Ben Carson, The Redeemer



It’s never good when HUD Secretary Ben Carson is in the news and sure enough his latest appearance carries on the tradition. The Washington Post reported this week that 1 out of 3 of his senior political appointees, who represent the highest levels of housing policy, don’t have any housing experience. I mean, they probably have lived in a house, but have not worked in housing. 

It’s easy to forget that before coming to HUD, Dr. Carson didn’t have any housing experience either (still doesn’t), but that wasn’t enough to stop his abundantly insulting nomination from going through. Not having experts in housing, or even experienced in housing, in the federal department in charge of housing has barely registered with the the public, even though it should be an enormous scandal. 

But that’s still not the biggest scandal about Secretary Carson’s run at HUD. As with many aspects of the Trump Era, the stupidity, pettiness, and corruption at the heart of the administration trends, but the insidious unraveling of policy aimed at protecting the vulnerable does not. In truth, Secretary Carson has been a highly effective agent of the president’s agenda: to unravel any attempts at racial desegregation of the American landscape undertaken by the Obama administration and others.

I’ll get back to this point in a second, but it bares repeating: Dr. Ben Carson is not qualified to run HUD. He has never worked in housing policy, never worked in development, and never worked in government. He has spent his career in medicine and then the self-help circuit. Both of those things are fine, even admirable, but they offer absolutely no rationale for his nomination, let alone confirmation. 

His is insulting to the work done at HUD, to the thousands of HUD employees across the country, and to the millions of Americans who rely on HUD’s services. It has a budget of $53 billion, oversees the regulation of the mortgage industry and public housing authorities, administers rental assistance programs like Section 8 and homelessness aid, and enforces fair housing laws (more on that later.) The work HUD does is not trivial and shouldn’t be treated that way.

HUD has been a backwater in other presidential administrations and having an inexperienced secretary in other circumstances might not be such an issue if HUD is allowed to go about it’s business. But that’s not what is happening with Dr. Carson or the administration. It would be one thing if he was simply ignorant of policy, but he’s ignorant and hostile to it. That can be summed up by the fact that he considers enforcing fair housing policies that encourage more integration in wealth majority-white communities “social engineering.”

Of course, it is social engineering, but then again the entire development of suburban America was social engineering. None of the 20th century’s sorting of white families into suburbs and black and brown families into inner cities was “organic.” The federal government crafted a policy regime for 80 years that pushed that racial agenda. Dr. Carson’s ignorance or dismal of this perfectly aligns with the Trump administration and the Republican agenda.

As with immigration, law enforcement, and just about anything else, the Trump administration has defined itself by a transparent retraunchment of white supremacy, which it and its allies perceive as being under threat politically and demographically. Any attempt, through federal policy, at challenging the traditional view that white men should be in charge, white people should be privileged, and equal rights should be a administered on a limited allowance has been purposefully halted or reversed wherever possible. 

Nothing has codified white supremacy more than housing policy. Most Americans are simply unaware of this. For a short period of time during the Obama administration, there was a surprisingly successful challenge to it. 

First, in 2015, HUD outlined rules drawn from the Fair Housing Act called Affirmatively Furthering Fair Housing (AFFH) that required local communities that receive federal block grants to submit plans that show how they are taking active steps to reverse years of racial segregation. It took a long time to get through the approval process, and the Obama administration could have taken bolder steps, but it was significant progress.

That same year, the Supreme Court made an even more significant decision on a case in Texas that expanded the definition of racial discrimination (which the Fair Housing Act made illegal) to include “disparate impact.” This means that even if a housing policy was not explicitly racist, if it still resulted in a disproportionately negative impact on a minority group, it would violate the Fair Housing Act.

Combined, both efforts opened a window to address deeply entrenched racial segregation in the US that has only accelerated over the last 50 years since the Fair Housing Act passed. It is no coincidence that this corresponds with skyrocketing wealth inequality. Fixing one fixes the other and both are required to make America fair and prosperous.

But since Dr. Carson has taken over at HUD, this agenda has quietly and effectively been halted, abandoned, or reversed. He hasn’t fought for HUD on the Hill. He has tried to raise rents for public housing residents. He has killed AFFH and tried to say it was in support of more development. He is there to stop attempts at addressing the legacy of racial discrimination in housing. You can see why he doesn’t want people with housing experience. 

I don’t know what is in Dr. Carson’s heart. He may sincerely believe, based no doubt on his remarkable personal story, that racism is at best a mild hinderance and self-determination can help a family overcome any obstacles. He may look at the American landscape and not see that actively racist policies sorted communities. He may not think its the federal government’s role to fix this even if it is a problem.

But even in this generous guess, he is still dangerously wrong and still guilty of supporting the goals of an administration that is blatantly racist and actively pursuing the protection of white supremacy. His personal policy ignorance and indifference to acquiring it or requiring it is not a bug, it is a feature. And a very effective one that is erasing a small window of progress against racial segregation.

Cuomo is Full of It On NYCHA and Has Always Been Full of It On Housing

They haven't aged well (nymag)

They haven't aged well (nymag)

Governor Cuomo is apparently shocked, shocked that NYCHA is crumbling. He has spent the last couple of weeks visiting a few buildings, surrounding himself with cameras, taking shots at Mayor de Blasio, and touting his resolve to bring in more state money. No doubt this money will help residents who have been suffering greatly this winter and beyond, so it is welcome, but the fact that these trips represent the majority that the Governor’s has made to a NYCHA property since he took office in 2011 should tell you all you need to know about his commitment to public housing. The truth is, Governor Cuomo has always been a cynical opportunistic when it comes to housing. He’s built his career on it and hopes to carry it all the way to the White House (he won’t.)

Cuomo rode his name to the top of HUD and then abandoned it’s legacy

It is one of those obvious things that gets lost over time, but Governor Cuomo is Governor Cuomo largely because his father was Governor Cuomo. The son worked on the more popular father’s campaigns and what he lacked in his father’s robust liberal principles, he made up for in sharp insider elbows.

It was housing where Andrew stepped out from his father’s orbit (as much as you would want or need to when your father is a popular governor toying with the presidency) by setting up a non-profit, Housing Enterprise for the Less Privileged (HELP). The organization did good work then and still does today and I make no suggestions otherwise, but its clear that Cuomo saw housing as a means to score liberal cred while building relationships with powerful developers, a play he has repeated many times since.

This cred led to a position under Mayor Dinkins (where he came into contact with future nemesis Mayor de Blasio) as chair of the Homeless Commission where he backtracked Dinkins housing-first policy goals and claimed that homelessness was a “human” problem not an economic one. 

After Dinkins lost re-election, this “tough thinking” led to a position in the Clinton Administration as an assistant secretary at HUD. His father’s legacy as a working class ethnic liberal from the northeast made his son an easy choice for the southern, conservative Democrat. Both were cynical politicians fluent in empty gestures.

Contrary to his father’s robust liberal legacy, Cuomo’s record at HUD is very similar to his later record as governor — lots of big talk, lots of press coverage, some decent ideas, but little follow-through that would challenge powerful interests in finance or politics. 

He became HUD Secretary in 1997 (Mayor de Blasio was hired to run HUD in NY-NJ) and served till the end of Clinton’s administration very much in the fashion its neoliberal triangulation that has haunted the Democratic Party ever since.

That triangulation helped lead to the Mortgage Crisis in 2008, which Cuomo played a role in creating. While half-heartedly warning against lowering standards for mortgages and against the rise of pernicious lending practices, he raised the benchmarks for banks and Fannie/Freddie to issue more mortgages to lower-income households that the agencies ultimately couldn’t back when the market tanked. Some have argued that he is more responsible for the crisis than any other single person. That might be a stretch, but he has never accounted for his role in the crisis.

He also did nothing for public housing. This is partly because the Clinton Administration embraced homeownership over rental assistance, which itself was very much a bi-partisan standard given the general dominance of conservative ideology during the era, and also because the Clinton triangulation required the deconstruction of the welfare state. Along those lines, public housing was seen as a place people needed to be moved out of, not into.

There were positive efforts to address extremely distressed public housing during the Clinton Administration, but much of it occurred while Governor Cuomo was assistant-secretary in community development. Those efforts lost steam when he became Secretary, despite his claim otherwise

For the most part, HUD abandoned the mission of public housing and oversaw the destruction of many public develops and the withering away of funding for remaining ones. Cuomo didn’t cause the current crisis in NYCHA, but he did nothing to stop the squeezing of federal funds that has crippled it. He has also never accounted for this legacy.

The governor has always been a generic product of the political times he exists in and his effort to promote homeownership (a disaster that both parties were guilty of) along side the Clinton Administration’s dismal record on affordable housing, came at the expense of public housing funding and later the nation’s economy.

Then he rode his housing experience at HUD to Albany and abandoned that

His spotty record at HUD didn’t stop Cuomo from running for governor (again) on his housing cred and name, winning in 2011. Given that he ran on that experience, his subsequent disinterest in housing policy is even more egregious.

He could have used that experience, especially the lessons learned from the crisis, to become a major leader in changing national and state housing policy away from subsidizing homeownership and towards funding sustainable affordable housing by supporting NYCHA, rent regulation laws, and alternative housing policies like community land trusts. His campaign narrative could have turned into transformative, highly-experienced governing.

Instead, Governor Cuomo ignored housing issues. When he did have to address them, he was lukewarm on protecting let alone extending rent regulation laws and unquestionably friendly to subsidizing big developers. His big public talk always resorted back to closed-room deals with private interests. Not surprisingly, that’s why it costs taxpayers $400k–$600k per unit under the Governor’s affordable housing plan.

Governor Cuomo has also completely ignored NYCHA for 7 years. While threatening to declare a state of emergency for the housing authority (which would put its 178,000 homes under state control, bypassing the existing leadership in the agency and the city) and touting an additional $250m for the agency, he keeps reminding us all that the state has no obligation to fund NYCHA. Aside from the obvious shot at Mayor de Blasio, this statement shows on some level the Governor knows his lack of support looks bad. Because it is bad.

It also looks bad that the state had already approved $200 million for NYCHA but hasn’t allocated it. He had previously committed $300m in 2015 that hasn’t materialized yet either. This pattern of promising lots of resources for housing but failing to deliver them is a long-established habit. We should be extremely skeptical that these announcements will turn into funding that helps residents any time soon.

 We should also be concerned that these funds will come with strings attached. He has also already entertained the idea of bringing in private developers if he does declare an emergency. This would only reinforce the perception that for all his talk, he is interested in helping his powerful developer-backers first. Any help for NYCHA residents is welcome, overdue, and deserved, but the fact that we are left to wonder if, when, and to whom it will materialize is a scandal.

NYCHA faces a truly daunting list of challenges, some of which are entirely self-inflicted. But it is short $20 billion dollars in maintenance and capital costs. The Governor’s pledge, especially as the former head of HUD, is a sick joke compared to that.

And now he wants a promotion

Many people have noted that the timing of the Governor’s new found interest in NYCHA comes as he is preparing for re-election and a potential run for the Democratic nomination in 2020 thereafter. He knows Mayor de Blasio is unpopular in many circles (for some self-inflicted reasons, much like NYCHA) and hopes folks that haven’t paid attention to his own indifference for years will see his efforts now and line up to support him. It is an insult to New York voters, but it has worked in the past.

But it’s not clear that Cuomo will get much traction or credit for his intervention in NYCHA now (or how sincere he will even be in the long run). Residents know that as rough as they’ve had it under Mayor de Blasio, they haven’t gotten help from Cuomo. It won’t take much to remind them that Cuomo ignored them at two different jobs.

It will also be fascinating to see what the governor says about rent regulation laws which are up for renewal in Albany again next year. The annual Rent Guidelines Board meetings will be taking place over the next few months and we can expect many advocates to press the Governor on his position now. 

His record, as I’ve already stated, has been dismal. Expect him to tout his support for the laws and to mention his $20 billion five year plan for housing in the state but to angle for concessions to developers as he tried to get during the 421a renewal last year. It could blow up in his face this time.

This is because, after all these years of triangulation, the Governor is in trouble. He had a taste of this last year during the budget shutdown. Whatever he decides to do with NYCHA and rent regulations, he will alienate a key element of his re-election strategy. He needs Democrats, especially progressives, to back him (or at least remain divided), but he also needs his usual wealthy backers. There are few plausible scenarios where he can secure both.

The Governor has never had a strong constituency or political base either in NYC or outside of the city. He has relied on New York’s horrendous voter apathy and deep-pocketed developers to aid his re-election before. Now, however, in the Trump Age, progressives have woken to enemies within both parties and many are gunning for him on the left (even before former-actress, qualified lesbian Cynthia Nixon announced her primary challenge.) Even if he continues his cynical lurch left, very few progressives will buy it and many more voters will be paying closer attention for the first time.

Governor Cuomo’s record on affordable housing is clear. He has been at best indifferent and at worst hostile to policies that don’t include massive subsidies to private developers. Under his administration, help for public housing, rent regulation laws, and alternative housing models like community land trusts has been largely ignored, slow-walked, or superficially supported.

That hasn’t stopped others from acting in his absence, but the lack of leadership has been glaring given that his entire career is based on his alleged housing expertise. Trying to make up for years of indifference now might get him some press, but it won’t erase a career of opportunism around housing. That isn’t the only reason will never be president let alone the nominee in 2020, but it might very well jeopardize him even in 2018.

PE Firms Renting Homes Proves How Fraudulent Federal Housing Policy Is

Since when is this a thing? (cnbc)

Since when is this a thing? (cnbc)


New York Magazine had a truly scathing article about the Department of Housing and Urban Development under Secretary Carson last week and it’s worth reading. He is as disinterested and unaware of housing policy as many feared, but surprisingly, to me anyway, he is also as prone to incompetence, nepotism, and cronyism as his boss. I could go on about how bad things are at HUD and why that is terrible for the affordable housing crisis, but one person who played a minor role in the story deserves more focus: Maren Kasper.

Ms. Kasper’s presence in government offers a chance to talk about the significant growth of private equity firms in the single-family housing market and why it confirms how fraudulent the federal government’s stated policy of encouraging homeownership truly is. It also shows that addressing the affordable housing crisis is not a priority of the federal government under either party.

Before I get to Ms. Kasper, let’s quickly review what happened during the foreclosure crisis in 2007–2008. The long-held bi-partisan focus on promoting homeownership in the US created a policy apparatus that over decades became a two-headed monster that was bound to devour itself and us along with it.

On the one side, through massive Government Sponsored Organizations (GSOs) like Fannie Mae and Freddie Mac, the federal government subsidized homeownership by backing mortgages and allowing them to be securitized and traded on secondary markets. Over time, mortgages were bundled and unbundled, divided and combined, sold and resold to the extent that it was hard to know where they originated. The largest, most powerful banks in the country traded in this profitable and increasingly complex system, which became a main engine of the American economy.

On the other, in the interest of raising homeownership rates, government policies created incentives for banks and other mortgage lenders to offer increasingly absurd or pernicious mortgages for traditionally unqualified buyers — the most infamous example being the sub-prime mortgage. Millions of Americans took out mortgages that they could not realistically expect to support based on willful ignorance, carelessness, and outright criminality from the industry.

You know the rest. Inevitably, the system collapsed on itself and caused the greatest economic crisis since the Great Depression. An estimated 10 million Americans lost their homes and 30% of all homeowners were underwater in their mortgages. The financial system was bailed out and Fannie and Freddie came under government receivership, where they remain today.

Some banks like Wells Fargo, Bank of America, and Goldman Sachs were forced to pay millions in fines and one or two low-level people went to jail. Some lending policies were tweaked and financial regulations were added in Dodd-Frank. Some people continued to lose their homes or remain underwater. The country and the press largely moved on.

But the crisis never really went away. That’s because the underlying roots of the crisis were never honestly accounted for or discussed at the policy level. The bigger problem is that Americans can’t afford basic goods and services anymore without taking on huge amounts of debt. 

Rather than address ways to increase Americans’ incomes and purchasing power, or to control the costs of important needs like housing, education, and healthcare, we’ve encouraged increasingly exotic financial instruments to fill the gap.

That’s what our federal housing policy actually is — a series of exotic financial instruments. On the surface, it provides a means for Americans to buy homes, but look deeper and it is in fact a giant wealth transfer for financial institutions. 

By allowing housing — the land, the structure, and the mortgage — to become a commodity (through the policies that I mentioned earlier, but just as importantly, through the tax code) they’ve increased the incentive to speculate on housing just like any other traded good.

In the immediate aftermath of the crisis, this naturally led to a rush of private equity firms into the housing market, buying up thousands of foreclosed homes on the cheap. 

The government could have helped keep families in these homes, could have kept ownership of them, or could have sold them to non-profit housing groups. Instead it allowed speculators to dominate this vulnerable market, flying in the face of what the goals of housing policy were supposedly intended to do.

That brings us to Ms. Kasper, who worked at a west coast startup company called Roofstock before she entered the Trump Administration. The company is a platform that helps investors buy single-family homes with the intention of renting them. Roofstock offers a chance for smaller investors to compete with PE firms in the same speculative game.

The space for renting single-family homes is rapidly expanding, thanks to the government. Just this month, Blackstone merged with Starwood Waypoint Homes to form one of the largest landlord entities in the country, with over 80,000 homes under management. The NY Times had a detailed article about the new focus and it’s worth checking out. 

In 2015, when Blackstone originally announced it was spinning-off its business into a publicly traded home rental company, it also quietly announced that Fannie Mae was backing $1 billion of its mortgage debt.

If it seems counter-intuitive for a single-family home to be owned by large private equity firms, you’re right. If it seems counter-intuitive for the federal government to support private equity firms — or investor platforms like Roofstock — in owning single-family homes, you’d also be right. But that’s exactly what is happening.

So let’s be clear: it has been federal policy to encourage homeownership for the average American family for 70 years to create an ownership society, to promote economic development and strengthen civic commitment (with decidedly mixed results). The government has spent trillions of dollars subsidizing the industry as a result. Now, that policy directly supports the opposite. How does that make any sense?

It doesn’t. The truth is, secure housing for Americans may have been the initial goal of federal policy (for white Americans, anyway) but by the 1970s the true goal was to enrich private interests through the commodification of housing. 

The move to subsidize private equity firms as they rent out homes just shows that this reality no longer has to be hidden from the public. This contradiction doesn’t factor in to policy discussions — at all. Who in either party is willing to talk about this? Who is willing to question if this is good for the country?

It’s also clear that this trend is making it harder for Americans to afford homes, particularly at the lower-end of the market and in hotter secondary markets. First time buyers are competing with these investors for the same housing, but often don’t have nearly as much cash on hand for the deposit. In many cases, they instead get to rent those homes for increased rents. The federal government has increased the cost of shelter for Americans.

It is clear that affordable housing will not be a central goal in the Trump Administration. HUD is in serious trouble under Secretary Carson. Massive budget cuts are expected to further weaken the agency’s mission. Tax reform threatens the only (flawed) federal affordable housing policy, the Low-Income Tax Credit. And the desire to deregulate the financial industry further only speeds up a future crisis.

As a coda, Ms. Kasper, the only visible member of the administration with even a modicum of housing experience, is now working at Ginnie Mae, which like Fannie and Freddie, backs mortgages. She will likely pursue more support for private investors to enter the single-family housing rental market.

If this doesn’t show how bad federal housing policy is, I don’t know what will. We have learned little from the Great Recession and we have no new ideas at the federal level for the ongoing affordable housing crisis that doesn’t rely on the same flawed market thinking. Until either party is confronted with the flawed logic of our housing policy, the cycle of crisis will continue.

5 Arguments to Help Change the Debate on Public Housing

A beautiful day at Mill Brook Houses (homebody)

A beautiful day at Mill Brook Houses (homebody)

Despite the unprecedented affordable housing crisis across the country, there is seemingly no popular support for more public housing. President Trump instead reflects the general sentiment in Congress by outlining a budget that would cut billions of dollars from housing assistance for millions of low-income Americans. Though many residents, housing groups, and elected officials are speaking out against these cuts, they are hobbled by a lack of national attention. Frankly, I believe it’s because their message “#nocuts” is hardly a battle cry, as important as it is.

If we are to prevent these draconian cuts from becoming law this year, we must put as much pressure on Congress as we can. It’s likely that some of these programs will be saved if we do. But simply reducing the cuts or saving certain programs is not enough to help the millions of Americans struggling to find affordable shelter.

We must fundamentally transform the discussion about housing in the US and we must once again create a national effort to support, build, and maintain public housing on a significant scale. In the spirit of “#nocuts” I have outlined 5 hashtags that describe where I believe we can succeed in doing so.

1. #HousingIsARight and Denying it is a Crime

We live in a deeply segregated country. This is not an accident. This was not an organic result of natural clustering or preferences. As Richard Rothstein has pointed out in detail in his book The Color of Law, it was the result of direct, explicit federal and local policy decisions to favor white Americans over all other types of Americans. The US Government made housing a de facto right for white people and denied it to black people and other minorities. The consequences have been devastating.

A lot of people, including the Supreme Court, do not know or accept this. This can no longer be tolerated. Just as we are finally taking down statuescelebrating an armed insurgency based on white supremacy and slavery, we must also face the blatant suppression that has been staring us in the face for generations every time we drive from a suburb to an inner-city core. The geography of our built environment must finally be accounted for with proper historic context.

Only by recognizing that housing is a basic human right and a basic obligation of our government, will we ever truly reconcile with and change the accepted narrative that downplays the scale of suppression. The God’s honest truth can tear down more than just statues in this country.

2. #RealTakers and Subsidizing Wealthy Homeownership

Once we accept how awful our housing policy was in the 20th century, we can then take a critical eye to how terrible our current housing policy is in the 21st. The specter of racism undoubtedly hangs over our current policies by the sheer scale of previous decades. However, today the true outrage is more about class.

As Matthew Desmond, author of Evicted, has recently written about, the federal government spends $134 billion a year — more than the entire budget of the Education, Justice, and Energy Departments combined — subsidizing homeownership, particularly through the Mortgage Interest Deduction. About 60% of that money goes to wealthy homeowners. The 7 million households that make over $200,000/year receive a larger share of that savings than the 50 million households who earn less than $50,000/year.

This is far from “free market” principles and in fact inflates the housing market to the benefit of wealthy homeowners. It’s estimated that removing such programs could reduce housing prices across the country by 13–17%, making it far easier for many people to purchase a home if they chose.

When a record number of Americans are rent burdened, and over 600,000 Americans are homeless, the fact that we subsidize these homes is a national disgrace. By placing a hand on the scale (again, for explicitly racist purposes) the housing market has exacerbated the economic inequality ravaging all quarters of the country.

Let’s start calling these households what they actually are: takers. Let’s remove the moralizing and euphemisms around how some politicians use that term currently and instead, by placing basic logic and fairness on it, aim it towards those who are actually taking the most from all of us.

3. #PublicHousingWorks and Has Always Worked

Despite decades of discriminatory policies favoring white homeownership (and now more general wealthy homeownership) and systemic neglect against everyone else, we can still point to an obvious truth: public housing works.

During the brief period when there was popular support for public housing and federal intervention in general, the US government built thousands of units. Though some, like Pruitt-Igoe, became shorthand for crime and neglect, the larger truth is that many more continue to be wonderful homes. And the complexed that did fail, failed because the federal government let them fail due to systemic neglect and more racial discrimination.

NYCHA is by far the largest public housing authority in the country, housing nearly 400,000 people across thousands of units. It is a bigger city than Miami and Las Vegas. Despite a rapid retreat of federal funding and larger demographic shifts that decimated NYC in the 1960s and 1970s, NYCHA has endured. Even today, as it faces billions in capital budget gaps and millions more in potential cuts in Trump’s Budget, residents are happy with their communities and the agency. And only 13% of residents receive public assistance.

The idea that Public Housing is a wasteland where people want to get out of, or where they should be encouraged to get out of, has never been true. As Affordable Housing in New York shows repeatedly, even in the hardest times when crime was high and many facilities were in poor shape, these communities survived and in some cases thrived.

NYCHA residents should be proud of where they live. Employees of the agency, past and present, should be proud of the work they did and continue to do to keep it going when no one could or would help.

Public housing residents shouldn’t be pitied or demonized and they don’t need to be romanticized either. They are normal Americans who happen to be part of something bigger than any one person or one building. Their experiences represent just how much the republic can achieve if it follows its values and how many it can fail when it abandons them. We should be telling this story everywhere to everyone.

4. The #FutureOfPublicHousing Will Not Look like the Past

There were many flaws in the design and support of public housing in the US during the 20th century that caused many complexes to fail outright or fail for a period of time. Early generations of complexes were sterile and anti-social. Many of the funding sources were fleeting and easily diverted. Sociological assumptions in design were flawed and discriminatory.

No one is suggesting that we go back and do this over again. Throw out the idea that public housing means tall brick towers isolated from neighborhoods. Instead, we should articulate a new vision for the 21st century that reflects lessons learned from the past and a broader mission for the future.

Instead of building new residential towers on superblocks, repurpose older infrastructure and combine multi-use functionality within existing city and town fabrics.

Instead of designing uniform apartments or complexes with rigid specifications, allow for innovative construction techniques like pre-fab units, modern SROs or shared living arrangements that strive for different, locally desired outcomes.

Instead of subsidizing homeownership (especially for wealthy Americans), invest those resources in community land trusts and land banks to give local communities more agency and sustainability. Take the speculation out of (at least parts) of the housing market by tipping the scale towards affordability.

We should simplify yet broaden HUD’s mission based on housing as a right. Set its goals and budget around lowering the cost of shelter across the country in whatever forms that shelter is needed for local conditions. Make HUD about providing Public Housing whether it’s apartments or a single-family home.

The possibilities of future Public Housing are almost endless when you shed the vision of the past. Let’s start showing the country what the future could look like and how it could help everyone, whether you live in a city, a suburb, or the country.

5. #RebootTheUS Can Start With Public Housing

The polarization of our politics has increasingly bled into all corners of our public policy discussions, crippling our ability to address the challenges facing our rapidly changing nation and planet. The polarization of our economics, in the form of runaway income inequality, has also poisoned our broader civic life and national identity. We were in crisis long before President Trump and will remain so long after him unless we can do what America has always done best — reinvent itself.

As when the Gilded Age spawned the Progressive Era and the Great Depression spawned the New Deal, we must lay the seeds now for a great rebirth of national promise and purpose. We must embrace the core values and aspirations of our republic — freedom, justice, and the public interest — and shed the rot of late capitalist values of commodification, exploitation, and greed. In the digital age, no term better represents what I think we need than a great “reboot.”

And there’s no better place to start than with public housing. Committing again to a massive nation-wide effort to provide affordable housing in many forms not only addresses the moral urgency of our current situation, but it also addresses the economic urgency as well.

Public Housing is infrastructure. Its creation means jobs and economic activity on a scale unseen in decades. Its existence means more take-home income for millions of Americans who are rent burdened or underwater in their mortgages. Its location means more mobility for families and individuals in economically productive regions.

What other effort could so thoroughly demonstrate the power of a great national reboot to inject economic and civic purpose into a country that should never have to sacrifice either. We don’t need to abandon the experiment of national government to do so. We need to reinvigorate our civic intellect as well as our institutions. We start by showing how a focused federal effort in housing can promote our values, help our citizens, and share our prosperity.

None of these ideas are new or radical. They reflect an obvious truth about contemporary America: what we have now is not working. We are ultimately presented with two options. First, we can continue on with our late capitalistic doctrine that we are all consumers on our own or, second, we could revitalize our identity as citizens and recognize that we are in this together. One leads to a brutal, empty society. The other leads to something much stronger and fulfilling.

Secretary Carson as Useful Idiot

But don't let him, or us, off the hook (housingwire)

But don't let him, or us, off the hook (housingwire)

When Dr. Ben Carson was announced as the nominee for HUD Secretary, it was pointed out that he had never worked in government and had no experience in housing.   When he took questions before the Senate, it was pointed out that he barely mentioned anything to do with housing (and was barely promoted to).  And when he went on his listening tour shortly after becoming Secretary, it was pointed out that he praised the results of programs that would likely be cut or eliminated by his boss.  Now that the budget is officially here, and does include devastating cuts to HUD, it’s safe to say that Secretary Carson is as bad as housing advocates feared.  But truthfully, he has been everything the Trump Administration wanted him to be.  The implication for our country is disheartening.

I know it’s harsh to refer to Secretary Carson as a “useful idiot” but he is the literal definition of the term.  President Trump is cynically using Dr. Carson to go along with policies that the doctor (and, frankly, the President) doesn’t fully understand for purposes he may also not fully appreciate.  Dr. Carson seems quite content with the arrangement.

It is unlikely that Secretary Carson was consulted or even notified of the budget cuts outlined for HUD.  I’m not entirely convinced he knows what is in the budget. Not that the department is even staffed enough to have anyone around to tell him. Despite Dr. Carson’s testimony during the nomination to defend the mission and programs of his department, he has done nothing of the sort and never intended to.

This was all from the White House.  The department faces cuts of 15%, or $7.4 billion, which would include the elimination of bedrock programs like the Community Development Block Grant, the Housing Trust Fund, HOME investment partnerships, capital funding for public housing, and many other regional rental assistance programs.  Hundreds of thousands of poor, young, old, disabled, or otherwise vulnerable Americans would lose housing assistance in the midst of the affordable housing crisis.

Secretary Carson has still been useful by putting a genial face on what is a dark, cruel vision of public policy that has emerged as the only through-line in the Trump Administration.  Secretary Carson has made national headlines for two statements that reflect the naked truth of the Trump Administration but spares the President of having to say them himself: Fuck the Poor.

First he said that public housing, or presumably any subsidized housing, shouldn’t be “too comfortable” for residents because they won’t be motivated to find other housing.  Second (and not for the first time) he called poverty a “state of mind."

These comments are horrifying and stupid for several reasons. 

Let’s look at the first statement.  The logic that public/assisted housing should only be temporary was abandoned decades ago by HUD because it never made sense to begin with.  Providing permanently affordable housing for low-income families is a worthy public investment because it creates more economic opportunity for individuals and communities, reduces public spending in other supportive services, and maintains a mixing of income (and by extension, racial) groups that is fundamentally necessary for the health of our civil society.

If residents have the opportunity to move up the economic and housing latter, then great, American mobility is working.  But, more accurate to today, if they have to stay economically, or want to stay socially, they shouldn’t be punished with Spartan accommodations. Where are the good jobs and opportunities in our economy today? Decades of terrible economic policy have trapped millions of Americans in all corners of the country.  The idea that this housing shouldn’t be “too comfortable” is not only cruel and condescending, it is ignorant and classist.

Which brings us to Secretary Carson’s second statement about poverty being a state of mind.  This statement is so utterly wrong on its merit, so astonishingly ahistorical, and so morally debased that in a healthier society, we would have demanded and received his resignation. 

Our brand of American exceptionalism has always had a darker tone when it comes to poverty.  We romanticize the idea that anyone can do anything if they work hard enough, and point to any number of anecdotal stories to show this kind of success.  However, this allows us to ignore the larger structures in our society that have exploited the poor and vulnerable from the founding of our republic to present day – from Native Americans to slaves, to immigrants, to women and children, to veterans and foreign workers.

It’s why our national consciousness remembers the wagon trains of western expansion more than the violent removal and murder of Native Americans to achieve it.  It’s why we recall the great industrial expansion during the Gilded Age through the mansions of the robber barons without remembering their violent suppression of labor strikes at places like Tompkins Square in 1874 or on Grand Street in 1886. Its why we gloss over MLK's true message of economic justice for a waterer-down version of inclusiveness.

Dr. Carson’s views on poverty are no doubt shaped by his own exceptional life story (which, unlike the President, he achieved on his own.)  He has made a lucrative second career as a writer and motivational speaker by telling willing audiences that he overcame poverty and achieved greatness, reaffirming this great narrative of America by personifying it himself.

But is everyone blessed with Dr. Carson’s brain? How many other poor young men and women – who likely had equally strong and dedicated mothers - were unable to achieve even modest economic prosperity?  For every Dr. Carson, there are a hundred anonymous poor who, if even acknowledged by our broader society, are blamed for their condition. 

That this blame is also leveled by a man like Dr. Carson, who should know better given his background, his stated religious beliefs, and his position in government, shows everything that is wrong with our country today.

We can debate the likelihood of the cuts in the president’s budget actually passing and take some hope in knowing that many won’t.  We can hide behind the fact that Dr. Carson is simply inexperienced and overwhelmed in government. We can tell ourselves that the economy is doing well, that it could even improve, and that anyway it’s only a small portion of people impacted by these cuts.

But this thinking would let us all off the hook.  We can’t turn away from what is staring right in front of us.  Our society is growing crueler.  Our government, and even President Trump, is only a reflection of this. Our illness runs much deeper.

We are looking at the challenges posed by globalization, coming automation, and climate change with tax cuts for the wealthy and program cuts for everyone else. We are blaming the poor for their condition and excusing the mega rich for theirs.  We are lying about the past, ignoring the true problems of the present, and betraying the future - for nothing. 

Yes, we can start by demanding Secretary Carson step down.  We can continue by blocking the president’s housing agenda (and general agenda) and voting him out (if it comes to that). But we must acknowledge that the cruelty running through our society is a much larger plague that must be eradicated. 

We must discover a new civic spirit and a new commitment to our shared republican values of liberty, justice, and peace. We must acknowledge that these values are only viable when every citizen has access to them.  We must create a government that reflects the supremacy of collective effort and shared benefit over exploitation and selfish gain.  We must reject the ideology that says we are on our own.  That has never been anything but an excuse for the bigger fish to eat the little ones.  America is greater than that.

But Look at What Secretary Carson Didn't Say Once: Housing. Urban. Development.

We all need a bit more help than that (newyorker)

We all need a bit more help than that (newyorker)

Newly appointed HUD Secretary Dr. Ben Carson made headlines this week for his first remarks to HUD employees.  Towards the end of his speech he referred to slaves as ‘immigrants’ and caused a predictable upheaval in the media.  However, we should be more concerned about what he didn’t mention. In 30 minutes, not once did he mention “housing,” “urban,”or “development.” Not alone, not together. Only once vaguely did he even reference HUD’s mission. Given the massive cuts already announced by HUD, Secretary Carson showed again why his appointment is an insult to every American and a cynical misdirection from the Trump Administration.

Secretary Carson’s slavery comment was perhaps lazy and insensitive (although it's debatable), but we shouldn’t make that much of it.  Dr. Carson has many more regrettable views on the historical and current relationship between state power and personal agency.

The only thing that I took from that comment is how clearly, almost comically, it illustrates the difference between his usual motivational speech audiences and his new audience. Those conservative, older and whiter audiences buying his books don’t have a lot of overlap with the core constituency of HUD - be it its employees or those receiving its investments.  As humorous and uplifting as his other well-paced anecdotes were, what the hell do they have to do with housing? Secretary Carson has a lot to learn about messaging to this audience. Book tour is over.

It’s perfectly fine to introduce your new employees to your personal background and how it shaped your worldview, and Dr. Carson certainly has an admirable story to tell. But that introduction needs to transition to include some discussion about your commitment to the mission of your agency and your vision of the policies that your employees are working on. Or at least acknowledge that you understand them.  Platitudes about the American Dream and ‘fairness for everybody’ don’t cut it.

This is especially important when you are, by your own admission, an unqualified novice at government work and, lest we forget, entirely new to housing.  You are coming into a world that is much larger than just those HUD employees in the room.  You are facing skepticism, if not outright hostility, from just about every stakeholder in housing.  You also represent an administration that is openly dismissive of your agency’s mission.  People have a right to be deeply worried about the future of HUD under your leadership.  It either shows profound arrogance or prohibitive ignorance (or maybe both) not to address those concerns.

Secretary Carson isn’t selling books.  He’s running a $50 billion federal agency with close to 10, 000 employees that helps millions of Americans pay their rent, get a mortgage or construction loan, and access fair and affordable housing.  Over 20 million Americans – half of all renters – are rent burdened.  Millions of Americans are near or underwater in their mortgages or can’t afford to buy a home. HUD’s mission has never been more important - or more in doubt.

Given these stakes, what is even more galling about Secretary Carson’s substance-free speech is that it came after HUD announced the beginning of significant cuts to its programs.  New York City is expected to lose $58 million in funding by the end of this year for NYCHA and HPD. That's just the beginning.

This is on top of the rumors that President Trump will cut $6 billion from HUD in his proposed budget, which would effectively end many of the programs that give housing investments to the poorest Americans. How can Secretary Carson not speak about this to the employees working on those programs? How is it that he has still not commented on these cuts to anyone?

I entertain the possibility that Secretary Carson wasn’t told about the cuts and wasn’t consulted on the budget proposal.  The announced cuts are based on a somewhat wonky, previously outlined policy formula, which would have occurred regardless, so I’ll give him a pass on that for his first week.  And it’s clear that most of President Trump’s Cabinet are figureheads who don’t get consulted on policy decisions, so that isn’t surprising at all.

But I don’t honesty know what would be worse.  That Secretary Carson hasn’t been consulted or informed on HUD-related policy, that he has been consulted and doesn’t understand it enough to comment on, or that he doesn’t think he needs to comment on it? None of those scenarios should comfort HUD employees and housing advocates. And none of them should be surprising.

President Trump has made it clear that, at best, he doesn’t understand the systemic injustices surrounding housing in America or, at worst, he doesn’t care.  His rhetoric from the campaign to the Oval Office has been a steady stream of dog whistles about “inner-city hell holes,” “law and order” and “urban renewal.”  His language, and its racial implication, is straight out of the lawsuit HUD brought against him in the early 1970s.  

Selecting Dr. Carson to head HUD was always about putting a genuinely amicable, entirely weak face on an agency that will be gutted at every turn.  The fact that President Trump picked a man with no experience in government and no experience in housing proves this.  The fact that Dr. Carson is black also shows the cynicism behind President Trump’s ‘urban agenda.’  

Don’t pity Dr. Carson as some unfortunate rube.  Behind his uplifting personal story and sunny disposition lies an unforgivable misreading of American history and an unwarranted belief in the power of personal responsibility to overcome obstacles (he would never acknowledge the existence of systemic oppression). His listening tour and time at HUD won’t change that. Yes, he’ll change his tune a bit after the embarrassment of this week, but he’ll do so more in the hopes of expanding his future book and speaking opportunities than in helping the millions of Americans that need HUD to live safely.

The Trump Age: Nobly Save or Meanly Lose?

What can we expect? (inquisitor)

What can we expect? (inquisitor)

Today Donald Trump will become the 45th President of the United States.  He comes into office having lost the popular vote by 3 million to Secretary Clinton, after experiencing the lowest approval rating of any incoming president on record, all while under a shroud of unprecedented allegations of foreign meddling in the election.  He takes the most powerful office in the land with a federal government dominated by his questionably-aligned party, facing a decimated and rudderless opposition, under the confused, delegitimized eyes of the press.  He enters a world stage that is suffering a near universal retreat of liberal values and the rise of ethno-nationalism in the wake of ever-increasing inequality, temperatures, and sea levels. And yet, as of today, many claim not to know what to expect from the man.

Of course there are reasons for this confusion.  President Trump ran a campaign that oscillated wildly between standard Republican positions, shocking hard-right proposals, and incoherent populist rhetoric.  I won’t spend time rehashing the litany of lies, contradictions, or fantasies that spewed from the candidate anymore than I will spend time rehashing the offensive, irresponsible, and dangerous language that he used. 

But we know many things about the Trump Administration based on the Trump Campaign. First, some successes: Mr. Trump has a genius for social media and showmanship, has an ear for the underrepresented voices in America (in media if not government at any rate), and a knack for slaying the sacred cows of our conventional politics.  These were assets for gaining attention in a shallow, media-soaked campaign environment. 

Some of these assets no doubt could be refreshing in government.  Mr. Trump may be a coastal elite who inherited his wealth and surrounds himself with all its trappings and sycophants (which will be a common theme in his cabinet), but he is also clearly outside of the Washington scene.  Questioning long-held assumptions about American domestic and foreign policy is healthy and long overdue.  Expanding debate to include ideas from vast segments of forgotten regions and people is an imperative that could potentially reinvigorate the trust and enthusiasm for our republic’s institutions. Whether he uses his brashness to these ends or not, President Trump will have permanently disrupted the neo-liberal consensus. The electorate has said demonstrably that this consensus has failed and that they want something else. It is about to get what it wants.

Now, the failures: Mr. Trump has consistently proven to be unorganized, incoherent, and disinterested.  These are three attributes that don’t translate into strong governance.  As good as Candidate Trump was at getting attention and throwing (or tweeting) popular bombs at the establishment (and many vulnerable individuals and groups), his campaign was a chaotic mess that fell backwards into a victory that they didn’t see coming just like everyone else. Winning softens that narrative (as it does with any presidential campaign) but it doesn’t mean those trends will change in the White House.  There is little doubt that the Trump Administration will be just as chaotic, if not more chaotic.

This is because, whatever Trumpism represents, it is not a cohesive agenda or ideology, but a cult of personality.  The three axes running through the Trump Administration – orthodox Republicanism, alt-right populism, and retro nationalism – have few areas of overlap and many more areas of direct opposition.  Ugly conflicts will be inevitable.  There are a lot of big egos new to government walking through the door.  The one thing these factions will have in common will be competing for and relying on the whims of the President to choose sides on an issue-by-issue, day-to-day basis. Again, this is not a formula for effective governance (and will do significant damage to the institutions and agencies within this orbit that would normally have some autonomy).  

Instead of a focused, on-message White House, we will see one with lots of noise, lots of backtracking, and lots of blame shifting. However, that circus could (perhaps intentionally) distract the public from what should be a sustained if unsteady unraveling of domestic policy. For all the chaos over the last 18 months, Mr. Trump has held remarkably consistent views on most things for a much longer period of time.

More often than not, President Trump's brand of orthodox Republicanism, one with a messianic hard-right flavor, will dictate the Trump agenda. This will mean dramatic budget cuts to most discretionary agencies, the termination of many smaller programs and departments, privatization and deregulation, and a general sustained federal retreat from many policy fronts. America will become a place with distinctly sharper edges and higher boundaries between its winners and losers.

Housing is a good example. It is unlikely that the Trump Administration believes in many of the goals of the Department of Housing and Urban Development (which is by no means the only federal agency that impacts housing).  Those goals include assisting poor Americans with direct housing costs, supporting affordable housing construction, enforcing fair housing laws, and overseeing the vast agencies Fannie Mae and Freddie Mac that subsidize homeownership for millions of middle-class Americans.  Aside from perhaps this final goal, none of the three factions in the Trump Administration will want to continue those policies.

Mr. Trump’s personal interactions with HUD consisted of being sued for racial discrimination. His Secretary of Treasury candidate Steven Mnuchin profited from the housing crash of 2007 and its aftermath.  Candidate Trump’s repeated usage of ‘inner-cities’ and ‘urban renewal’ reveal either a deeply cynical tendency to dog whistle to his white working-class base and/or a persistent ignorance of the changing shape of our cities and the larger spectrum of minority experiences in America. 

His pick of Dr. Carson to run HUD encapsulates this indifference-to-outright hostility perfectly. I, and many others, have already discussed why Dr. Carson is unfit to run the Department of Housing and Urban Development.  Nothing in his Senate hearing changed that judgment. 

Like his boss, he is unaware of or unwilling to recognize the history of government-sanctioned segregation in our communities that has perpetuated multi-generational poverty for millions of Americans.  Instead, Dr. Carson has spoken of poverty as being a choice.

Like his boss, Dr. Carson is entirely unfamiliar with the majority of activities HUD undertakes or that most of them don’t involve aid to black Americans stuck in “inner-city hell-holes.” 

Dr. Carson also seems unwilling to (or, perhaps more troubling, unaware of the need to) challenge Mr. Trump’s dated and offensive characterizations of urban America. This doesn’t bode well for the priorities of HUD under his watch.  It’s difficult to see Dr. Carson having the stomach for defending HUD’s mission from the White House let alone for budget fights on the Hill. President Trump will have near-free reign to dismantle much of HUD with an affable face at the helm and willing co-conspirators in Congress. This will have an untold impact on millions of struggling Americans.

Because of who Mr. Trump is as a man and what divergent worlds he has rode to power on, we truly don’t know a lot about what will happen over the next four years.  President Trump will have an immense amount of power to impact the lives of billions of people.  His lack of humility and leadership in the face of this responsibility give many reasons for progressives and conservatives alike to fret.

But he is no king.  It will be up to the institutions set up by the Founding Fathers to check his authoritative impulses.  It will be up to the free press to challenge him and to reassert its role as a vital public advocate.  And most importantly, it will be up to us as citizens, regardless of whom we voted or didn’t vote for, to remain vigilant, engaged, and hopeful.  The stakes for our republic, our world, are real and they are high.  To paraphrase President Lincoln, over the next four years, we shall nobly save, or meanly lose, the last great hope of earth.

Carson Heading HUD Would be an Insult to Everybody

Asleep, but figuratively or literally? (fallssociety)

Asleep, but figuratively or literally? (fallssociety)

In 1966, Dr. Robert C. Weaver became the first Secretary of Housing and Urban Development (HUD) and the first black man to have a Cabinet-level position in the federal government.  He had a Bachelors, Masters, and PhD from Harvard University and started in government during the New Deal as a member of FDR’s famous “Black Cabinet.”  He later worked in the Kennedy Administration and helped lay the groundwork for HUD, which was eventually created during President Johnson’s “Great Society” platform with Dr. Weaver envisioned at its head.  Though largely forgotten today (though his name is on the HUD Building in DC) Dr. Weaver’s influence on government and civil rights, forged through years of government work and policy execution, is a testament to what talented individuals can overcome and accomplish through a dedicated federal government.

So it is in surprisingly stark contrast this week that there have been strong indications that President-elect Trump has picked another black doctor - Dr. Ben Carson - for Secretary of the US Dept. of Housing and Urban Development.  Though no official announcement has been made, Mr. Trump has floated the name on twitter and Dr. Carson, a former Presidential hopeful and accomplished brain surgeon with no government experience, has signified that he is considering the position.  If this does pan out, it would be an insult to every American.

Let’s start with the obvious: Dr. Carson is not at all qualified to run any government agency. Just ask him - a week earlier he took himself out of the running for any cabinet position because he didn’t think he was qualified to run a federal agency.  He is right. He has no experience in government and no experience in managing a large agency of any type, let alone one concerning housing.

Dr. Carson was clearly a talented doctor and an inspiring speaker, but he has never worked in housing (and has not show much aptitude for politics).  He has only commented on housing issues publicly a few times. In those cases, he has come out against fair housing policies and the Supreme Court ruling on disparate impact in Texas because they are ‘social engineering.”  That either shows a shocking ignorance towards the legacy of housing policies on economic segregation and inequality or a deep cynicism. I will give Dr. Carson the benefit of the doubt and assume it is ignorance.

In any case, Dr. Carson is not prepared to take over one of the most important federal agencies in government – tasked with managing $1 trillion of home mortgages and a $50 billion annual budget towards fair and affordable housing policies and legal defense for hundreds of thousands of Americans.

Apparently, Mr. Trump felt Dr. Carson was qualified because: 1. He was born in a city (and presumably has lived in a few houses) and 2. He supported Mr. Trump early.  You could also easily add in a third reason: Dr. Carson is black.  Given Mr. Trump’s clear preference for older white men for his top positions (and the growing criticism for it), this was an easy, if entirely empty, gesture to make.

Unfortunately, it is not uncommon in any Presidency for cabinet positions to be filled by unqualified loyalists or isolated figureheads. It has been especially true at HUD where many Presidents have placed token minority hires or personal loyalists who have been ignored (George Romney, Jack Kemp) or guilty of massive corruption (Samuel Pierce). So while there have been accomplished Secretaries in the past (Shaun Donovan comes to mind), HUD has largely been an afterthought for most Presidents. The fact that Mr. Trump has picked Dr. Carson is sadly not unprecedented.

However, what is unprecedented is the affordable housing crisis gripping the nation and crippling its long-term economic potential.  This blog has documented just how bad the crisis is and just how much it could damage our economic and social prosperity for generations.  It is simply too important an issue to be dismissed with such an abysmal appointment.

Picking Dr. Carson tells us much about what a President Trump will do for housing. At best he appears uninterested and likely to simply ignore the problem. Dr. Carson, unless he surprises, would not be a powerful advocate for housing and will not have a powerful voice in the administration.  Whether it’s the still-troubling status of Freddie Mac and Fannie Mae or the systemic lack of affordable housing in our cities, there are too many issues in housing for President Trump to take such a dismissive approach about it.

At worst, President Trump will use Dr. Carson as cover while appointing undersecretaries like Rob Astorino from Westchester who would very likely peel back affordable housing policies and cease to enforce fair housing laws.  Dr. Carson could oversee HUD as it quietly retreats into underfunded irrelevance.  The federal government could stop defending poor residents against discrimination at the local or city level and allow the continued resegregation of our communities.  HUD could also likely enrich the private sector by dismantling mortgage assistance and other housing programs without addressing the needs for poorer homeowners and renters.

It remains to be seen what Dr. Carson will decide on, but that it is up to him – after just stating he wasn’t qualified for such a position – shows a troubling sign for what the Trump Administration will prioritize.  Rather than acknowledging the scale of problem facing the nation with housing and finding qualified people with the experience and ideas (whether one agrees with them or not) to tackle it, Mr. Trump has evidently thought little of policy implications and a lot about personal loyalty. This does not bode well for Americans across every type of home.

The New York Times Doesn't Get the Housing Market

Wait, seriously? (newyorktimes)

Wait, seriously? (newyorktimes)

This week the New York Times published an article about how the national housing market “finally looks healthy” that was at best misleading and at worst irresponsible (it was also lazily edited).  The writer bases his argument on a joint release from the US Census and HUD that shows an increase in housing sales of 12% over last month and 31% over the same month last year.  On the surface, this could be a positive sign that the housing market is returning to ‘health’, but once you dig into the numbers, the picture is more complicated.  In fact, if this writer stepped back and examined the broader context of the economy, it would be hard to argue that we have a healthy market at all. This reveals a larger problem about how the media talks about the housing market and what it hasn’t learned from the 2008 crash.

Let’s start with the data from the joint report.  Though the article does point out that this data has a wide margin of error and is volatile, it still proceeds to use it as the core of the argument.  The problem is, this data does have a wide margin of error and is incredibly volatile because it’s based on a quick sample turnaround. You only need to look at the previous month’s release (June 2016) to see the difference in the July report’s revised totals.  They lowered the June numbers by 10,000 homes.   The report itself is clear about expectations and explains its methods and possible errors.  It also makes it clear that it takes a quarter to get an accurate sense of the trends within the market.  You can quibble with how different the data ends up being from what is currently reported, but the point is, this is a thin piece of evidence to base an entire argument on. 

Now, let’s just assume that the data is more or less accurate. We are still left with a more complicated picture than the article suggests, particularly when trying to compare the differences among regions.  Though the numbers are broken down into 4 regions, the raw numbers don’t show how wildly different the housing market is, even in certain parts of the same region.  For example, prices and availability for housing in and near NYC remain a competitive death-match while parts of Connecticut less than an hour from New York are struggling.   Does that mean the housing market is healthy?

The reality is that economic growth is happening in an increasingly smaller number of cities (and it’s almost exclusively cities) in certain pockets of the country that also have extremely expensive housing markets.  This is because of a limit in the supply of housing in these markets relative to the demand, whether as a result of geographical or political limitations. In either case, this situation is making it harder for middle class workers, let alone poorer workers, to be able to locate in these hot job markets. Hot job markets should create a housing boom, but that’s not what’s happening and it’s hurting our productivity as a nation.  That’s not the sign of a healthy housing market.  

This article also somehow neglects to mention (which is surprising given that the Times has covered this issue in another section recently) who is buying up a lot of these houses in certain market segments.  The entry of private equity firms into the housing market has been a quiet, powerful force building over the last 10 years.  Though the number of houses under control by private equity on a national level is relatively minor, the concentration of their portfolios in certain markets has had a huge impact on the perception of the housing market as a whole.  In many cases, they are buying up homes for straight cash.  They then rent them until the market reaches a certain point to flip them.  This speculation is perfectly legal, but it distorts the actual activity of house sales.

Also unaccountably left unsaid is the question over the financial health of the housing market.  No, another crash is not just around the corner, but the continuing receivership of Freddie Mac and Fannie Mae (who collectively back over 60% of US mortgages) has left the previous crash in an unresolved, frozen state.  Though many of the excesses that led to the crisis have been removed, the flawed assumptions underlying the housing market – that homeownership is a good political policy, that the government should support it as an economic policy - remain in place.  The fact that this policy costs taxpayers $150 billion a year while still failing to provide adequate housing for millions of Americans should challenge the assertion that this is a healthy market.  It’s not even a true market.

It is a mystery how the same paper that has addressed all of these issues at various times could allow an article to be published that breezes passed them all.  Maybe it’s just laziness or someone having an off-day, but it could also be someone pushing a narrative in search of story.   The media primarily talks about the housing market as an economic trend.  In doing so, it internalizes the assumptions of people who profit from the housing market regardless of how that process impacts the larger society and economy.  The housing market looked healthy, even robust, in the lead up to the 2008 crash, but underneath the sales numbers were real problems with earnings, financial instruments, and exploitation that went underreported until it was too late.  It is stunning and ultimately disappointing to see the Times revert back to this laziness and water-carrying.

It’s easy to cherry pick data from a report or to draw phantom conclusions from it, but it’s more important to report the full context of an issue to readers.  The housing market is not healthy.  Arguably it has never been healthy.  Trying to present it that way does a terrible disservice to the people that are suffering from it and to the people that are trying to solve it.

Fannie Mae and Freddie Mac: How the Government has Warped the Housing Market for 80 years (Part 1)

The free market didn't build this.  It didn't even build itself (house logic)

The free market didn't build this.  It didn't even build itself (house logic)

An article in the NY Times this past week discussed the on-going court battle between the US Government and private shareholders over the profits of mortgage-finance companies Fannie Mae and Freddie Mac.  As part of one of the major bailouts of the 2008 crisis, the US Treasury took both companies into government receivership and secured rights to future profits of both institutions along the lines of a 10% dividend each quarter.  Surprisingly, in 2012, the US Treasury revised the deal and has since taken all of the profits from both companies (to the tune of $1.7 billion in Q4 2015 alone) which prompted the first lawsuit in 2013.

This post will be the 1st of 2 that will examine Fannie Mae and Freddie Mac and why they have had such a huge impact on housing policy in this country, whether you are a homeowner or a renter.  The first post will discuss their creation and the policy discussions that drove their evolution.  The second post will examine their role in the lead up to and aftermath of the financial crisis of 2008.

It all begins in the midst of the previous major financial crisis, the Great Depression. In 1933 just less than half of Americans owned homes, but about a quarter of those mortgages were in default and thousands of people had lost their homes.  This also meant that thousands of workers associated with the homebuilding industry didn't have jobs.  

FDR, in full New Deal swing, passed the National Housing Act of 1934 which established several government-sponsored enterprises (GSEs) to encourage the construction and financing of private homes: the Federal Housing Administration which offered insurance on mortgages that explicitly guaranteed them, the Federal Savings and Loan Insurance Corporation, which insured savings and loan associations which offered mortgages; and the United States Housing Authority, which made loans to local public agencies for low-income housing.

The underlying logic was that by supporting home ownership and home construction, the US government could kickstart the economy and stabilize the political environment which had many radical elements. Homeownership was seen as a social good as well as an economic good. There was notable opposition to these measure, but FDR's first administration had large enough majorities in Congress to pass such measures despite Republican and conservative Democratic opposition. 

FDR meant well (us news)

FDR meant well (us news)

An amendment to the National Housing Act in 1938 created forerunner of the Federal National Mortgage Association (FNMA) - conveniently shortened to Fannie Mae.  Fannie Mae was formed to encourage banks to offer more mortgages to Americans by creating a secondary mortgage market where banks could then package those mortgages and sell them to other financial institutions.  

So basically as a result of the National Housing Act, the government tilted the housing market heavily towards private ownership and away from renting by first guaranteeing mortgages through the FHA, which reduced the risk to banks, and then by creating a secondary mortgage market through Fannie Mae, which increased the amount of money banks could make from reselling mortgages.  This made offering affordable mortgage financing attractive to banks which dramatically lowered the cost of owning a home for average Americans.

This is an important and often overlooked moment in American history because it can be argued that this is where the idea of owning a home became such a large, bi-partisan part of the American Dream (a phrase coined around the same time in 1931).  Up until this point, homeownership rates were generally around 40-45% nationally with predictably huge swings between rural and urban dwellers (it is currently about 65%).

Certainly much of the foundational mythology of American homeownership can be traced back to the early European settlers carving out their own homes and to the early homesteaders settling the western frontiers, but there was always a smaller share of homeowners than commonly believed (and a larger share of slaves, indentured servants, and displaced indigenous that were obviously denied the ability to own a home). Indeed, as European immigration exploded in the 19th and early 20th centuries, people flooded into cities and few had any expectation of owning a home. Renting was cheap and allowed proximity to jobs, services, and cultural institutions that shaped many ethnic identities in America as well as the cities that housed them.

It was the perception that urban America was in irrevocable decay during the Depression that permanently changed American housing policy away from cities and urbanism. Hysteria over the conditions of the urban poor has long been an easily exploitable trope in American politics, often not so subtly tinged with racism and xenophobia.  Perhaps ironically, the New Deal created an unprecedented opportunity to address it on a national scale but unfortunately caused a lot of unintended damage, which further exacerbated those problems. Fannie Mae was just one policy tool that the US Government used, consciously or subconsciously, to start the suburban sprawl / white flight era that dominated the postwar American landscape.

Almost instantly, Fannie Mae went beyond its initial intended policy goals, which were to spark the private sector, and instead effectively established a 30-year monopoly over the secondary mortgage market because, as a government agency, it could borrow money at lower-rates than private institutions, which made it harder to compete against. 

Some members of Congress along with trade groups associated with homebuilding thought Fannie Mae exerted too much power over the private market (criticisms were a mixture of self-interest and philosophical beefs) and wanted it abolished or privatized - while other members of Congress wanted it to remain a government agency to ensure the social goods of affordable homeownership were preserved.  

The Eisenhower administration, which was stocked with people from the real estate industry, pushed through a compromise in the pivotal National Housing Act of 1954, which included the Charter Act that reorganized Fannie Mae into a semi-private company that allowed private investors to hold common stock. (The Act also established slum clearance as a national policy of urban renewal, which also had far reaching consequences.) This left Fannie Mae as a "mixed-ownership corporation" but undeniably set it up for future privatization.

In 1968, at the height of the Vietnam War, President Johnson re-chartered Fannie Mae as a private company to remove it's holdings from the federal budget through the Housing and Urban Development Act of 1968.  The cost of the war was skyrocketing and though Johnson could largely ignore citizen protests (to a point), Congress was starting to question the impact on the budget, so Fannie Mae - which many in Congress still wanted privatized - was an elegant solution to reduce the raw numbers. From this point forward, Fannie Mae would be a private corporation beholden to its shareholders. 

Johnson less so (housing perspectives)

Johnson less so (housing perspectives)

Fannie Mae officially went public in 1970 and also began purchasing conventional mortgages, expanding beyond the secondary market, but technically no longer had the explicit backing of the federal government. In order to create 'competition', Congress also created the Federal Home Loan Mortgage Corporation (Freddie Mac) which had an almost identical structure and mission but was a separate entity with its own board and leadership.

The modern Fannie and Freddie were born. Today they are two of the largest financial institutions in the world and control over $5 trillion in mortgage assets. I'll explore how this happened in the next post.

It might seem weird to have kinda-sorta private-but-public companies have so much power in the mortgage industry, because it was and is.  Let's not forget that this was a political choice that had broad bi-partisan support.  Politicians on the left and right both saw the virtues of homeownership and wanted government policy to encourage it. The key intention here was to 'encourage' it, but creating such a large force within the private sector that has a government guarantee ultimately did more than encourage the private market - it dominated the private market and warped it.

Without the government guaranteeing the market directly and indirectly, homeownership would simply never have been such an economic and cultural driver in the second half the 20th century.  

Just as importantly, the amount of federal money that went into homeownership (including through infrastructure spending and the tax code) created a vacuum that sucked money out of America's cities during this period. Though billions were spent on "urban renewal" the devastating impact on poorer urban residents (the majority of which were minorities by this time) has been chronicled for years.

It is fascinating to imagine how differently America would look physically and socially without such a large government intervention over decades in homeownership.  Would the private market still have driven up homeownership rates to their current levels? Would there have been such an explosion of car-centric suburban and exurban communities? Would there have been such a focus on highway construction over transit construction? Would there have been such conscious racial exclusionary policies? Such a concentration of extreme poverty in inner city neighborhoods? Such a political divide between urban and rural across state-lines

No question there are social goods for owning a home, and no question there are a lot of benefits from the type of society it has created, but the costs and trade-offs of the US government tilting the scales so heavily in the favor of homeownership are difficult to comprehend, even without looking at the hard numbers of the bailout.  At a time when the environmental and political impact of these policies have started to manifested themselves in troubling ways, we must look honestly at how we got here if we are to address these challenges responsibly. 

In post 2, I will give a quick overview of Fannie and Freddie from 1970 to today and why all this blew up in 2008. I'll also return to the current court case and where both companies stands today.