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Stop Deportation of 30,000 Haitians!
Tell President Obama, Vice President Biden, Secretary of State Clinton, U.N. Secretary-General Ban, Caribbean Economic Community Chair Barrow, Homeland Security Secretary Napolitano, ICE director John P. Torres, Congress and members of the media: Stop the Deportation of 30,000 Haitians!
Please tell Homeland Security and ICE to STOP THE DEPORTATION OF 30,000 HAITIANS!
YOUR EMERGENCY ACTION IS NEEDED NOW!
Sign the Petition today at http://www.iacenter.org/haiti/haitideportationpetition
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Jon Stewart Eviscerates CNBC, Rick Santelli On Daily Show
http://www.alternet.org/blogs/video/130250/jon_stewart_eviscerates_cnbc%2C_rick_santelli_on_daily_show/
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Mass outreach to build March 21 Demonstration:
San Francisco -- 415-821-6545:
Saturday, March 7 and March 14:
12:00 Noon, meet at 2489 Mission St. #24 at 21st St.
East Bay -- 510-435-0844:
Saturday, March 7 and March 15, 10:00 A.M.
meet at MacArthur BART main entrance, Oakland
Posters, flyers and stickers are available at the ANSWER office.
Call 415-821-6545 for convenient pick-up times. All are encouraged
to view outreach and talking to your neighbors as crucial
to building this action.
NEXT MARCH 21 COALITION PLANNING MEETING:
SUNDAY, MARCH 15, 4:00 P.M.
CENTRO DEL PUEBLO (UPSTAIRS)
474 VALENCIA STREET (NEAR 16TH STREET)
SAN FRANCISCO
Check out the new MARCH 21 Coalition Website
(An extensive endorsement list is posted here):
http://www.pephost.org/site/PageServer?pagename=M21_homepage
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Winter Soldier: Testimony from US veterans on their experiences in Iraq, women's experiences, being a Muslim in the US military, war resisters and more.
Wed., March 11, 6 - 9 PM
150 Goldman School of Public Policy on UC Berkeley campus
Free.
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March against the war on March 21
Dear friends,
During his presidential campaign, Obama's popularity surged with the promise that he would bring the troops home from Iraq within 16 months. But his recently announced plan would continue the illegal occupation indefinitely. It would leave up to 50,000 troops in that war-torn country for who knows how many years. And it would delay the withdrawal of the first batch of troops to 19 months.
"When President Obama said we were going to get out within 16 months, some people heard, 'get out,' and everyone's gone. But that is not going to happen," said a senior military officer.
This plan doesn't "leave Iraq to its people and responsibly end this war", as Obama claimed during his Congressional address of Feb. 24. Instead it entrenches the U.S. in a brutal counter-insurgency war that helped to bankrupt our country and sends an endless stream of Americans to continue dying and killing.
The U.S. government, the American people, and the Iraqi people need to hear our voices of opposition on March 21.
Last week, Sec. of Defense Gates and President Obama announced their plan to deploy an additional 17,000 troops to Afghanistan - that's a 50 percent increase - despite the fact that the Department of Defense has no exit strategy. And the U.S. is expanding the covert war run by the CIA inside neighboring Pakistan.
We cannot afford another quagmire.
Please join us in Washington, SF, and LA on March 21.
Go to www.pentagonmarch.org for more information
Meanwhile the U.S.-funded occupation and blockade of Gaza continues after an assault in which 100's of civilians were killed and even a United Nations school was not spared from the onslaught of human rights crimes and violations of international law.
The people of Iraq, Afghanistan, Pakistan and Palestine are struggling to rid themselves of deadly, racist occupations. We need to unite in the realization that the movement in solidarity with the people of Palestine is the same as the movements in solidarity with the people of Iraq and Afghanistan. Let us stand together with each other and with them, and say:
Iraq, Afghanistan, Palestine, occupation is a crime!
The people of the world need to hear from Americans that we are against the racist U.S. wars of aggression and occupation. We have an historic responsibility to raise our voices and be heard, to march with our banners held high and be seen, demanding
Bring ALL the troops home NOW!
Money for jobs and education, not for war and occupation!
End U.S. support for the occupation of Palestine!
No war on Iran or Pakistan!
The National Assembly to End the Iraq and Afghanistan Wars and Occupations is joining with a broadening alliance of 100's of coalitions, organizations, and networks in a united MARCH 21 NATIONAL COALITION to mobilize people across the United States to take part in a March on the Pentagon on the sixth year of the military invasion and occupation of the Iraq War: Saturday, March 21.
Demonstrations will also be held on that date in San Francisco, Los Angeles, and other cities across the U.S.
For updated information about buses and the national March 21 coalition, which includes labor unions, peace and anti-war groups, veterans and community groups and more, see: www.pentagonmarch.org
These actions will remind the nation and the world that the U.S. antiwar movement - marching behind a banner demanding "Out Now!' - will intensify its struggle to stop the wars.
The actions are needed to assure the people of Iraq, Afghanistan, Palestine, and other countries threatened by Washington's expansionist policies that tens of millions of people in this country support their right to settle their own destinies without U.S. interventions, occupations and murderous wars. International law recognizes - and we demand - that the U.S. respect the right to self-determination. We reject any notion that the U.S. is the world's self-appointed cop.
The March 21 united mass actions are also needed at this time of economic meltdown to demand jobs for all; a moratorium on foreclosures; rebuilding the crumbling infrastructure; guaranteed, quality health care for all; an end to the ICE raids and deportations; and funding for sorely needed social programs. So long as trillions of dollars continue to be spent on wars, occupations, and bailouts to the banks and corporate elite, the domestic needs of the people of the U.S. can never be met.
For more information about the National Assembly please visit: www.natassembly.org
March 21, in D.C., will culminate in a dramatic direct action where hundreds of coffins-representing the multinational victims of militarism, Empire and corporate greed-will be carried and delivered to the headquarters of the Corporate War Profiteers and Merchants of Death.
From the Pentagon, we will march to the nearby giant corporate offices of Boeing Company, Lockheed Martin Corporation, General Dynamics and KBR (the former subsidiary of Halliburton).
A March 21 Labor Rally and contingent to March 21
will be held in the grassy area just South of Market
Street in Justin Herman Plaza
Saturday, March 21
Rally at 10:30 a.m. // Form contingent to march at 11:45 a.m.
http://uslaboragainstwar.org/article.php?id=18479
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Donate to Courage to Resist
A message from Army Spc. AgustÃn Aguayo,
Iraq War veteran and war resister
Since the day I surrendered to military custody after refusing to return to Iraq, Courage to Resist has been there for me and my family as a constant fountain of support. This support has come in many forms, from a friendly call, to organizing a campaign to cover my legal expenses and basic needs. I believe only an organization with altruistic motives that truly cares would have done this. As someone who has felt the enormous relief of having a strong support group behind me, it is a privilege now as a member of Courage to Resist to help others as I have been helped.
http://www.couragetoresist.org/x/content/view/21/26/
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Wake Up, Freak Out - then Get a Grip from Leo Murray on Vimeo.
http://www.wakeupfreakout.org/film/tipping.html
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ARTICLES IN FULL:
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1) Ex-Leaders of Countrywide Profit From Bad Loans
By ERIC LIPTON
March 4, 2009
http://www.nytimes.com/2009/03/04/business/04penny.html?ref=us
2) Job Losses Accelerated in February, Index Indicates
By REUTERS
March 5, 2009
http://www.nytimes.com/2009/03/05/business/economy/05econ.html?ref=business
3) A.F.L.-C.I.O. to Support Nationalizing Banks
By STEVEN GREENHOUSE
March 4, 2009
http://www.nytimes.com/2009/03/04/business/04private.html?ref=business
4) The Big Dither
By PAUL KRUGMAN
Op-Ed Columnist
March 6, 2009
http://www.nytimes.com/2009/03/06/opinion/06krugman.html
5) Helping the House Poor
Editorial
March 6, 2009
http://www.nytimes.com/2009/03/06/opinion/06fri1.html
6) Continuing Job Losses May Signal Broad Economic Shift
By PETER S. GOODMAN and JACK HEALY
March 7, 2009
http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?hp
7) All Boarded Up
By ALEX KOTLOWITZ
Magazine Preview
March 8, 2009
http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?ref=us
8) Our kids deserve the best
by Rafael Mandelman, Tommi Avicolli Mecca, and Marko Matillano
03/05/2009
http://ebar.com/openforum/opforum.php?sec=guest_op
9) When Jobs Go Missing
Editorial
March 7, 2009
http://www.nytimes.com/2009/03/07/opinion/07sat1.html
10) Iraqi Surveys Start to Unveil the Mental Scars of War, Especially Among Women
“More than three decades of war have made widows of an estimated 740,000 women and left many others fatherless or without brothers to look after them, said Olga Ghazaryan, Oxfam’s regional director for the Middle East.”
By ALISSA J. RUBIN
March 8, 2009
http://www.nytimes.com/2009/03/08/world/middleeast/08iraq.html?ref=world
11) Discipline of Military Redirects Dropouts
By ERIK ECKHOLM
March 8, 2009
http://www.nytimes.com/2009/03/08/us/08cadet.html?ref=us
12) Army Developing Teams for Electronic Warfare
By THOM SHANKER
March 8, 2009
http://www.nytimes.com/2009/03/08/washington/08army.html?ref=us
13) Discharge From the Army Relieves a Mother
By THE ASSOCIATED PRESS
March 8, 2009
http://www.nytimes.com/2009/03/08/us/08mom.html?ref=us
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1) Ex-Leaders of Countrywide Profit From Bad Loans
By ERIC LIPTON
March 4, 2009
http://www.nytimes.com/2009/03/04/business/04penny.html?ref=us
CALABASAS, Calif. — Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.
So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
“It has been very successful — very strong,” John Lawrence, the company’s head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac’s spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.
“In fact, it’s off-the-charts good,” he told Mr. Kurland, who was leaning back comfortably in his leather boardroom chair, even as the financial markets in New York were plunging.
As hundreds of billions of dollars flow from Washington to jump-start the nation’s staggering banks, automakers and other industries, a new economy is emerging of businesses that hope to make money from the various government programs that make up the largest economic rescue in history.
They include big investors who are buying up failed banks taken over by the federal government and lobbyists. And there is PennyMac, led by Mr. Kurland, 56, once the soft-spoken No. 2 to Angelo R. Mozilo, the perpetually tanned former chief executive of Countrywide and its public face.
Mr. Kurland has raised hundreds of millions of dollars from big players like BlackRock, the investment manager, to finance his start-up. Having sold off close to $200 million in stock before leaving Countrywide, he has also put up some of his own cash.
While some critics are distressed that Mr. Kurland and his team are back in business, the executives say that PennyMac’s operations serve as a model for how the government, working with banks, can help stabilize the housing market and lead the nation out of the recession. “It is very important to the entire team here to be part of a solution,” Mr. Kurland said, standing in his office, which has views of the Santa Monica Mountains.
It is quite evident that their efforts are, in fact, helping many distressed homeowners.
“Literally, their assistance saved my family’s home,” said Robert Robinson, of Felton, Pa., whose interest rate was cut by more than half, making his mortgage affordable again.
But to some, it is disturbing to see former Countrywide executives in the industry again. “It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies.
More than any other major lending institution, Countrywide has become synonymous with the excesses that led to the housing bubble. The firm’s reputation has been so tarnished that Bank of America, which bought it last year at a bargain price, announced that the name and logo of Countrywide, once the biggest mortgage lender in the nation, would soon disappear.
Mr. Kurland acknowledges pushing Countrywide into the type of higher-risk loans that have since, in large numbers, gone into default. But he said that he always insisted that the loans go only to borrowers who could afford to repay them. He also said that Countrywide’s riskiest lending took place after he left the company, in late 2006, after what he said was an internal conflict with Mr. Mozilo and other executives, whom he blames for loosening loan standards.
In retrospect, Mr. Kurland said, he regrets what happened at Countrywide and in the mortgage industry nationwide, but does not believe he deserves blame. “It is horrible what transpired in the industry,” said Mr. Kurland, who has never been subject to any regulatory actions.
But lawsuits against Countrywide raise questions about Mr. Kurland’s portrayal of his role. They accuse him of being at the center of a culture shift at Countrywide that started in 2003, as the company popularized a type of loan that often came with low “teaser” interest rates and that, for some, became unaffordable when the low rate expired.
The lawsuits, including one filed by New York State’s comptroller, say Mr. Kurland was well aware of the risks, and even misled Countrywide’s investors about the precariousness of the company’s portfolio, which grew to $463 billion in loans, from $62 billion, three times faster than the market nationwide, during the final six years of his tenure.
“Kurland is seeking to capitalize on a situation that was a product of his own creation,” said Blair A. Nicholas, a lawyer representing retired Arkansas teachers who are also suing Mr. Kurland and other former Countrywide executives. “It is tragic and ironic. But then again, greed is a growth industry.”
David K. Willingham, a lawyer representing Mr. Kurland in several of these suits, said the allegations related to Mr. Kurland were without merit, and motions had been filed to seek their dismissal.
Federal banking officials — without mentioning Mr. Kurland by name — added that just because an executive worked at an institution like Countrywide did not mean he was to blame for questionable lending practices. They said that it was important to do business with experienced mortgage operators like Mr. Kurland, who know how to creatively renegotiate delinquent loans.
PennyMac, whose full legal name is the Private National Mortgage Acceptance Company, also received backing from BlackRock and Highfields Capital, a hedge fund based in Boston. It makes its money by buying loans from struggling or failed financial institutions at such a huge discount that it stands to profit enormously even if it offers to slash interest rates or make other loan modifications to entice borrowers into resuming payments.
Its biggest deal has been with the Federal Deposit Insurance Corporation, which it paid $43.2 million for $560 million worth of mostly delinquent residential loans left over after the failure last year of the First National Bank of Nevada. Many of these loans resemble the kind that Countrywide once offered, with interest rates that can suddenly balloon. PennyMac’s payment was the equivalent of 38 cents on the dollar, according to the full terms of the agreement.
Under the initial terms of the F.D.I.C. deal, PennyMac is entitled to keep 20 cents on every dollar it can collect, with the government receiving the rest. Eventually that will rise to 40 cents.
Phone operators for PennyMac — working in shifts — spend 15 hours a day trying to reach borrowers whose loans the company now controls. In dozens of cases, after it has control of loans, it moves to initiate foreclosure proceedings, or to urge the owners to sell the house if they do not respond to calls, are not willing to start paying or cannot afford the house. In many other cases, operators offer drastic cuts in the interest rate or other deals, which PennyMac can afford, given that it paid so little for the loans.
PennyMac hopes to achieve a profit of at least 20 percent annually, and it is actively courting other investors to build its portfolio, which now consists of $800 million in loans, to as much as $15 billion in the next 18 months, executives said. For the borrowers whose loans have ended up with PennyMac, it can translate into an extraordinary deal.
The Laverdes, of Porter Ranch, Calif., had fallen three months behind on their mortgage after sales at a furniture store owned by the family dipped in the economic crisis. Margarita Laverde and her husband were fearful that they might need to move their four children, three dogs and giant saltwater aquarium into a cramped apartment, leaving behind their dream home — a five-bedroom ranch on a suburban street overlooking the San Fernando Valley.
But a PennyMac representative instead offered to cut the interest rate on their $590,000 loan to 3 percent, from 7.25 percent, cutting their monthly payments nearly in half, Ms. Laverde said.
“I kept on asking, ‘Are you sure this is correct? Are you sure?’ ” Ms. Laverde said. Even with this reduction, PennyMac stands to make a profit of at least 50 percent, a company official said.
Ms. Laverde could not care less that executives at PennyMac used to work at Countrywide.
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2) Job Losses Accelerated in February, Index Indicates
By REUTERS
March 5, 2009
http://www.nytimes.com/2009/03/05/business/economy/05econ.html?ref=business
Private sector job losses increased in February, according to a report by ADP Employer Services on Wednesday that came in worse than economists’ expectations.
ADP said private employers cut 697,000 jobs in February compared with a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.
Economists had expected 610,000 private-sector job cuts in February, according to the median of 23 forecasts in a Reuters poll, which ranged widely from a drop of 730,000 to losses of 500,000.
The forecasts in the poll ranged widely from a drop of 730,000 to losses of 500,000.
“I was actually expecting it to be a little worse. Every month we’ve had data come in worse than expected,” Dan Faretta, senior market strategist at Lind-Waldock in Chicago, said.
“Until we get positive news about housing or industry or anything like that, the numbers will continue to get worse,” Mr. Faretta said. “The numbers keep weighing on all the markets.”
The ADP release comes ahead of Friday’s non-farm payrolls report from the government, which gives a more comprehensive picture of the labor market.
Economists expect the payrolls report to show the economy shed 648,000 jobs in February and the unemployment rate rose to 7.9 percent from 7.6 percent.
In another economic report, the service sector shrank further in February but by less than expected, according to a report released Wednesday.
The Institute for Supply Management said its nonmanufacturing index came in at 41.6 in February versus 42.9 in January.
The level of 50 separates expansion from contraction in the index, which dates back to July 1997.
Economists had expected a reading of 41.0, according to the median of 69 forecasts in a Reuters poll ranging from 37.0 to 44.0.
The service sector represents about 80 percent of economic activity, including businesses like banks, airlines, hotels and restaurants.
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3) A.F.L.-C.I.O. to Support Nationalizing Banks
By STEVEN GREENHOUSE
March 4, 2009
http://www.nytimes.com/2009/03/04/business/04private.html?ref=business
MIAMI BEACH — The A.F.L.-C.I.O.’s executive council will call on the Obama administration on Wednesday to speed the nationalization of problem banks to stimulate lending and lift the sagging economy.
The labor federation, a lobbying powerhouse that represents 10 million workers, will thus become one of the first groups — and certainly the most powerful — to call for moving more aggressively on nationalization, both to counter Republican and business cries against it and to press the Obama administration not to vacillate over such a move.
A.F.L.-C.I.O. officials asserted that the administration’s practice of giving billions of dollars in dribs and drabs to distressed banks had failed to restore their solvency, leaving them as zombie banks that largely refrain from lending, thereby contributing to the economy’s decline.
The executive council is scheduled to approve a statement that criticizes the Obama administration for indulging shareholders of distressed banks by not nationalizing the banks to speed the cleanup of their balance sheets.
“We believe the debate over nationalization is delaying the inevitable bank restructuring, which is something our economy cannot afford,” a draft of the council’s statement said.
The labor leaders also asserted that the Obama administration, like the Bush administration, had failed to obtain fair value for the tens of billions it had invested in distressed banks.
“By feeding the banks public money in fits and starts, and asking little or nothing in the way of sacrifice, we are going down the path Japan took in the 1990s — a path that leads to ‘zombie banks’ and long-term economic stagnation,” the draft statement said.
The statement makes clear that the group wants to add its political and lobbying muscle to calls by Joseph E. Stiglitz, Nouriel Roubini and other economists in favor of nationalization.
Labor leaders said the administration appeared to be vacillating on nationalization partly out of fear of Republican attacks that it was adopting socialist policies.
Banking executives have spoken out against nationalization, saying it would hurt shareholders and insisting they can nurse their banks back to health.
Some Obama officials voice fears that it will be hard to manage nationalized banks and that nationalization could drive down the shares of other financial institutions by generating fears that additional banks will be taken over.
A.F.L.-C.I.O. leaders said they did not favor long-term nationalization of banks, but rather temporary trusteeships in which the government would take a controlling stake in a bank, clean up its balance sheet, then spin it off.
“The result should be banks that can either be turned over to bondholders in exchange for bondholder concessions or sold back into the public markets,” the executive council’s draft said.
James A. Baker, the Treasury secretary under President Ronald Reagan, wrote in The Financial Times on Tuesday that temporary nationalization might be necessary to inject public funds into problem banks.
“I abhor the idea of government ownership — either partial or full — even if only temporary,” he wrote. “Unfortunately, we may have no choice. But we must be very careful. The government should hold equity no longer than necessary to restructure the banks, resume normal lending and recoup at least a portion of taxpayer investment.”
The labor leaders said that 43 percent of the nation’s bank assets were held by four institutions — Citigroup, Bank of America, Wells Fargo and JPMorgan Chase. One A.F.L.-C.I.O. financial expert said Citigroup and Bank of America were insolvent and candidates for quick nationalization.
“When these institutions are paralyzed, our whole economy suffers,” the labor statement said, adding, “However, government interventions must be structured to protect the public interest, and not merely rescue executives or wealthy investors.”
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4) The Big Dither
By PAUL KRUGMAN
Op-Ed Columnist
March 6, 2009
http://www.nytimes.com/2009/03/06/opinion/06krugman.html
Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. “While the cost of action will be great,” he declared, “I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade.”
Many analysts agree. But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.
Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.
Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.
Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.
Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the “basic inherent economic value” of troubled assets and the “artificially depressed value” that those assets command right now. In recent transactions, even AAA-rated mortgage-backed securities have sold for less than 40 cents on the dollar, but Mr. Geithner seems to think they’re worth much, much more.
And the government’s job, he declared, is to “provide the financing to help get those markets working,” pushing the price of toxic waste up to where it ought to be.
What’s more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions. Earlier this week, Ben Bernanke, the Federal Reserve chairman, was asked about the problem of “zombies” — financial institutions that are effectively bankrupt but are being kept alive by government aid. “I don’t know of any large zombie institutions in the U.S. financial system,” he declared, and went on to specifically deny that A.I.G. — A.I.G.! — is a zombie.
This is the same A.I.G. that, unable to honor its promises to pay off other financial institutions when bonds default, has already received $150 billion in aid and just got a commitment for $30 billion more.
The truth is that the Bernanke-Geithner plan — the plan the administration keeps floating, in slightly different versions — isn’t going to fly.
Take the plan’s latest incarnation: a proposal to make low-interest loans to private investors willing to buy up troubled assets. This would certainly drive up the price of toxic waste because it would offer a heads-you-win, tails-we-lose proposition. As described, the plan would let investors profit if asset prices went up but just walk away if prices fell substantially.
But would it be enough to make the banking system healthy? No.
Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.
And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it’s just not going to happen.
So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.
But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.
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5) Helping the House Poor
Editorial
March 6, 2009
http://www.nytimes.com/2009/03/06/opinion/06fri1.html
President Obama’s anti-foreclosure plan, which took effect on Wednesday, is better than anything attempted by the Bush administration, but it is at best one step forward and, unfortunately, may prove to be fundamentally flawed.
The program’s success ultimately will rest on whether the administration is willing to intensify its efforts and, as needed, shift gears. Congress also has to bolster the plan with a new anti-foreclosure law.
The bulk of Mr. Obama’s plan is aimed at about four million borrowers who are in default or at risk of default — people who cannot afford their monthly mortgage payments and cannot refinance, generally because they owe more on their loans than their homes are worth.
The idea is to lower the monthly payment on a loan by modifying its terms, which is the right goal. The problem lies in the way loans will be modified. Mr. Obama’s plan emphasizes lowering monthly payments by reducing a loan’s interest rate, which certainly will allow many people to stay in their homes, in the near term at least. What it won’t do is make staying there a wise move. And it’s not the best way to guard against re-default.
Remember that most delinquent and high-risk borrowers are “under water.” Reducing the interest would make their monthly payments more affordable, but their loan balance would still be higher than the value of the property — in many cases much, much higher. Essentially, they would be renting their homes from the lender.
In the short run, and perhaps even in the long run, many troubled borrowers will be relieved to qualify for a lower interest rate. But the fact is that being under water is itself a big risk factor for default, even if the payment has been cut. One reason is that there is no equity cushion to fall back on in the event that job loss or any other financial setback — illness, divorce, major repairs — make it impossible to keep up with the payments. Currently, some 13.6 million homeowners are under water. While most are current in payments, many of them are just one unfortunate event away from default.
A better way to lower the monthly payments for these people is to reduce the principal remaining on the loan. That way, the payments become affordable and, as equity is rebuilt, the borrower has both an incentive and the means to keep current. The Obama plan provides subsidies for lenders to reduce principal balances, but the option is not promoted as prominently as simply reducing the interest rate. That’s a shame. It is a better way to go, but lenders prefer interest-rate reduction to principal reduction, in part, because it appears to minimize the loss they have to recognize upfront.
This is where Congress can make a difference. On Thursday, the House passed a bill that would allow bankrupt homeowners to have their loans modified in bankruptcy court, where the most common solution is to reduce the principal. The bill is overly restrictive, but if passed — and if the Senate doesn’t weaken it any further from the House’s version — it could give underwater homeowners another way to keep their homes.
Perhaps more important, lenders are more likely to pursue sound modifications if the alternative is to face the borrower in court. Best of all, modifying loans via bankruptcy proceedings costs the taxpayer nothing. The costs are borne by the borrowers and the lenders.
Homeowners — like the banks, much of corporate America and the government itself — are suffering under the weight of excessive debt. The Obama plan will make mortgage indebtedness more manageable, but ultimately the debt itself needs to be greatly reduced. The sooner we as a nation move in that direction, the better.
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6) Continuing Job Losses May Signal Broad Economic Shift
By PETER S. GOODMAN and JACK HEALY
March 7, 2009
http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?hp
Another 651,000 jobs disappeared from the American economy in February, the government reported Friday, as the unemployment rate soared to 8.1 percent — its highest level since 1983.
The latest grim scorecard of contraction in the American work place largely destroyed what hopes remained for an economic recovery in the first half of this year, and it added to a growing sense that 2009 is likely a lost cause.
Most economists now assume that the soonest American fortunes can improve is near the end of the year, as the Obama administration’s $787 billion emergency spending program begins to wash through the economy.
“The current pace of decline is breathtaking,” said Robert Barbera, chief economist at the research and trading firm ITG. “We are now falling at a near record rate in the postwar period and there’s been no change in the violent downward trajectory.”
Indeed, the monthly snapshot of the national employment picture worsened an already abysmal picture as the government revised upward the number of jobs lost in December and January. The economy has now shed at least 650,000 jobs for three consecutive months, the worst decline in percentage terms over that length of time since 1975.
Since the recession began, the economy has eliminated roughly 4.4 million jobs with more than half of those positions — some 2.6 million — disappearing in the last four months.
The dramatic acceleration has convinced some economists that, far from an ordinary downturn whose ending will see jobs return, the contraction under way reflects a fundamental restructuring of the American economy. In crucial industries — particularly manufacturing, financial services and retail — many companies have opted to abandon whole areas of business.
“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”
For American policy makers, such a reality poses fundamental challenges to the traditional response to hard times. For decades, the government has reacted to economic downturns by handing out temporary unemployment insurance checks, relying upon the resumption of economic growth to deliver needed jobs. This time, argues Mr. Silvia, the government needs to put a much greater emphasis on retraining workers for careers in other industries.
In the auto industry, for example annual American car sales have dropped from some 17 million a year a few years ago to 9 million now. Even if sales increase to 10 or 12 million, that still leaves a lot of unneeded factories.
“That’s a lot of workers that are not coming back,” Mr. Silvia said. “That’s a lot of steel, a lot of rubber, a lot of suppliers that are not coming back. It’s really challenging to us as a society.”
President Obama responded to the figures by declaring that “this country has never responded to a crisis by sitting on the sidelines and hoping for the best” and asserting that government has a huge role to play in bringing out the best in the American people.
“I know that throughout our history we have met every great challenge with bold action and big ideas,” he told police academy graduates in Columbus, Ohio, on Friday. “That’s what’s fueled a shared and lasting prosperity.”
Mr. Obama cited the unemployment figures as further evidence that those who opposed “the very notion that government has a role in ending the cycle of job loss at the heart of this recession” are on the wrong side of history. (The president’s stimulus package was approved by the House with no support from minority Republicans, whose leader, Representative John A. Boehner, is from Ohio.)
February saw another 168,000 manufacturing jobs eliminated, bringing losses over the last year to 1.2 million. In Michigan, where the troubles of the auto industry have been particularly traumatic, the unemployment rate sits at 10.6 percent, the highest of any state.
“The people who do what I do in the Detroit area are a dime a dozen,” said Kim Allgeyer, 46, a machine toolmaker in Westland, Mich., who was laid off in January from a company that makes manufacturing assembly lines for the Detroit automakers. Since then, he has failed to find another full-time job, subsisting on day labor and one week-long stint for contractors. He is thinking of moving to Louisiana or Mississippi to seek work as a shipbuilder.
“Who’s going to put me to work?” he asked. “Where’s the work at? It’s just a great big black hole.”
Much the same can be said for financial services, which relinquished another 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other exotic flavors of investments. That industry is unlikely to return to anything close to its former shape.
Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a new period in which millions of households are being forced to confine their spending to their paychecks, limiting their trips to the mall. The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year.
The United States has been neglecting job training programs for decades, argues Andrew Stettner, deputy director of the National Employment Law Project in New York. In current dollars, the nation devoted the equivalent of $20 billion a year on job training in 1979, while spending only $6 billion last year.
The stimulus spending bill includes $4.5 billion in additional monies for job training. But under current programs, many of those eligible for training are given vouchers that cover only a semester or two at community colleges, while careers in growth industries like biotechnology and health care typically require two-year degree programs.
“We have to seriously look at fundamentally rebuilding the economy,” Mr. Stettner said. “You’ve got to use this moment to retrain for jobs.”
Friday’s report reinforced the degree to which the economy is being assailed at once by panic in the financial system, falling household spending power and plunging real estate prices, with growing numbers of companies resorting to wholesale layoffs after months of merely declining to hire.
“There’s been no place to hide,” said Stuart Hoffman, chief economist at PNC Financial in Pittsburgh. “Everybody in every industry has lost jobs or is feeling insecure about whether they’re going to keep their jobs or how their company’s going to do."
Some economists suggested the substantial increase in layoffs reflected the anxiety that has gripped the financial system since last fall when major Wall Street institutions failed, notably the giant investment bank Lehman Brothers. Borrowing costs have spiked for American companies, making even healthy businesses reluctant to expand and hire. Perhaps even more decisive, the meltdown of last fall has left many companies spooked.
“There was a huge increase in uncertainty and a huge hit to confidence which caused a large rethinking among businesses,” said Ethan Harris, co-head of United States economics research. “That caused a big downshift in employment.”
Similar crises, like the stock market crash of 1987 and the near-collapse of the enormous hedge fund Long Term Capital Management in 1998, saw dysfunction continue to grip markets for about six months, Mr. Harris said, suggesting that this episode may be nearing its end.
But history also shows that when fear lifts, the economy returns not to normalcy but to wherever it was when the crisis began, Mr. Harris said. That means that even if order is restored to the financial system the economy will still be staring at a recession.
And order cannot be restored, many economists say, until the Obama administration crafts and executes a credible plan to remove the bad loans choking the balance sheets of financial institutions.
“The 800-pound gorilla is whether we face up to the bad loans in the financial system,” said Alan Levenson, chief economist at the trading firm T. Rowe Price in Baltimore.
David Stout contributed reporting.
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7) All Boarded Up
By ALEX KOTLOWITZ
Magazine Preview
March 8, 2009
http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?ref=us
TONY BRANCATELLI, A CLEVELAND CITY COUNCILMAN, yearns for signs that something like normal life still exists in his ward. Early one morning last fall, he called me from his cellphone. He sounded unusually excited. He had just visited two forlorn-looking vacant houses that had been foreclosed more than a year ago. They sat on the same lot, one in front of the other. Both had been frequented by squatters, and Brancatelli had passed by to see if they had been finally boarded up. They hadn’t. But while there he noticed with alarm what looked like a prone body in the yard next door. As he moved closer, he realized he was looking at an elderly woman who had just one leg, lying on the ground. She was leaning on one arm and, with the other, was whacking at weeds with a hatchet and stuffing the clippings into a cardboard box for garbage pickup. “Talk about fortitude,” he told me. In a place like Cleveland, hope comes in small morsels.
The next day, I went with Brancatelli to visit Ada Flores, the woman who was whacking at the weeds. She is 81, and mostly gets around in a wheelchair. Flores is a native Spanish speaker, and her English was difficult to understand, especially above the incessant barking of her caged dog, Tuffy. But the story she told Brancatelli was familiar to him. Teenagers had been in and out of the two vacant houses next door, she said, and her son, who visits her regularly, at one point boarded up the windows himself. “Are they going to tear them down?” she asked. Brancatelli crossed himself. “I hope so,” he mumbled.
Prayer and sheer persistence are pretty much all Brancatelli has to go on these days. Cleveland is reeling from the foreclosure crisis. There have been roughly 10,000 foreclosures in two years. For all of 2007, before it was overtaken by sky-high foreclosure rates in parts of California, Nevada and Florida, Cleveland’s rate was among the highest in the country. (It’s now 24th among metropolitan areas.) Vacant houses are not a new phenomenon to the city. Ravaged by the closing of American steel mills, Cleveland has long been in decline. With fewer manufacturing jobs to attract workers, it has lost half its population since 1960. Its poverty rate is one of the highest in the nation. But in all those years, nothing has approached the current scale of ruin.
And in December, just when local officials thought things couldn’t get worse, Cuyahoga County, which includes Cleveland, posted a record number of foreclosure filings. The number of empty houses is so staggeringly high that no one has an accurate count. The city estimates that 10,000 houses, or 1 in 13, are vacant. The county treasurer says it’s more likely 15,000. Most of the vacant houses are owned by lenders who foreclosed on the properties and by the wholesalers who are now sweeping in to pick up houses in bulk, as if they were trading in baseball cards.
Brancatelli and others — judges, the police, city officials, residents — are grappling with the wreckage left behind, although to call this the aftermath would be premature. Even with President Barack Obama’s plan to help prevent foreclosures, the city is bracing for more, especially as more people lose their jobs. The city’s unemployment rate is now 8.8 percent. Moreover, on some streets so many houses are already vacant that those residents left behind are not necessarily inclined to stay. “It just happens so fast, the sad part is you really have little control,” Brancatelli told me. “It snowballs on the street, and you try to prevent that avalanche.” Walking away from a house even makes a kind of economic sense when the mortgage far exceeds the home’s value; Obama’s foreclosure-prevention plan does little to address that situation. Now outside investors have descended on Cleveland; they pick up properties for the price of a large flat-screen TV and then try to sell them for a profit.
So much here defies reasonableness. It’s what Brancatelli keeps telling me. A few months ago, he met with Luis Jimenez, a train conductor from Long Beach, Calif. Jimenez had purchased a house in Brancatelli’s ward on eBay and had come to Cleveland to resolve some issues with the property. The two-story house has a long rap sheet of bad deals. Since 2001, it has been foreclosed twice and sold four times, for prices ranging from $87,000 to $1,500. Jimenez bought it for $4,000. When Jimenez arrived in Cleveland, he learned that the house had been vacant for two years; scavengers had torn apart the walls to get the copper piping, ripped the sinks from the walls and removed the boiler from the basement. He also learned that the city had condemned the house and would now charge him to demolish it. Brancatelli asked Jimenez, What were you thinking, buying a house unseen, from 2,000 miles away? “It was cheap,” Jimenez shrugged. He didn’t want to walk away from the house, but he didn’t have the money to renovate. The property remains an eyesore. “Generally, I’m an optimist, but none of this makes sense,” Brancatelli told me. “Trying to give order to all this chaos is the big challenge.”
Like others who have stayed in Cleveland, Brancatelli, who has lived in his two-story American Foursquare for 15 years, is trying to hold the wall against the flood. Of his ward, known as Slavic Village, he says: “It’s one of the most resilient communities in the country. People are rolling up their sleeves and working. We can’t wait for others to step in.” This was a tone — the swagger of the underdog — that I heard from other Cleveland stalwarts during the weeks I spent in the city this winter. “Cleveland’s a blue-collar community,” Mayor Frank Jackson told me. “They’re surviving-cultures. And we will fight back.”
The task is achingly slow; each house its own battle. On one street I visited, in a ward near Brancatelli’s, a third of the houses were abandoned. One resident, Anita Gardner, told me about the young family who moved in down the street a few years before. They spruced up the house with new windows, a fireplace, wood kitchen cabinets, track lighting and a Jacuzzi. When they lost the house to foreclosure, they left nothing for the scavengers. They stripped their own dwelling, piling toilets, metal screen doors, kitchen cabinets, the furnace and copper pipes into a moving van. “They said, ‘Why should someone else get it?’ ” Gardner told me. “So they took it themselves.” In December, Gardner’s neighbor watched a man strain to push a cart filled with thin slabs of concrete down the street. It explained why so many of the abandoned homes in the city are without front steps, as if their legs had been knocked out from under them. Perhaps such pillage is part of the natural momentum of a city being torn apart. If you can’t hold onto something of real value, at least get your hands on something.
Foreclosures are a problem all over the country now, but Cleveland got to this place a while ago. Cities, old and new, are looking at what’s occurring in Cleveland with some trepidation — and also looking for guidance. Already places as diverse as Atlanta, Chicago, Denver, Las Vegas and Minneapolis have neighborhoods where at least one of every five homes stands vacant. In states like California, Florida and Nevada, where many of the foreclosures have been newer housing, there is fear that with mounting unemployment and more people walking away from their property, houses will remain empty longer, with a greater likelihood that they will deteriorate or be vandalized. “There are neighborhoods around the country as bad as anything in Cleveland,” says Dan Immergluck, a visiting scholar at the Federal Reserve Bank of Atlanta and an associate professor in the city and regional planning program at Georgia Tech. Local officials from other industrial cities have visited Cleveland to learn how it’s dealing with the devastation. “Cleveland is a bellwether,” Immergluck says. “It’s where other cities are heading because of the economic downturn.”
TONY BRANCATELLI, WHO IS 51, is a man of a birdlike build and intensity, but he also possesses a Midwestern folksiness, closing most conversations with a cheerful “alrighty.” Over the past couple of years, he has become a minor media star. Journalists from Sweden, Japan, China, Germany, Britain and France have visited him, drawn to his ward because of the high rate of foreclosures, at present two a day. Brancatelli’s world is defined by the borders of Slavic Village. It’s where he grew up and where he has lived for all but three years of his life. His license plate reads Slavic 1. (He tried to convince his wife to get plates that read Slavic 2, but she declined.) The neighborhood took root roughly a hundred years ago: diminutive, narrow homes — some no more than 900 square feet — built within walking distance of the steel mills now shuttered. The demographics have been changing over the past decade: African-Americans moving in, whites moving out. A common story. Unintentionally, it’s one of the few racially mixed communities in Cleveland.
Brancatelli’s mother worked as a waitress at a local diner, then as a clerk at a neighborhood Army-Navy store. His father was an auto mechanic. They divorced when Brancatelli was 12, yet Brancatelli describes his childhood in Slavic Village in nostalgic hues. “You always knew somebody,” he says. “You didn’t need formal day care. There was always somewhere to stay.”
He began working for the Slavic Village Development Corporation, a local nonprofit group, in 1988 and a year later became its director. The organization built and renovated storefronts and homes, bringing new people to the area. In fact, he met his wife when she bought a rehabbed house in the neighborhood. He stayed at the development group for 17 years until moving on to the City Council.
Cleveland has long been known for its unusually large number of nonprofit housing groups, and in the 1990s their impact on the city was noticeable. Under Brancatelli’s watch, Slavic Village Development constructed more than 500 new homes and rehabbed more than 1,000. Brancatelli measured success by the number of homes the group sold for more than $50,000. “We started to see this incredible transformation,” he recalls. A local thrift, Third Federal Savings and Loan, built its new corporate headquarters in Slavic Village. Marc A. Stefanski, chairman and chief executive of Third Federal, told me, “There was a good feeling that, hey, this neighborhood’s coming back.” Throughout the city, there was a renaissance of sorts: new housing construction in the neighborhoods and, downtown, three sports stadiums and the Rock and Roll Hall of Fame. Cleveland adopted the moniker “The Comeback City.”
But then Cleveland was hit hard — and early — by the foreclosure crisis. In 1999, Brancatelli noticed something peculiar: homes, many of which were in squalid condition, were selling for inflated prices. One entrepreneur in particular caught Brancatelli’s attention: 27-year-old Raymond Delacruz. He would buy a distressed property and, at best, make nominal repairs before quickly selling it for three or four times what he paid for it. The flips needed the cooperation of appraisers and the gullibility of home buyers. But the proliferation of mortgage companies — mostly based out of state and willing to provide loans with little documentation — also facilitated flippers. And the flippers justified the high prices to both home buyers and mortgage companies by pointing to the high prices nonprofit housing groups, like Brancatelli’s, were getting for their new construction.
There was something else going on in the city that was even more destructive. Unlike fast-growing communities in Florida and California, Cleveland didn’t see housing prices rise through the stratosphere. But even moderately rising property values created the conditions for subprime lenders to exploit strapped homeowners. Cold-calling mortgage brokers offered refinancing deals that would let homeowners use the equity in their houses to pay off other debts. A neighbor of Brancatelli’s had medical problems and fell behind in her bills. She refinanced, then did it two more times, draining the equity in her house. “She used her house as an A.T.M.,” Brancatelli says. “In the end, they just walked away. The debt exceeded the value of the house.” In other instances, mortgage brokers would cruise neighborhoods, looking for houses with old windows or a leaning porch, something that needed fixing. They would then offer to arrange financing to pay for repairs. Many of those deals were too good to be true, and interest rates ballooned after a short period of low payments. Suddenly burdened with debt, people began to lose homes they had owned free and clear.
As early as 2000, a handful of public officials led by the county treasurer, Jim Rokakis, went to the Federal Reserve Bank of Cleveland and pleaded with it to take some action. In 2002, the city passed an ordinance meant to discourage predatory lending by, among other things, requiring prospective borrowers to get premortgage counseling. In response, the banking industry threatened to stop making loans in the city and then lobbied state legislators to prohibit cities in Ohio from imposing local antipredatory lending laws.
In the ensuing years, the city’s real estate was transformed into an Alice-in-Wonderland-like landscape. Local officials began keeping track of foreclosed homes by placing red dots on large wall maps. Some corners of the map, like Slavic Village, are now so packed with red dots they look like puddles of blood. The first question outsiders now ask is, Where has everyone gone? The homeless numbers have not increased much over the past couple of years, and it appears that most of the people who lost their homes have moved in with relatives, found a rental or moved out of the city altogether. The county has lost nearly 100,000 people over the past seven years, the largest exodus in recent memory outside of New Orleans.
Banks are now selling properties at such low prices — many below what they sold for in the 1920s — you have to wonder why they bother to foreclose at all. (The F.D.I.C. estimates that each foreclosure costs a bank on average $50,000, more than if they were to do a loan modification.) All of this leaves Brancatelli in a constant state of exasperation. When asked how he’s doing, he often takes a breath and replies, “Another day in paradise.”
O.V.V. IS A TERM OF ART that stands for Open, Vacant and Vandalized. Houses fitting this description have popped up like prairie dogs. They are boarded, unboarded, then boarded again, and the city can’t keep up with the savvy squatters. They will prop the plywood over the front entrance to make it look as if it’s nailed shut. One woman told me that she called the police last summer when she saw smoke coming out of a vacant home across the street; it turned out that some young men were cooking on a grill inside.
On a dreary wintry day, Brancatelli took me to Hosmer Street, on which a fourth of the homes were foreclosed. As we strolled down the block, Brancatelli noticed something odd. Through a side window of one slender house, we could make out a waist-high pile of tree limbs and branches. The front door was off the hinges and propped against the entrance. We entered through the rear, where the door was gone altogether. “Hello,” Brancatelli hollered, “City!” — an effort to both warn squatters and frighten animals. Earlier that day we entered another O.V.V. and heard footsteps upstairs. “They don’t have a gun,” he had assured me. He explained that scavengers know enough not to carry weapons because it would mean more prison time should they be caught. Even in O.V.V.’s, there are rules.
Inside, we found firewood and brush piled in the kitchen and front room. “The crap we deal with,” Brancatelli muttered to himself. He snapped a photo with his cellphone and sent an e-mail message to the city’s Building and Housing Department, urging the department to send someone to secure the house. He often does this two or three times a day. But finding a collection of timber like this is of particular concern; over the past year there have been more than 60 fires in his ward, all in vacant houses. The fire department tried stakeouts but has not caught anyone. The general belief is that the fires are set either by squatters trying to stay warm or by mischievous kids. Brancatelli, though, wonders aloud if it might be vigilantes who don’t like the blight on their block. “Maybe I’m overthinking it,” he says. More likely, he’s projecting. He would like to see many of these houses just disappear.
This is Brancatelli’s conundrum: many of the abandoned homes should be razed. They’re either so old or so impractically tiny that they have little resale value, or they have been stripped of their innards and are in utter disrepair. There are an estimated one million lender-owned properties nationwide, and on average each house sits empty for eight months, a length of time that is only growing. Demolition, though, is costly: roughly $8,000 a house. Two years ago, Litton Loan Servicing, a mortgage servicer, discussed giving the city a number of foreclosed homes. Free. The city told them that would be fine, but only if the company came up with money to pay for the necessary demolitions. The transaction never occurred.
Last summer, Congress appropriated $3.9 billion in emergency funds for cities to acquire and rehab foreclosed properties. (An additional $2 billion will be available under the recently enacted economic-stimulus package.) The legislation was labeled the Neighborhood Stabilization Program, but Cleveland and a handful of other cities had to lobby hard to convince Congress that “stabilization” in their cities meant tearing down houses — not renovating them. Last month, Cleveland said it planned to use more than half of its $25.5 million allotment to raze 1,700 houses. This presents an opportunity to reimagine the city, to erase the obsolete and provide a space for the new. (There’s little money now to build, so imagine is the operative word.) Cuyahoga County is also establishing a land bank, a public entity that can acquire distressed properties and hold on to the land until improved economic times allow for redevelopment. The county hopes to persuade banks to unload their distressed properties, which the land bank would then raze, as well as give up some foreclosed properties in the suburbs, which the county could eventually renovate and sell.
Other cities — including Minneapolis, Youngstown, Detroit and Cincinnati — have put aside at least a third of their neighborhood-stabilization funds for demolition. “As properties stay vacant for longer periods of time,” says Joe Schilling, a founder of the National Vacant Properties Campaign, “it’s inevitable that even in some of the fast-growing communities, they’ll have to look at demolition.” Phoenix, for instance, has set aside a quarter of its grant money to tear down abandoned homes.
Cleveland may use some of those demolition dollars on houses now owned by the federal government. Between the Department of Housing and Urban Development and entities like Fannie Mae and Freddie Mac, the federal government has control of roughly a thousand abandoned properties in Cleveland. Across the street from the house with the timber inside sits a one-and-a-half story vacant property owned by HUD, which had guaranteed the last mortgage. On the front porch, a large picture window was wide open, but Brancatelli chose to enter through the front door. Going on a hunch, he punched the numbers in the address into the lockbox. The toilet was gone, as was the copper piping. HUD recently sold this house — for $1,500 — but didn’t inform the new owner that the house had been condemned. “They dumped the house,” Brancatelli grumbled. “It’s this kind of stuff that drives me nuts.”
A few weeks ago Brancatelli persuaded HUD to let the owner out of his purchase. Then HUD offered to sell the city its distressed properties, including this one, for $100 each. You might think this was something to celebrate. Brancatelli, though, is irked. As he sees it, the city will now have to use some of its emergency HUD financing to demolish houses that HUD was responsible for.
THE LIFE OF A CLEVELAND CITY COUNCILMAN has become one of answering complaints derived in one way or another from the foreclosure crisis. In November, Zachary Reed, who represents the ward near Slavic Village, received a pleading phone call from Cecilia Cooper-Hardy, a constituent and school-bus driver who lives next to a vacant house. Cooper-Hardy told Reed that as she was leaving for work at 5 one morning, she peered out her living-room window and noticed a pair of eyes staring back at her from behind a slit cut in a window shade next door. Reed had the house secured, but within days the boards were pulled off. Cooper-Hardy then purchased a pistol that she now keeps under her pillow. The local police commander calls her regularly, just to make sure everything’s O.K., a routine he has adopted with others as well. Last summer, while Cooper-Hardy was doing yardwork, someone slipped in her back door. She hollered to a neighbor across the street who was drinking in the yard with friends. They rushed to her aid as the burglar fled. That neighbor is gone now. Another foreclosure. So every morning she offers up a prayer, and then she peeks out her living room blinds to see if there’s anyone peeking back at her from the house next door. Reed, the councilman, told me, “If we don’t get some help we’re going to turn into a third-world nation.”
Brancatelli doesn’t necessarily disagree with the sentiment, but he continues to search for reasons to be sanguine. He insisted on driving me past a small store called Johnny’s Beverage because, he told me, it was a key to his community’s future. Johnny’s Beverage sits in the middle of a residential block. Its facade is worn. Dark plastic sheeting covers the front windows so you can’t see in. A hodgepodge of posters and handwritten signs advertise cold beer and wine, cigarettes and lottery tickets. A tattered American flag flaps in the breeze. When Jerome Jackson purchased the store three years ago, Brancatelli told him in no uncertain terms that he wasn’t too happy about it and that he was going to oppose the transfer of the liquor license. It did not, after all, have the aspect of a family-friendly enterprise you would want in a residential neighborhood.
Jackson, who is 52 and barrel-chested, has a retiring demeanor. His perch is a narrow space separated from the rest of the store by counter-to-ceiling plexiglass. He had managed a store in another neighborhood and saved up to buy his own business. He renovated the upstairs and moved in (and hung the American flag from a second-floor deck he built).
He then purchased a foreclosed house down the street, where his brother could live. The house next door to the store went into foreclosure, and Brancatelli heard that Jackson kept watch over it, chasing scavengers away and erecting a fence in the rear. He also heard that Jackson had alerted the city that there was a foot of water in the basement of the vacant, the result of pipes having been ripped out. (This is common; Brancatelli has seen back water bills for vacant houses as high as $6,000.)
Brancatelli began to reconsider his opinion of Jackson. He was keeping an eye on the neighborhood — and he was committed to staying. Brancatelli decided to support the liquor-license transfer and then told Jackson that he would help get him the property next door, if he agreed to tear it down.
U.S. Bank, which owned the house, appealed a city condemnation order. “It’s the running joke,” Brancatelli told me. “The banks appeal the condemnations because they say they want more time to make repairs to put it on the market to sell. And I go to the hearings on a regular basis to say you shouldn’t get more time. Here, they owned it for more than six months and hadn’t made any repairs. They just want time to try to unload the property.” Jackson offered U.S. Bank $2,000. He heard nothing. He upped his offer to $3,000. Again, no response. When Brancatelli intervened and made it clear that U.S. Bank would be stuck with the $8,000 demolition bill, the bank agreed to sell it for a dollar to the Slavic Development Corporation. The nonprofit group then turned it over to Jackson, who agreed to pay for the razing. “Imbeciles,” Brancatelli said more than once, referring to the banks. “They’re imbeciles.”
I spent an evening with Jackson in his store and watched as a young disheveled man came in and purchased a pack of cigarettes. He hovered around the plexiglass. “Do you want to buy some tools?” the man asked.
“No,” Jackson curtly replied.
Customers frequently offer Jackson sinks, cabinets and other scavenged items. He says that in the few years he has owned the store, the community has become more transient. “I don’t know nobody no more,” he said. “I don’t know who to trust.” Everyone calls him Johnny. They assume the store was named after him, even though it has been there for decades. The week before Christmas, two men rammed a van into the front of the store, intending to rob it. The van got stuck, and the robbers fled. But Jackson isn’t deterred. He says he hopes one day to knock down his store and build a row of small enterprises, including a restaurant and a barbershop. He is trying to buy another vacant house on the block. Brancatelli now fears he’ll lose Jackson. “I want to convince him we have a strategy for the neighborhood,” he told me. “The worst thing you can have happen is to have this store close up.”
BY MID-2007, IT BECAME CLEAR to Brancatelli that his was a city at the mercy of lenders and real estate wholesalers, who now owned thousands of abandoned properties in the city. Somehow, the city needed to hold these new land barons accountable for their vacant houses, so many of which were in utter disrepair.
Brancatelli and others looked to Raymond Pianka, the judge in the city’s lone housing court. In 1996, Pianka gave up his seat on the City Council to accept this judgeship. His judicial colleagues derisively refer to it as “rat court,” because its main function is to make sure that owners mow their lawns, trim their hedges, clean up their garbage, repair leaning porches or hanging gutters — in short, that they make their homes inhospitable for rats. No one foresaw that this lowliest of courts would become one of the most powerful instruments in the city’s fight for survival. “The court’s the only tool we have,” Brancatelli said. “When we get them into court, we can’t let them go.”
In 2001, when it became clear how Raymond Delacruz was wreaking havoc on city neighborhoods by flipping houses, it was Pianka who ran him out of town. The city’s building and housing department cited Delacruz for code violations on a house he hadn’t flipped fast enough. When he didn’t show up in court, Pianka had his chief bailiff stake out Delacruz at a doughnut shop. Pianka placed him on house arrest, ordering him to spend 30 days in the dilapidated structure he owned but had not maintained. Shortly after his sentence was up, Delacruz moved to Columbus, where he continued his flipping, and was eventually convicted for fraud that included swindling a bank vice president.
Housing codes, which were established in the mid-19th century, set minimum standards for housing quality. They traditionally help maintain both a city’s aesthetics and safety. In Cleveland today, they seem to be all that keeps the city from crumbling. In 2007, Pianka realized that the banks weren’t showing up in court after being cited for code violations. “They were thumbing their noses at the city,” he told me. “They were probably thinking, It’s Municipal Court. What can they do? And we thought, How loud can this mouse roar?” Pianka set up what he called his Clean Hands Docket. If a bank didn’t respond to a warrant, Pianka refused to order any evictions it requested.
Pianka’s staff also dug up a little-used 1953 statute that allowed for trials in absentia, and every other Monday afternoon for the last year and a half Pianka has held trials with a judge and a prosecutor but no defendant. The first case involved Destiny Ventures, a firm based in Oklahoma that buys foreclosed properties in bulk and then sells them. It was cited in 2007 for violations on one of its houses, but didn’t show up in court. The idea of a trial without a defendant was so unusual that when the prosecutor said he had no opening statement, Pianka prodded him. “You’re going to waive opening statement?” he asked. “Don’t you want to give the court a little road map about the strategy?” A housing inspector testified that Destiny Ventures had done nothing to correct the code violations on the vacant two-story clapboard house in question. The windows were punched out, the front door was wide open and roof shingles were missing. Pianka fined Destiny Ventures $40,000, and then had a collection agency sweep the company’s bank accounts for the money. Brancatelli celebrated by taping a copy of the check to his office wall. In a recent phone interview, an owner of Destiny Ventures, Steve Nodine, said, “It’s unconstitutional the way they fine people.” His firm now refuses to do business in Cleveland.
One morning this fall, I visited Pianka before his Monday court session. His office, on the 13th floor of the Justice Center, overlooks Lake Erie and the new Cleveland Browns Stadium. It might be one of the nicer views in the city, but he would just as soon overlook the city’s residential neighborhoods. When I entered his chambers, he was on his computer scanning Web sites to tap into the real estate chatter. He found a Cleveland house on eBay selling for $500. In the photos, Pianka could make out mold on the walls and noticed a large portable heater, which he said was illegal. He shook his head. He has no power to haul people into court. Building and housing inspectors issue citations for code violations, and then the city’s law department decides whether to prosecute. Pianka hears only misdemeanor offenses, but he can both fine and jail defendants.
Pianka, who has a bushy mustache, often seems amused, so it’s easy to underestimate his resoluteness. The chief magistrate told me she has heard Pianka curse only once. It was in late 2007. He had fined Wells Fargo $20,000 for code violations but told the bank he would rescind the fine if it spent that amount rehabilitating the structure. Wells Fargo fixed up the house, and it was, for Pianka, a success story. When he drove the chief magistrate to the address to show off the house, there was nothing there, just a vacant lot. The city, he discovered, had razed it, unaware of the repairs.
Pianka lives on a beautiful block in Cleveland’s Detroit-Shoreway neighborhood, where there is a stunning variety of architecture. But even on his street, there have been three foreclosures. For months, Pianka helped keep watch on a majestic 19th-century Victorian down the street. One neighbor paid for the electricity so the vacant house would be protected against vandals by an alarm system. Pianka shoveled the snow in winter and often parked his car in the driveway so it would appear as if someone were living there.
Pianka is an amateur historian, and his office shelves are filled with books on Poland, his grandfather’s native country. During my visit, he retrieved a book about wartime Warsaw and opened it to a photograph of a lone man with a wheelbarrow collecting bricks from the rubble of a building’s ruins. “He’s putting the city back together,” Pianka told me. “We just have to make the best of things. We have to do it because nobody else will.”
One of his assistants poked her head in the doorway. “It looks like we’re going to have another packed house,” she announced, and Pianka headed for the courtroom. A line of people snaked into the hallway. When the bailiff called their names, they approached the lectern, usually without an attorney. Pianka asked one man how he wanted to plead. “I plead whatever it takes,” he replied. Most of the defendants are simply asking for guidance, or at least some understanding, and the word is that you can trust Pianka. “He’s the most loved judge in Cleveland,” Brancatelli told me. A good number of the defendants are facing foreclosure themselves and don’t have the means to keep up their property. Until recently, many might have refinanced, but that is no longer an option.
One of the first cases I observed involved Sally Hardy, who is 52 and works as a housekeeper at a nursing home. She asked Pianka if she could confer briefly with the prosecutor, which she did, and then began to cry softly. “What’d you say to her?” Pianka asked the prosecutor in an attempt to lighten the mood. Hardy jogged out of the courtroom in tears. When she returned, Pianka apologized. “I’m sorry,” he said. “These are emotional times, and sometimes it feels like the weight of the world is on your shoulders.” Her house was in foreclosure, she told Pianka, but she had rescued it. Pianka brightened. “That’s a great accomplishment,” he told her. He ordered her into a program that assists struggling homeowners; a housing specialist will work with Hardy to find money to repair her roof and porch.
Mayra Caraballo, a 39-year-old mother of two, appeared in court in response to code violations on her home. She explained to Pianka that she no longer owned the house. She had lost her job at a processing plant, and an adjustable rate had kicked in on her mortgage, boosting her monthly payments to $1,100, from $800. She had left after receiving a foreclosure notice. The house was quickly stripped of everything but the furnace. Pianka asked a clerk to check into the house’s ownership; he suspected that the lender had withdrawn the foreclosure at the last minute, as is becoming more common. The clerk tracked down the trustee on the mortgage, Deutsche Bank, and confirmed that the foreclosure had indeed been withdrawn. Pianka calls these situations “toxic titles.” “You’re in limbo,” Pianka told a shocked Caraballo. “There’s no hope in your getting out of this property as a result of foreclosure. We’re seeing this more and more.”
Pianka sees these toxic titles as an effort by lenders to dodge responsibility for vacant houses. Later, I called Deutsche Bank to ask about Caraballo’s house. “We don’t own the property,” a spokesman told me. “We’re the owner of record, but the investors who bought the mortgage-backed securities own it.” Pianka chuckled when I told him of the bank’s response. “That’s their mantra: we don’t own it,” he said. “It’s handy for them to say, ‘Oh, it’s not us.’ It’s part of this big shell game they’re playing.” I checked in with Caraballo, too. She’s now renting and working part time at a day care center. She told me that she would like to move back into the house, but she’s not sure she has the money to replace all the hardware that has been stripped by scavengers or to make the necessary repairs.
Over the last year and a half, the housing court has collected $1.6 million in fines from defendants who didn’t show up for their trials. Last April, Pianka fined Washington Mutual $100,000 for a vacant property on the city’s west side. Washington Mutual, now owned by JPMorgan Chase, appealed, and in December, the Eighth District Court of Appeals in Ohio ruled that trials in absentia were not permitted in misdemeanor cases, essentially putting an end to Pianka’s efforts. JPMorgan Chase disputes the code violations, but a spokeswoman said the bank was not planning to send a representative to court to respond to the city’s charges.
“We just have to figure out some other ways,” Pianka told me. He has suggested that the city could name corporate officers when prosecuting code violations. He told me that a Cleveland police officer was so angered by all the abandoned properties that he volunteered last month to serve warrants to bank officers should they ever be issued. In the meantime, early last year, Cleveland sued 21 lenders, arguing that their vacant houses created a public nuisance, virtually destroying some neighborhoods. Ten of those lenders have since gone under, been acquired or gone into bankruptcy. The case is slowly winding its way through federal court.
“This crisis changes weekly,” Pianka told me. “It’s a torrent of water coming at us. We can divert it one way or another. But we can’t stop it.”
ON FEB. 29 LAST YEAR, Derek Owens, a 36-year-old police officer on patrol, spotted a group of young men drinking beer in the open garage of an abandoned house. Neighbors previously complained of teenagers both selling and using drugs in the row of vacant houses on the street. When Owens and his partner got out of their squad car, the men fled. As Owens chased them, one of the men stopped in the driveway of yet another abandoned house, turned around and opened fire. One shot hit Owens in the abdomen, and he died several hours later.
When Brancatelli heard of Owens’s murder, he wondered who owned the abandoned house and garage where the young men were drinking. He made some phone calls and discovered that he knew the owners, Eric and Sheila Tomasi, a couple from Templeton, Calif., who had been buying up foreclosed houses in Cleveland as an investment. Eric Tomasi soon called. He had heard about the shooting. Brancatelli liked the Tomasis, and suggested that it might be a good idea to begin repairs on the house. The neighbors, he told Tomasi, were up in arms over the vacant houses in their community. The Tomasis soon sought permits to do work and began to fix up the house.
Brancatelli had met the Tomasis a few weeks earlier at a suburban hotel where a private company was auctioning off foreclosed homes. Brancatelli was there to scare off speculators. He passed out a flyer, which read in part: “Dealing with the increasing problem of abandoned and vacant homes is at the forefront of our efforts to continue improving our community. . . . You should be aware that some of these homes were the source of incredible community concern and some resulted in criminal prosecution of mortgage brokers.”
This is what Brancatelli calls “the next tsunami” — companies and individuals who are buying foreclosed houses in bulk and then quickly selling them for a profit, often without making any repairs. The companies have appellations like Whatever Inc., Under Par Properties and Tin Cup Investments. Brancatelli thought all the equity had been wrung out of these properties, but clearly he was mistaken.
At this auction, Brancatelli was introduced to the Tomasis. They are both in their 40s. Before investing in real estate, Sheila Tomasi owned a small chain of clothing stores and Eric Tomasi was a mortgage broker and before that managed a chain of sporting-goods stores. Brancatelli found them surprisingly open, unlike some of the other wholesalers — or “bottom feeders” as some derisively refer to them — who wouldn’t return his phone calls or e-mail queries. He invited the couple to a gathering of local housing activists, and they laid out their business plan. Brancatelli was curious to find out how anyone was making money in a market where houses were selling for a few thousand dollars on eBay.
The Tomasis said that they owned about 200 houses in Cleveland. (They purchased 2,000 homes last year, in 22 states.) They explained that they, unlike most other wholesalers, provide each buyer with the mechanicals — pipes, a boiler, a furnace, all the basic materials that had been stripped — that the purchaser would then be responsible for installing. Brancatelli derived some comfort from this description. From his background with a nonprofit housing group, he knew the theory that people who put sweat equity into a house will be more committed to its upkeep and to making the mortgage payments. The financing the Tomasis laid out, though, made Brancatelli squirm. The purchaser would pay $500 down and then make monthly payments of no more than $450, which was below local rental prices. But the interest rate was 10 or 11 percent. What most concerned Brancatelli was that the Tomasis eventually hope to package the mortgages and sell them to investors.
“It’s Groundhog Day all over again,” Brancatelli remembers thinking to himself. “Intuitively, it doesn’t make any sense that a person from California would be buying hundreds of distressed properties in a place that’s in a downward spiral. It has nothing but the makings of someone coming to pillage our neighborhood.” But did that mean he shouldn’t work with the Tomasis? If he considered them the enemy, he wondered, where would that get him? Eric Tomasi assured Brancatelli and the others that they had a shared interest. “I want to put people in homes,” he said. “And you want to get homes occupied.”
Pianka says Brancatelli faces a difficult choice: work with the Tomasis to make sure their properties are maintained and then sold to people who make the payments, or contest the Tomasis’ efforts and lose any oversight. In December, while I was driving through Slavic Village with Brancatelli, we passed a Tomasi-owned house that wasn’t secured. He left a message for Tomasi: “Eric, calling about 6921 Gertrude. The door’s open in the back. Give me a call. Hope things are well.” Tomasi sent someone out to board it up. “Even if I didn’t like this guy, I don’t have the ammo to fight him,” Brancatelli later told me. “Let’s see if this is a model we can work with.”
THERE ARE REASONS to be wary. During my time in Cleveland, I came across two properties owned by an investment company that goes by the name Thor Real Estate. The first I stumbled across while driving through the city’s west side with Jay Westbrook, a city councilman. We passed a compact two-story house that had been vacant just a few weeks earlier. Westbrook peeked through the windows and, much to his surprise, saw some activity. A young, stocky man was inside installing new floors. He introduced himself as Oswan Jackson and told us he had just bought the house. He planned to move in with his wife, who was pregnant with their first child. He seemed disoriented, like many new homeowners, overwhelmed by the amount of work he needed to do. “I didn’t know there were code violations,” he told Westbrook. The foundation was failing and the roof needed replacing. He said the purchase price was $24,580 for the house: $500 down and $290 a month. “We’ll make it work for you,” Westbrook cheerfully told him. “Welcome to the neighborhood.” A few days later, after a colleague researched the property, Westbrook learned that the house had been in such poor condition that it was condemned three weeks after Jackson signed the contract — and that Jackson owed the back taxes on the property, which amounted to $4,000. The last I spoke with Jackson, he planned to walk away from his new home.
The second house was on East 113th Street. The front steps were missing; piles of brush and rubbish clogged the driveway. One side was tagged by a local gang, an indication that it had been used as a gathering place. Posted to the front porch was a sign that read: 500 Down, 295 a month. In January on Craigslist, the owner advertised it this way: “I have a beautiful home at 3637 East 113th Street, Cleveland, OH 44105 Move in now! No credit check!” One neighbor I spoke to wondered why anyone would want to buy it. “It looks like there’s nothing left for that house to give,” the neighbor said.
The dispiriting part of the story behind these houses, certainly from Brancatelli’s point of view, is that Thor Real Estate had been in partnership with the Tomasis. The Tomasis say they are now separate entities, but in court, the Tomasis have admitted that properties have been transferred between the two companies, and on occasion Eric Tomasi has offered to speak for Thor on code-violation cases. Once again, it’s hard to know who owns what.
In January, Sheila Tomasi appeared in housing court. Sheila Tomasi is a personable, cheerful woman with high cheekbones and honey-streaked hair. The Tomasis purchased a house for their own use near Cleveland, and she was back for a couple of weeks to appear in court and to check on their properties. It wasn’t the Tomasis’ first time in Pianka’s court, and on that day, five of the Tomasis’ properties were cited for code violations. During her appearance, she told the court about a new owner, a single mother of seven, who had hired a contractor to install new pipes provided by the Tomasis. But it was a shoddy job. So, the Tomasis hired a plumber themselves and paid him $1,300 to redo the work. They added that charge to the woman’s monthly mortgage payments. “I can’t go to sleep at night if we can’t give someone a good start,” Tomasi told me on an earlier occasion. “You want to groom them and get all the hiccups out of owning a home: that they’re getting all their improvements done, that they’re paying their taxes. We want to make sure that everything’s going O.K.”
Tomasi also confirmed to the judge that they were considering the purchase of another 1,000 homes in the city. “That’s the nature of what’s happening here,” Pianka sighed. “We feel in many ways helpless.
“You’ve moved to Cleveland at least temporarily,” he said. “That’s important, and taking care of your inventory properties, making sure you come into compliance with the law. There aren’t enough inspectors to follow you around.” Tomasi nodded. Pianka continued, “If we find out you have a property and it’s flying below the radar, there are going to be severe consequences.”
“Yes, your honor,” Tomasi replied.
Then, as if thinking aloud, Pianka said, “It is really tough being a city municipality because we’re subject to international banks, national banks, acts of Congress, buyouts of mortgages. . . . We have no control over those entities, so I guess we’re going to have to try to work with you.”
He fined the Tomasis $50,000 but gave them time to either raze the properties or repair them. “I’d like you to appreciate what we’re dealing with in Cleveland,” he told Tomasi. “Now if you don’t have some good reason, I expect a good check made out to the clerk.”
Pianka left the bench shaking his head and later told me he better understood why Brancatelli was willing to work with the Tomasis. “What are you to do?” he said.
When I told Brancatelli about the court proceedings and about the Tomasis’ mention of purchasing another 1,000 homes, Brancatelli said, “It’s just really strange times.”
Alex Kotlowitz teaches writing at Northwestern University and is a regular contributor to the magazine. His last cover article was about urban violence.
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8) Our kids deserve the best
by Rafael Mandelman, Tommi Avicolli Mecca, and Marko Matillano
03/05/2009
http://ebar.com/openforum/opforum.php?sec=guest_op
We do not want "Don't Ask, Don't Tell" in our schools.
We do not want a program in our schools that won't hire openly LGBT instructors.
We do not want our school district to spend $1 million every year for such a program. We do not want a program that is taught by retired officers from the Pentagon who are hand-picked by the military with no input from the school district, and who get paid more money than our teachers.
And we certainly do not want politicians in Sacramento, from San Diego to Redding, telling us what our local school board should do.
That is exactly what Assemblywoman Fiona Ma's (D-San Francisco) AB 223 would do. It would have Sacramento politicians from all over the state require the San Francisco school district to indefinitely continue the Junior Reserve Officers' Training Corps. San Francisco would become the only city in the state, indeed in the country, that is required by law to have JROTC.
Due to poorly drafted language, this bill would require JROTC in every high school in our city, not just the seven schools in which the program currently exists. It mandates the school board to make JROTC "available to pupils under its jurisdiction in grades nine to 12, inclusive."
Assemblywoman Ma states that she is "against allowing military recruitment in our schools." Good. But her claim that JROTC "does not allow for military recruitment in our schools" is wrong. U.S. Army Recruiting Command Policy Memorandum 50 requires JROTC personnel to "facilitate recruiter access to cadets in JROTC ... and sell the Army story." That is why military officials consistently brag that 30 percent to 50 percent of cadets end up in the military, and why former Defense Secretary William Cohen called JROTC "one of the best recruiting devices we could have." It is a good thing that fewer cadets from San Francisco end up in the military than cadets from other cities, but the small numbers that Ma and others claim are unbelievable.
We know that President Obama wants to get rid of the military's discrimination against the LGBT community. So did President Bill Clinton when he first came into office. We hope that Obama will succeed where Clinton failed. And we are glad that Ma says she is "100 percent opposed" to DADT. But, right now, JROTC instructors are all retired military officers, chosen by the Pentagon, who are either straight or spent their entire military careers in the closet. What kind of message does that send to our youth, both straight and LGBT?
Ma's bill would also require school district officials to give physical education credit to JROTC. This despite bipartisan efforts in recent years to tighten up PE instruction for our youth, and improve their fitness and well-being. Marching around in formation once or twice a week, or doing push-ups as punishment by your commander, is not the same as real PE instruction. JROTC instructors do not have PE teaching credentials. In fact, their "credentials" require little more than a high school diploma.
The fact is that most freshmen and sophomores who voluntarily enrolled in JROTC did so in the past to get out of PE. When PE credit was withdrawn this year, in accordance with state law, JROTC enrollment dropped over two-thirds, from its peak of over 1,600 cadets to 500 today. That should tell us all something about the real value of this program.
JROTC costs school district taxpayers one million dollars per year, according to official district figures. The average salary for JROTC instructors is $84,500 per year, plus benefits, as mandated by the Pentagon. This is far more than other San Francisco teachers get paid. In addition, the military requires the school district to hire two instructors for every 150 cadets, compared to the 300 students that one physical education teacher would normally instruct. Thus the "subsidy" that the Pentagon gives the school district for JROTC actually ends up costing us $1 million per year.
We are, of course, aware that Prop V passed last November, after downtown forces spent over $200,000 from the Committee on Jobs, the Chamber of Commerce, the Association of Realtors and PG&E. They outspent the community-based campaign 15 to 1. California voters passed Proposition 8 also, but does that make it right? Of course not.
We don't need the Pentagon in our schools, we don't need DADT in our schools, we don't need to spend our increasingly limited funds on a military program, and we don't need Sacramento to tell San Franciscans what to do.
Rafael Mandelman is president of the Harvey Milk LGBT Democratic Club. Tommi Avicolli Mecca has been a queer and anti-war activist for almost 40 years. Marko Matillano is campaign coordinator for Military Out of Our Schools.
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9) When Jobs Go Missing
Editorial
March 7, 2009
http://www.nytimes.com/2009/03/07/opinion/07sat1.html
The numbers in the jobs report for February were bad, but the trends were worse. More than half of the 4.4 million jobs lost since December 2007, when the recession began, vanished in the last four months. The unemployment rate has also surged to 8.1 percent last month from 7.6 percent in January — and from 5.0 percent when the recession began. The ranks of the unemployed now total 12.5 million people. It’s fortunate, then, that the nation’s first line of defense against rising joblessness — unemployment insurance — was reinforced in the stimulus law that passed last month.
The law increases unemployment benefits by $25 a week and allows states to extend those benefits through the end of the year. It also provides $7 billion to the states to cover more than 500,000 workers — often part-time, low-wage and female — who are denied jobless benefits under outdated rules that apply in many states. Those states, of course, must reform their systems to specifically include those workers and to bring their programs more in line with federal guidelines.
Some Republican governors have resisted doing that, an act of grandstanding that does nothing but hurt their neediest constituents. Recently, however, several governors — from California, Florida, Georgia and Utah — and state legislatures have supported making the changes. Other states must step up soon to ensure that broad relief reaches unemployed workers in a timely way.
Congress and the Obama administration must also be prepared to do more as unemployment worsens — as it inevitably will in this contracting economy. In 11th-hour wrangling last month, a provision was struck from the stimulus bill that would have provided Medicaid coverage to unemployed workers who do not qualify or cannot afford to stay on their former employers’ group health insurance. The measure should be reintroduced and passed into law.
Indeed, all job-related policies should acknowledge that employment is unlikely to turn around anytime soon. That’s because the economy’s other headwinds — the housing bust and the stock-market wipeout — will delay any labor market recovery. With both sales and prices for homes declining in most places, many people who might otherwise move to take a new job are compelled to stay put, especially if a sale would not bring in enough money to pay off the mortgage. With stocks tanking, many workers are likely to postpone retirement, impairing upward mobility for other workers and crowding out new entrants to the work force.
That means that in addition to providing relief for today’s unemployed, greater emphasis must be placed on job training and retraining and on better education at all levels. If a job slump is short and shallow, old jobs come back. If it is long and deep, like the current one, some old jobs never return and even some industries never revive. That makes it imperative to prepare as a nation for the prospect of a vastly different future.
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10) Iraqi Surveys Start to Unveil the Mental Scars of War, Especially Among Women
“More than three decades of war have made widows of an estimated 740,000 women and left many others fatherless or without brothers to look after them, said Olga Ghazaryan, Oxfam’s regional director for the Middle East.”
By ALISSA J. RUBIN
March 8, 2009
http://www.nytimes.com/2009/03/08/world/middleeast/08iraq.html?ref=world
BAGHDAD — Only when the guns fall silent does the extent of damage wrought by conflict become visible.
So in Iraq, as security improves, only now are the full effects of the violence on the Iraqi people emerging.
Two studies being released this weekend, one on mental health and the other on the status of women, paint a sobering portrait of the enormous difficulties that lie ahead as the country tries to recover from years of war and state-sponsored terrorism under Saddam Hussein and the more recent sectarian and ethnic strife that followed the American invasion.
In the mental health study, released Saturday, the Iraqi government and the World Health Organization surveyed 4,332 Iraqis over 18 years old nationwide and found that 17 percent suffered from mental disorders of some kind, with depression, phobias, post-traumatic stress disorder and anxiety among the most common.
The sense of desperation was so severe that among those who had mental health issues, nearly 70 percent said they had contemplated suicide. Nonetheless, the psychiatrists and psychologists who carried out the survey in 2006 to 2007 said that they were surprised that the percentages were not even higher given the levels of violence and trauma, and they hypothesized that Iraqis had developed defenses to protect themselves.
“Iraqi society has suffered for nearly 50 years from difficult circumstances, but gradually people seem to have become accustomed to enduring hard experiences,” said Abdul al-Monaf al-Jadiry, a psychiatrist at Amman University in Jordan who supervised the study.
The study found that women were particularly vulnerable to mental illness. Among men, 14 percent suffered from mental health problems while 19 percent of women did. A higher proportion of women than men were found to suffer from severe depression, phobias and anxiety.
Just 2 percent of Iraqis suffering from mental health troubles had sought treatment, which is hard to come by here. Social stigma attached to mental illness as well as a scarcity of psychiatrists and psychologists have meant that there is little treatment available.
Often those who are severely mentally ill are kept at home and untreated, out of sight of neighbors and others, for fear that malicious rumors would circulate about the whole family. A minority of Iraqis confine their ill relatives in one of just a few psychiatric hospitals.
More common ills like depression usually go untreated. A number of Iraqis self-medicate. Pharmacy customers commonly ask for Valium or sleeping medicines.
The higher levels of stress and mental illness among women, common in many postconflict societies, may be even higher in Iraq because of the long period of war, according to a study to be released Sunday by the nonprofit research group Oxfam and Amal, an Iraqi nonprofit group that concentrates on issues of concern to women.
Despite the recent increase in stability in Iraq, many women have seen their circumstances worsen over the past two years, according to the study, which surveyed 1,700 women in five provinces and was completed last May.
More than three decades of war have made widows of an estimated 740,000 women and left many others fatherless or without brothers to look after them, said Olga Ghazaryan, Oxfam’s regional director for the Middle East.
The survey found that more than three-quarters of all widows were not receiving pensions, and a third of the women surveyed had three hours or less electricity per day. Quality health care is harder to obtain than it was in 2006 and 2007, they said.
“These widows take care not only of their children but often of their extended family so they are bearing a heavy burden,” Ms. Ghazaryan said. The responsibility of finding food for the family and obtaining electricity and water puts great stress on women.
Beyond that, she said, “many of these women have lost loved ones and seen what happened to them, they have seen family members killed in front of them and that’s a tremendous burden.”
Anwar J. Ali contributed reporting.
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11) Discipline of Military Redirects Dropouts
By ERIK ECKHOLM
March 8, 2009
http://www.nytimes.com/2009/03/08/us/08cadet.html?ref=us
FORT GORDON, Ga. — By his own account, Donte’ A. Dungey had no motivation in high school, sleeping through classes and sometimes showing up only for the free lunch to reduce the burden on his mother, who was struggling with nine other children. Held back three times and scheduled to enter the 10th grade at nearly 18, he knew that “high school just wasn’t going to work for me,” he said.
But he was also ready to change. More than five months ago, Mr. Dungey took up residence in a program for dropouts called Youth Challenge, run by the National Guard, that is proving effective at using military atmosphere and discipline to turn around at-risk teenagers.
Mr. Dungey is one of 203 youths who graduated from a grueling physical and educational program on Saturday. Here at one of two Youth Challenge camps in Georgia, he rose at 4:30 a.m. each day, made his bunk with neat corners and sweated through an hour of calisthenics or running.
He has worn a uniform, marched in step with his platoon to the dining hall, completed 50 hours of community service, and spent long hours studying for the General Educational Development diploma that opens the door to college or career training for dropouts. The camp bars cigarettes and alcohol.
“It feels good to have discipline,” Mr. Dungey said. Sooner than most of his fellow cadets, he passed the G.E.D. exams and began tutoring others. Like all the youths, he has a personally selected adult mentor in his hometown who will advise him over the year ahead, and this one-time aimless school dropout now hopes to join the Air Force.
President Obama’s urgent call for every student to graduate and receive higher training has put a new spotlight on programs like the Job Corps, the government’s education and career-training program; YouthBuild, a group that helps dropouts earn G.E.D. certificates as they rebuild urban housing; and the smaller Youth Challenge program, which graduates more than 7,000 teenagers each year — a large majority of them male — from sites in 28 states.
The early results of a national study comparing youths who qualified for the program and were then admitted or denied on a random basis suggest that Youth Challenge may be the most successful large-scale program yet evaluated to help dropouts.
Nine months after participants left the program, they were 36 percent more likely than those in the control group to have obtained a G.E.D. or a high school degree. They were more than three times as likely to be attending college and 9 percent more likely to be working full time.
No one calls the program a panacea, but it has generated excitement among researchers because “the impacts are pretty large,” said Harry J. Holzer, a labor and poverty expert at Georgetown University. “So few interventions have proven to be cost-effective for the out-of-school, disadvantaged youth population when rigorously evaluated.”
Dan Bloom of MDRC, a research group based in New York that is leading the study, said, “It’s very promising, but it’s also early,” adding that the numbers will change as graduates are followed.
The camps, mostly at military bases, do not admit youths with felony records and expel those who fail a drug test, steal or fight. Participation is voluntary.
Usually about 20 percent of entrants drop out, mainly in the first two weeks. On average at Fort Gordon, 78 percent of those completing the five and a half months in residence obtain a G.E.D., said Janet Zimmerman, a retired Army colonel who runs the camp.
“By taking them away from their neighborhoods, we’re giving them a safe place to get their act together,” Colonel Zimmerman said. “These youths have been told they are failures. Here they find that if they straighten up, others will believe in them.”
Nationally, about half the graduates have gone directly into jobs, but a question facing this and other training programs is how much harder it will be to find work in this economy. More graduates may instead seek further training or try to join the military, although the standards for enlistment are rising, too, and not all graduates are taken.
In recent years, only 15 percent to 20 percent of Youth Challenge graduates have entered the armed services or the National Guard. “This is not a military recruitment program,” said Jennifer Buck, the deputy secretary of defense for reserve affairs, who oversees the program. It was founded by Congress in 1993 to make use of the military’s experience in shaping up young people. The routines have a military cast, though the rigors are short of a real boot camp and there is no training in weapons or tactics.
“The dropout rate is as great a threat to this country as terrorism is,” Ms. Buck said, justifying the use of defense money for the program — $88.5 million this year, with the states adding another $50 million. The National Guard, rooted in the states and with a tradition of community service, is an ideal home for the program, Ms. Buck said.
The quasi-military approach is not best for every errant youth. Connie Flanagan, a psychologist and professor of youth civic development at Pennsylvania State University, said the group cohesion in Youth Challenge, the emphasis on controlling anger and the immediate feedback on behavior all seemed to be useful elements.
“On the other hand, the real world doesn’t have those kinds of support systems,” she said. “As a next step, the kids have to learn to think for themselves, and we usually don’t think of the military approach as a way to learn autonomy and self-determination.” Ideally, she said, the civilian mentoring, which is supposed to continue after the camp, can help with the transition.
But for the right person, Youth Challenge seems to work. Branden Williams, 22, of Augusta finished the camp at Fort Gordon in 2005.
“I was headed down the wrong path, skipping school, doing drugs,” he said. “Youth Challenge changed my life totally.”
“All my friends are either locked up or dead,” Mr. Williams said, “and that’s where I would have ended up.” He decided he needed to do something radical after he was stabbed eight times on a school bus.
After gaining his G.E.D., he attended a culinary arts school for two years, thinking he might be a chef. Now, promoted to assistant manager at a Checkers Drive-In, he is taking a business administration course at a junior college and hopes to manage a restaurant.
But the lure of old neighborhoods can persist. One of his closest buddies in the camp has found little work and, Mr. Williams recently learned, was arrested on drug charges.
“I never thought he’d backtrack,” Mr. Williams said.
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12) Army Developing Teams for Electronic Warfare
By THOM SHANKER
March 8, 2009
http://www.nytimes.com/2009/03/08/washington/08army.html?ref=us
WASHINGTON — Viewed by its sister services as the less brainy branch of the armed forces, the Army over recent years had neglected to maintain its own ability to fight electronic warfare, relying instead on the expertise of the Air Force and the Navy. But the ground wars in Iraq and Afghanistan have introduced deadly new threats and proved how that lack of attention to electronic warfare has put soldiers directly at risk.
Information-age attacks, like improvised explosive devices detonated by cellphones, radios and garage door openers, have claimed more lives than any other type. And there are high-tech benefits that must be managed, including friend-or-foe tracking devices and surveillance drones that beam video straight to troops in battle.
In response, the Army is developing its own electronic warfare teams. The initial goal is to train more than 1,600 people from enlisted ranks through the officer corps by 2013, and to double that in the following years, giving the Army enough of these specialists to rival its sister services and surpass all of the NATO allies combined.
Gen. Peter W. Chiarelli was the first person to sound an alarm that the Army’s neglect of electronic warfare was endangering troops. General Chiarelli was serving as the No. 2 commander in Iraq when he sent a memorandum to Army leadership at the Pentagon in February 2006, warning that soldiers were unable to operate the new high-tech gear that was being rushed to the war zone to counter the rising threat of improvised explosive devices, or I.E.D.s.
General Chiarelli also warned Army headquarters that the ability of commanders and troops to communicate was diminishing as allied and American radios and electronic jamming gear fought for space on the limited broadcast bands, degrading the quality of transmissions all across the spectrum.
“When I first got over there in 2004 and in 2005, we didn’t have any Army electronic warfare capabilities,” said General Chiarelli, who is now the Army vice chief of staff. “It became deadly apparent in 2006, with the rise of I.E.D.s. At the same time, we were having big problems with the jammers and how to deconflict them with all of the other radio and signals traffic.”
The Army reached out to the other services for help. Adm. Mike Mullen, then the chief of naval operations but since promoted to chairman of the Joint Chiefs of Staff, immediately ordered to Iraq hundreds of sailors who specialized in electronic warfare.
“They saved a lot of lives when they came over,” General Chiarelli said. “They became the most important person in each formation down to the battalion level. They were sought out by soldiers who knew they had to learn this kind of warfare.”
In the three years since, hundreds of Air Force personnel have also served as electronic warfare specialists with ground units in Iraq.
In that time, the Army has produced a doctrine on electronic warfare that will join other new field manuals, including a better known one on counterinsurgency, that are transforming how the service prepares for and fights wars.
The Army’s new field manual, “FM 3-36, Electronic Warfare in Operations,” instructs commanders in how to integrate electronic warfare into all tasks, from planning to carrying out military operations. It also lays out a program for training personnel and sets the requirements for equipment.
“We simply have to look at ways to attack, and to protect ourselves, all across the frequency spectrum,” said Col. Laurie Moe Buckhout, chief of the Army’s electronic warfare division.
Managing communications, and protecting those transmissions, is complicated enough in the civilian world, but the problem is magnified in a combat zone, which is cluttered with sometimes conflicting radio signals from various American and allied units.
Military risk assessments note that potential adversaries, from nation states to terrorist groups, are seeking to increase their abilities to attack electronic frequencies. The goal would be to scramble radio and cellphone traffic, block signals from convoys that allow headquarters to track the movements of troops and supplies, or jam data from satellites that feed vital navigation systems.
“The enemy’s ability to weaponize the spectrum to detonate an I.E.D. was just the tip of the iceberg,” Colonel Buckhout said.
Electronic warfare is among the military’s most highly classified efforts, routinely carried out in conjunction with the nation’s intelligence agencies. It focuses on signals carried by radio and microwave frequencies, and is usually confined to a tactical battlefield setting.
It is separate from the other growing field of combat, cyber warfare, which deals with defending or attacking computer networks, with local, national and even international impact.
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13) Discharge From the Army Relieves a Mother
By THE ASSOCIATED PRESS
March 8, 2009
http://www.nytimes.com/2009/03/08/us/08mom.html?ref=us
CHARLOTTE, N.C. (AP) — A North Carolina mother who reported for Army duty with her two young children said she was happy and relieved that the military granted her an honorable discharge.
The woman, Lisa Pagan, was back home in Davidson, N.C., on Friday after spending a week at Fort Benning, in Georgia, waiting to learn if she would be put on active duty, possibly facing a tour in Iraq or Afghanistan.
In her first interview since leaving Fort Benning, Ms. Pagan said it was “nice to be home.”
“After I was told I could leave, my first thought was, God finally answered my prayers,” she said. “I’ve been going to church every weekend and saying my prayers. I’m just going to let this set in.
“I know what I did was controversial, but it was something I had to do.”
Ms. Pagan had been fighting the Army since she was recalled to active duty in November 2007, saying she had no one to care for her children.
A former truck driver in the Army, Ms. Pagan was recalled four years after being released from active duty, which is allowed under the military’s “individual ready reserve” program.
Ms. Pagan’s lawyer, Mark Waple, said she was discharged because of family hardship. An Army spokesman at Fort Benning confirmed that Ms. Pagan was discharged on Friday, but declined to say what kind of discharge she received or comment on why the Army let her go.
Soldiers can appeal, and nearly a third have won permission to remain in civilian life. Ms. Pagan filed several appeals, arguing that because her husband traveled for business, no one else could take care of their children. All of her appeals were rejected.
So she reported for duty on Monday at Fort Benning, accompanied by her children, 4-year-old Elizabeth and 3-year-old Eric.
Her children spent the week in an Army day care center while she was processed for active duty. But from the time she arrived, she said she believed she would be discharged.
“My commander was very supportive,” she said.
Mr. Waple agreed, saying the commanders at Fort Benning were “a breath of fresh air.”
“When Lisa and her husband made the decision she would comply with her orders to go and report to Fort Benning,” Mr. Waple said, “the jurisdiction in her case changed from the reserve command in St. Louis to the command at Fort Benning. And evidently, they took a closer look at the situation and made the right decision.”
Ms. Pagan is among thousands of former service members recalled after leaving duty since the Sept. 11 attacks because they are on individual ready reserve status, meaning they have time left on their original enlistment contracts and can be recalled at any time.
Master Sgt. Keith O’Donnell, an Army spokesman in St. Louis, has said that of the 25,000 individual ready reserve troops recalled since September 2001, more than 7,500 have been granted deferments or exemptions.
About 1,000 have failed to report, and most of those cases are still under investigation, he said. Another 360 soldiers have been separated from the Army either through “other than honorable” discharges or general discharges.
Ms. Pagan, who held the rank of specialist, said she was worried about receiving a dishonorable discharge.
On the roughly six-hour drive home, she said, she was so happy that she called her husband, who was on a business trip in Ohio, to share the good news.
“He was excited,” she said. “Now we can focus on other things. The whole thing has been stressful. I’m just glad it’s over.”
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