City Council seat, and a quiz that tests whether you're dedicated to civic culture ...or celebrity culture
City Laws Quiz
April 04, 2005 — The following quiz is designed not only to test your knowledge of New York City laws, but to offer a step-by-step guide to the different ways this tool lets you find information — by year, topic, keyword, and individual council member.
Voting Arcade
September 09, 2004 — New York's voting machines are so old that they were already out of date when the first video game, Pong, hit the market over three decades ago. Embark on a tour of New York's broken down voting system with a nostalgic journey thorough Gotham Gazette's versions of ancient video games.
Republicans in New York City Quiz
August 23, 2004 —
Find Your Inner Republican
June 14, 2004 — In our latest interactive feature, see where NYC Republicans past and present have stood on ten issues ranging from abortion to education, and where you fit in.
Plan Your Future Park
March 18, 2004 — Our newest interactive game lets you plan your own park, making choices that communities all over the city have been facing.
Breakdown
December 08, 2003 — New Yorkers rarely think about the systems that keep the city running, until something breaks down. Now, you can take a system-by-system look at what keeps us wired, watered, and flushed: play Breakdown!, our newest interactive game, and use your knowledge to save the city from kaput.
Ground Zero Planner
July 01, 2002 — The Ground Zero Planner allows you to design the World Trade Center site the way you think it should look. You can drag icons representing different ideas for the site, like housing, parks, and a memorial, onto a map of Ground Zero.
The New York City Budget Game
May 12, 2003 — In an effort to close the city's $3.8 billion deficit, public officials have been playing the usual budget games - laying off workers, raising taxes, and threatening to close firehouses and zoos. Now with our interactive NYC Budget Game, you can play too. You spend the money. You make the cuts. You raise and lower the taxes.
Moving Around the City -- A Quiz About Transportation in New York
June 09, 2003 — Which subway system has more riders -- New York's or Mexico City's? What mayor rode mass transit to his inauguration? And how loud are those car alarms? Test your knowledge of New York City transportation.
The Tour Guides Quiz
July 14, 2003 — This is a quiz especially for Gotham Gazette readers who want to challenge their own New York savvy. They are not the exact same questions as those offered in the professional licensing examination for tour guides, but they tap into the same vast treasure trove of New York City legends and lore.
The Judges Game
August 04, 2003 — With a steady stream of new revelations about scandal and political patronage in the Brooklyn judicial system, Gotham Gazette this week tries to sort it all out. Our newest interactive game lets you see if you got what it takes for the Brooklyn bench.
NYC Housing Trivia Quiz
February 17, 2003 — What is the most expensive city in the world – New York, Paris, or Hong Kong? And does Mayor Michael Bloomberg really want to house homeless people on a cruise ship? And how much is a one-bedroom apartment in Greenwich Village?
Gotham Gazette's Summer Quiz
July 16, 2001 — Who is NOT running for public office this year: a 19 year old, a Seinfeld character, a salsa singer, or a State Senator? How many golf courses are there in New York City; how many pigeons? Who are the Vieques Four? Which is greater, New York City's annual budget or Harvard University's endowment? Is NYPD Blue filmed in New York City? How about Friends? Take Gotham Gazette's Summer Quiz and test your New York knowledge.
Gotham Gazette's New York City Quiz
March 21, 2001 — So, you think you know New York City? Which is the longest subway ride? Which is bigger, the Fresh Kill's garbage dump or the Great Wall of China? Test your knowledge in Gotham Gazette's interactive quiz.
City Hall Quiz
January 13, 2003 — What do New Yorkers hate the most - noise, traffic, or rats? Is it illegal to talk on your cell phone on the subway? What new parking holidays were added in the last year? In 2002, the City Council and the mayor passed 47 new laws that they claim will make the city a better place. Test your knowledge of what they did at City Hall with our interactive quiz.
Everywhere we turn, there is evidence of how Wall Street and financial institutions have failed to step up and take responsibility for the foreclosure crisis they caused.
A few weeks ago, Charles Ferguson’s Inside Job won the Academy Award for Best Documentary Film, exposing how the explosion of predatory lending, combined with all the wrong incentives in the financial sector, stripped countless families of their life savings and cost millions of jobs around the world.
Then last week, Neil Barofsky, the federal inspector who oversaw the TARP program that bailed out the banks, resigned in protest over how much it had become a giveaway to the big banks. In explaining his decision, Barofsky writes of how banks have refused to modify mortgages or extend credit, how the home mortgage modification program has been a “colossal failure,” and how little real regulatory reform has taken place. The largest banks are actually 20% bigger than they were before the crisis, and the cost of their being “too big to fail” is now built right into the banking system.
Meanwhile, though banks can’t even find the paperwork to prove that they’ve got a right to foreclose on many mortgages, they have scoffed at the idea of reaching an agreement with the 50 states’ attorneys general to help homeowners in trouble.
Really, who could blame them? Time and again, we’ve shown that we’ll let them get away with it.
Much stronger federal and state action is needed. I remain hopeful that the Consumer Financial Protection Bureau, led by the indomitable Elizabeth Warren, will make a real difference here. And I have been encouraged by the work of new NYS Attorney General Eric Schneiderman.
But we can’t wait. We need stronger action at the local level as well. While NYC hasn’t been hit as hard as some places, communities throughout the city still have many vacant, blighted, and abandoned homes and construction projects.
In 2007, the Bloomberg Administration and the City Council helped launch the Center for New York City Neighborhoods to provide foreclosure counseling and address the crisis. Unfortunately, Mayor Bloomberg’s FY2012 preliminary budget eliminated all city funding for the Center (if only the foreclosure crisis had been eliminated).
And I am very pleased that the Housing Asset Renewal Program (HARP) created by the Administration and the Council has at last announced its first deals to convert failed development projects into housing for middle-income families.
But we haven’t seen anything from Mayor Bloomberg that holds banks responsible, or even asks them nicely. Instead, the mayor has often been Wall Street’s chief defender, traveling to Washington, speaking against additional regulation, and arguing against the renewal of New York State’s existing millionaire’s tax.
Despite these failures, the City Council is in a good position to do more.
Too often, lenders fail to take responsibility for repairs and upkeep of foreclosed or abandoned properties – and the city is left on the hook to keep those properties safe. Inspired by the advocacy of New York Communities for Change, I introduced a bill (Intro 494) that would require lenders to post a bond for each property they are foreclosing on – to ensure the city gets paid promptly for fees, fines, and emergency repairs during the foreclosure and post-foreclosure period. It builds on two other bills (Intro 500 and 501) sponsored by Councilmember Eric Dilan) that would require lenders to register when they bring a foreclosure proceeding and would transfer responsibility for those fines and repairs to the foreclosing bank. These bills will be heard in the Council on April 14th in the Housing & Buildings Committee.
A requirement to post a bond would force banks to step up and make sure the property they are seeking to take ownership of remains compliant with building and housing codes. This bill would apply to abandoned construction sites as well, giving us a new tool to address these blights in our neighborhoods.
And I hope we’ll go beyond holding banks responsible for individual properties. We also need them to take responsibility for meeting the credit needs of our communities. Even with the bailout money they received, and despite the fact that 2009 and 2010 were banner years, many banks are failing to lend, invest, modify mortgages, or locate branches in our communities. And yet some of these banks hold billions in government funds from the City of New York’s deposits.
The NYC Responsible Lending Act (Intro 485-2011) is sponsored by Councilmember Al Vann and was developed with the Association for Neighborhood and Housing Development and the Neighborhood Economic Development Advocacy Project (I’m pleased to be one of the four primary co-sponsors). This bill would require banks who want to make money on the business of holding the city’s cash to put forward a strategic plan for how they plan to meet community credit needs … and then provide a detailed annual report on their record of community investment and service. There would be a public hearing on their plan and track record.
Poor results would be grounds for the city to stop doing business with those banks. Philadelphia and Cleveland already have laws like this, and legislators are considering it in Los Angeles and other cities around the country.
The City Council can't reform derivatives trading, executive compensation, or predatory lending. But these local laws could build pressure on banks to get a few new bank branches open in low-income neighborhoods, help homeowners keep their homes, promote responsible lending to affordable housing, and help start small businesses.
And perhaps these steps will help promote the idea that taking responsibility is something that is expected of all of us … even financial institutions.
Brad Lander is a New York City Councilmember from Brooklyn.