Memo to the Obama Administration: if you want to see the makings of a national model to hold big banks accountable for fixing foreclosure-devastated neighborhoods, go to Milwaukee and talk to citizen leaders of a community organization who are practicing what Saul Alinsky preached.
"You broke it, you fix it," demonstrators chanted outside Wells Fargo's downtown Milwaukee headquarters on a cold January day two years ago. The scores of angry citizens were members of a broad-based community organization, Common Ground, that is comprised of some 40 interfaith religious congregations and other organizations. Ultimately, they targeted not only Wells Fargo but also four other large banks -- Deutsche Bank, U.S. Bank, Bank of America, JP Morgan Chase -- that either owned, were trustees or servicers of foreclosed houses.
Forty years after his death, Alinsky's influence is alive and well not only through his still widely read book, Rules for Radicals, but also through the work of his Industrial Areas Foundation (IAF) that he started more than 70 years ago with a grant from Marshall Field III, scion of the Chicago department store family.
Today's IAF has created more than 60 community organizations in the U.S. and abroad, but one of the newest, Common Ground, that spans Milwaukee and three adjacent Wisconsin counties, is doing what even the federal government has found to be so elusive: holding big banks accountable for the subprime foreclosure fallout that has left many cities much poorer and pockmarked with foreclosed and abandoned houses. By successfully pressuring five big banks into an unprecedented multimillion dollar commitment to help rehabilitate Milwaukee neighborhoods and winning local government support, the IAF's grassroots Milwaukee organization has forged what observers say should be replicated nationwide.
Before they took to the streets, some 250 Common Ground volunteers devoted nearly a year and hundreds of hours researching the banks' financial statements and foreclosure filings, and going door-to-door documenting the condition of poorly maintained, abandoned houses that degraded neighborhoods. The grim statistics: more than 20,000 foreclosure actions since 2007, a staggering $4 billion in lost property values and, in the case of just one bank, Deutsche Bank, an astonishing 17,041 housing code violations.
Consulting with city officials, Common Ground developed a set of demands, which included a bank-financed fund for the rehabilitation of abandoned houses. At first, the banks refused to meet, but Common Ground members, with terrier-like tenacity, weren't going to be stonewalled like the city government had been when the banks ignored the upkeep of their foreclosed houses.
Using media coverage to good advantage, Common Ground leaders hosted a high-profile public hearing where housing and financial experts explained the link between the blighted neighborhoods and the banks' investment in the subprime mortgage market.
In May of 2010, Common Ground sent two of its members some 4,000 miles to confront Deutsche Bank's CEO, Josef Ackermann, at the bank's annual shareholders meeting in Frankfurt, Germany. German media gave Common Ground's story about Deutsche Bank extensive coverage, including its slogan: "German immigrants built Milwaukee; now a German bank is destroying Milwaukee." After a Common Ground member addressed the shareholders in fluent German, Ackermann announced that he was sending a high-level delegation to Milwaukee to meet with Common Ground and city officials.
But the negotiations with Deutsche Bank and the other four banks dragged on for a year, and it took another trip to Germany, plus a Common Ground appearance at Wells Fargo's 2011 shareholders meeting in San Francisco before a deal started to take shape.
Wells Fargo was the first to step forward with a financial commitment and by the end of the summer the other four banks did, too. The total: $33.8 million in cash and mortgage commitments for priorities that the city and Common Ground identified: the rehabilitation of 100 foreclosed houses in one pilot neighborhood, Sherman Park; mortgage commitments so the rehabbed houses in Sherman Park and other neighborhoods can be sold; hiring more nonprofit housing counselors and supporting a new nonprofit organization that will employ and train low-income men and woman to monitor foreclosed houses and keep them safe and secure.
Here's the larger, national significance of the Milwaukee story.
First, to repair foreclosure-damaged neighborhoods in American cities, grassroots groups with the pluck and persistence of Common Ground must organize to pressure banks to do the right thing when other institutions, including government, are not up to the task. These groups also have the indispensable role, which banks and governments cannot perform, of strengthening the social fabric in fragile, recovering neighborhoods by inspiring local residents to become engaged citizens and shape their own destiny.
Second, the Milwaukee story shows how a savvy community organization and city officials working together can leverage limited public money. Like other hard-hit cities, Milwaukee received federal Neighborhood Stabilization Program funds. When Common Ground brought the banks to the negotiating table, city officials agreed to target $2 million of its NSP money to revitalize the Sherman Park neighborhood. With that $2 million, Common Ground leveraged a total of $33.8 million from the five banks, a ratio of almost 17 to 1. Multiply the woefully inadequate $7 billion in NSP funds appropriated nationwide to fix devastated neighborhoods by 17 and you get a much more realistic $119 billion. That should be the big banks' share, at a minimum. Call it the banks' down payment on repairing the subprime damage.
The precedent that has been established with the banks in Milwaukee has national implications, according to Alexander von Hoffman, senior fellow at the Joint Center of Housing Studies of Harvard University, who calls the multi-bank financial commitment "unique and significant." And as Alderman Michael Murphy, the respected, veteran chairman of Milwaukee's Common Council Finance and Personnel Committee says about the Milwaukee model: "I would hope that other cities would look at this as a blueprint of how to try to address the foreclosure crisis." Indeed, it is a blueprint and a success story that deserves to be repeated -- and, one would hope, promoted by the Obama Administraton.
Sanford D. Horwitt is the author of Let Them Call Me Rebel: The Life and Legacy of Saul Alinsky.
Perhaps many people have lost their homes or are underwater on their mortgages is because they overpaid for their home.
What helped cause inflated home prices? Government intervention in the housing market by mandating, via CRA, that banks make loans to previously unqualified buyers. The FLOOD of new buyers into the housing market drove prices up for EVERYONE. Many more people who took out home equity loans on the inflated value of their homes and are now underwater.
Clinton appointees Franklin Raines at FM and Henry Cisneiros at HUD kept upping the ante on banks to make more and more sub-prime loans.
The front page of the Sept 11th 2003 New York Times announced "Bush administration today recommended the most significant regulatory reform in the housing market since the savings and loan crisis of a decade ago."
On May 25th 2006 John McCain co-sponsored a bill, S-190, and gave a speech in support of that bill in which McCain outlined how Fannie Mae and Freddie Mac "pose enormous risk to the housing market, the overall financial system and the economy as a whole."
Did McCain miss anything? NO. The banks KNEW the loans they were being forced to make would go bad. Democrats just kept upping the ante to make more loans.
What responsibility did the homeowners have when THEY bought the house and THEY signed the mortgage? Apparently none.
In the late 1990's sub-prime loans accounted for just 7% of all loans. With CLinton appointees Franklin Raines at Fannie Mae and Henry Cisnarios at HUD sub prime loans rose to 50% by the mid 2000's.
The FLOOD of previously unqualified buyers into the market drove prices up for EVERYONE. People got so bold as to buy a house with no money down and cash out their equity after a few years rather than walk away with nothing by renting.
The banks KNEW these loans were risky and would collapse eventually but in a booming economy with low interest rates these high yield sub prime loans juiced up returns.
For banks CRA became a game of musical chairs to collect high returns on sub-prime loans being FORCED on them by the government yet not be holding on to them when the music stopped.
In 1988 Obama wrote a chapter for the book "After ALinsky: Community Organizing in Illinois" in which Obama lamented the community organizers "lack of power" to implement change.
This is nothing more than implementation of Obama's favorite rule, No 13, "Pick the target, freeze it, personalize it, and polarize it." rather than admit CRA was yet another FAILED democrat social experiment that over inflated the housing market.
Since Holder and his Department of Obstruction of Justice has become totally useless Obama has been forced to appoint a prosecutor from New York to investigate the swindlers in those banks and financial markets who caused the financial meltdown in 2008.
The odds of these trillion, billion, million dollar swindlers ever going to jail are a million to one which clearly indicates how really corrupt, politicalized and useless America's legal systems have become.
http://www.mortgageorb.com/e107_plugins/content/content.php?content.10820
" In May of 2010, Common Ground sent two of its members some 4,000 miles to confront Deutsche Bank's CEO, Josef Ackermann, at the bank's annual shareholders meeting in Frankfurt, Germany. German media gave Common Ground's story about Deutsche Bank extensive coverage, including its slogan: "German immigrants built Milwaukee; now a German bank is destroying Milwaukee." After a Common Ground member addressed the shareholders in fluent German, Ackermann announced that he was sending a high-level delegation to Milwaukee to meet with Common Ground and city officials".
Banker/real estate agent meets with “house buyer from main street”.
Banker/real estate agent: I have run the numbers and you don’t qualify for a loan to buys this house. It appears you can’t really afford to buy this house. Damn shame, I wanted the commission from the sale.
Buyer: Hey I really want to buy this house, besides isn’t the government putting “unofficial” pressure on you to give loans to poor people who can’t afford them?
Bank/agent: Yeah, you’re right. Got to keep the feds happy, besides I want the commission from the sale.
Buyer: How can we fix this?
Bank/agent: Will you be willing to lie about your income on the paperwork to get the loan?
Buyer: Sure! Then I can live in a house!
Bank/agent: Great! Now I will get a commission and feds will be happy!
NOW LET US ASK OURSELVES, WHEN ARE WE GOING TO HOLD MAIN STREET/FEDERAL GOV’T ACCOUNTABLE THE SAME WAY WE HOLD THE BANKS RESPONSIBLE? TWO FACED, ARE WE???
From the time Newt gave us THE CONTRACT WITH AMERICA republicans held both houses until 2006. They controlled government since the write the laws that Bush rubber stamped.
" government to control everything" you mean like the republican fascist who must be in everyones bedroom at every marriage and in every woman's wombs. Sexism is one of the fascist traits along with well here is the list
the current republican party is the modern fascist.
http://www.rense.com/general37/fascism.htm
Since newt bringing us the contract with America the republicans controlled both houses.
Gramm–Leach–Bliley_Act
http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act
People didn't do a damn thing when their "irresponsible" neighbors were foreclosed on, probably by banks "robosigning", and forced out of their homes...then when the houses started to get run down, they go fight the banks to keep their neighborhood "looking good".
In case these people don't know, it's the PEOPLE, not the houses, that make good neighborhoods. Wonder what their neighborhood will be like when it's taken over by speculators.
Oh, yeah, there were some people who got mortgages by inflating their incomes, and a lot couldn't pay when they lost their jobs, but banks made a fortune bundling the ARMs as CDOs and selling them...so they should give a little of that back to the victims.
It's funny, even now, Freddie was caught betting against homeowners.