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Communities to banks: You can fix housing crisis, economy

Banks caused the housing crisis — and the financial crash which threw millions out of their jobs — and they can fix it, according to a new report.

By writing down underwater mortgages to market value – using a relatively small portion of bailout financing they’ve received – banks could put a floor on the housing market, stem spiraling foreclosures, and provide the economy with a badly-needed second stimulus, creating millions of jobs over the next decade, the New Bottom Line Campaign argues in a new analysis.

It was released in Chicago last week at a vacant home on the West Side that’s being rehabbed under a new program — which demonstrates how community pressure can force banks to step up and take responsibility, organizers say.

(And it came out the same day Mayor Rahm  Emanuel announced a foreclosure recovery program that includes not one single community on the hard-hit West Side.)

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A tale of two golf tournaments

While Chicagoland Chamber of Commerce holds its annual golf tournament at the Beverly Country Club, Stand Up Chicago will hold a “People’s Putt-Putt” downtown, on a course set up to show “how rich corporate executives and working Chicago families play by two very different sets of rules.”

The free event takes place from 7:30 a.m. to 6 p.m., Monday, August 15, outside the Thompson Center at Randolph and Clark.

A nine-hole miniature golf course will feature obstacles and enhancements showing “the ease with which corporate executives avoid paying taxes, reap special tax breaks, and generally enrich themselves with taxpayer money,” while “the rest of us [are left] stuck in sand traps of stagnant employment, low wages, unnecessary layoffs, and unfair foreclosures.”

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Groups say JP Morgan Chase is soaking the state

Community groups from across the city will rally at JP Morgan Chase and petition elected officials tomorrow demanding that the bank pay its fair share to solve the state’s fiscal crisis.

The action at JPMorgan Chase, 10 S. Dearborn (Thursday, May 12, 3:45 p.m.) is one of six across the state targeting the bank.  Organizers say the bank should renegotiate loan terms which are costing the state hundreds of millions of dollars and do more to stop foreclosures.

In “toxic rate swaps,” JPMorgan Chase and other banks set fixed interest rates for financing state bond deals, said Jennifer Ritter of Lakeview Action Council. But since then “interest rates have plummeted because banks crashed the economy,” she said.

These “rotten interest rate deals” cost the state of Illinois $88 million a year – and the city of Chicago $74 million – in inflated rates, according to Make Wall Street Pay/Illinois, which is sponsoring tomorrow’s action. The group estimates the Illinois taxpayers will pay an additional $800 million for the deals through 2012.

Protesters will march to the State of Illinois building and delegations will deliver letters to Governor Quinn, Senate President Cullerton and House Speaker Madigan calling on them to renegotiate the rate deals.

They also want state leaders to support decoupling federal accelerated capital depreciation tax credits from the state income tax – which would recover $1 billion over two years, Ritter said – and to pass legislation holding banks accountable for the costs of foreclosure, which will cost Illinois taxpayers $7.4 billion through 2012, she said.

“It’s about corporate accountability, and it’s also about starting to look at the state’s budget crisis as a revenue crisis instead of just trying to cut our way out,” said Ritter.

The actions mark the launch of the Make Wall Street Pay/Illinois coalition. One reason they’re targetting JPMorgan Chase is that many groups will be joining protests at the bank’s shareholders meeting next Tuesday in Columbus, Ohio.

There the New Bottom Line campaign will demand that Morgan Chase pay its fair share of taxes and do more to modify troubled mortgages and lend to small businesses.

‘We Are One’

Thousands of Chicago workers will rally in Daley Plaza tomorrow (Saturday, April 9, 1 p.m.), the culmination of a week of activities around the state and part of over a thousand events nationally spearheaded by the AFL-CIO to “defend the middle class.”

The “We Are One” actions mark the anniversary of Martin Luther King’s assassination while leading Memphis sanitation workers striking for union recognition, and links it with the recent upsurge of resistance to efforts in Wisconsin and elsewhere to roll back union rights for public workers.   Read the rest of this entry »

Gas prices

Dean Baker of CEPR thinks the media should challenge politicians who call for no-holds-barred domestic drilling as a solution to rising gas prices.

He does the numbers – the U.S. has petroleum reserves of 22.3 billion barrels and consumes 6.9 billion barrels as year.  Given the requirements of exploration and drilling, “in the most optimistic ‘drill everywhere’ scenario, we would save less than 20 cents from our $4-a-gallon gas.”  Quite likely much less.

Opening the nation’s strategic reserves “will at best buy us a couple of months nationally, with no assurance of relief here” in the Chicago area, according to Scott Bernstein of the Center for Neighborhood Technology, writing at Planetizen.

Bernstein points out that a 10-cent increase in the price of gas costs the Chicago area economy $240 million a year, and “financial pressures caused by rising gas prices may push households coping with unemployment and underemployment in even greater financial distress.”

It’s a lot worse for residents of areas with less access to public transit and less proximity to jobs and shopping.  Looking at the period from July 2000 to July 2009, when local gas prices rose from $1.99 to $4.30 a gallon, CNT found that transportation costs in well-served, “location efficient” communities rose from 9.7 to 12.6 percent of personal income; in less convenient places, transportation costs rose from 27.9 to 35.8 percent of income.

That’s a good argument for a national infrastructure bank which could accelerate local transit improvements, Bernstein writes – and for a range of practical strategies, from tax breaks for transit use and carpooling and car-sharing, to maintaining transit service and creating a comprehensive plan for regional transit.

We might be closer to realistic solutions if we made it a little harder for politicians to spout nonsense.

Sounds familiar

The regular morning trip to the coffeeshop for the newspapers was attempted, out of a combination of uncaffeinated inertia and curiosity, but aborted when a foolhardy plunge into a bank of snow resulted in a boot full of the stuff.

Back home, an old pamphlet, acquired in the free box outside Powell’s Books, presented itself:  “A Choice, Not an Echo,” by Phyllis Schlafly (1964); and the bitter tale of the betrayal of conservativism in the mid-20th century Republican Party led, as such things often seem to around here, to checking the version in the magisterial and highly entertaining “American Political Parties: Their Natural History” by Wilfred E. Binkley, also acquired outside Powell’s.

The relevant chapter goes a bit further back, and some of it sounds strikingly familiar.

There’s Andrew Mellon, treasury secretary from 1921 to 1932, who argued in 1924 that “if income and inheritance taxes were drastically reduced…the money hitherto paid in taxes would then be diverted from the Treasury to productive industry and provide ample employment and bustling prosperity,” as Binkley puts it.

The historian comments:  “Instead, much of it served to stimulate a bull market and contributed to the stock market crash of 1929.”

Then there’s William Humphrey, appointed by Calvin Coolidge to the Federal Trade Commission, which had been created under Woodrow Wilson “to scrutinize business practices, warn violators of anti-trust laws, and, if necessary, recommend prosecution of the heedless.”  Humphrey denounced the FTC on which he served as a “publicity bureau to spread socialistic propaganda” – which “harassed and annoyed business instead of assisting it.”  He vowed a new role for the commission: “to help business help itself.”  That worked out well, too.

By mid-century, with “a leadership prepared to govern in a static society, but bewildered…by one suddenly become intensely dynamic,” the GOP was “threatened with the palsying conservatism that had doomed the Whig Party,” according to Binkley.  Writing in the early 1960s, he saw hope for the party in the rise of “Modern Republicanism” – the very thing Shlafly viewed as a conspiracy of eastern internationalist elites and the source of the party’s irrelevance.

Today Schlafly stands vindicated, as Senate Minority Leader Mitch McConnell brands as unconstitutional a health care reform much closer to versions backed by Richard Nixon and Mitt Romney than to Harry Truman’s.

At Huffington Post, Robert Borosage writes, in anticipation of next month’s celebration of the centenary of the 40th president, that our current morass of economic decline and crisis could be considered “the ruins of Reaganism.”

Anti-union and free trade policies have decimated manufacturing and shipped millions of jobs overseas, sapping the middle class.  This has undermined the real engine of our prosperity – and perhaps the ballast for political moderation and tolerance – leaving us with economic strategies largely dependent on speculative bubbles and consumer borrowing.

Anti-regulatory policies that would have made Humphrey proud have gutted protections for consumers, workers, and the environment and left us vulnerable to the recklessness of the Enrons and the big banks.

Anti-tax and anti-spending policies have widened the nation’s huge income inequality gap which, as Robert Reich argues, is at the root of our economic malaise, and left government at all levels impotent to address the jobs crisis or invest in badly-needed old and new infrastructure – not to mention threatening basic services like schools and police.

Some folks think the economy is rebounding, but that requires accepting a “new normal” where jobs are hard to find and unavailable for increasing numbers, and where this advanced economy stops advancing. HuffPo’s Peter Goodman takes a skeptical look at claims of economic revival, pointing out that we’ve already experienced a “lost decade” — with a devastating downturn on the heels of the weakest recovery on record; over 25 years, while the cost of health care, education and housing have skyrocketed, workers’ earnings have stagnated.

We’ve gone from casino capitalism to cannibal capitalism, an economic system which feeds on its own, where homeowners are marks for predatory profiteering by powerful banks, where schools are cut and the big money is in prisons, where low-price, low-wage retailers make money from the food stamps their employees spend at their workplaces.

What’s scariest, perhaps, is the way economic decline feeds political reaction and division, which brings more economic decline in a vicious cycle.  We can do better than that.  We just have to get some people out of their 1924 mindset.

King Day: Hazel Johnson, jobs crisis, public workers

On more than one Martin Luther King Day, Chicago columnist Vernon Jarrett wrote columns highlighting the role of E.D. Nixon, the local organizer who recruited King to lead the Montgomery bus boycott in 1955.

His point was that while history focused on King–  the way it always focuses on great leaders — the vast grassroots movement he shepherded was far more than a mass of aggrieved followers.  It included hundreds of local leaders, deeply rooted in their communities, many of them maintaining struggles over decades with remarkable tenacity and determination, often at great risk, and far outside the limelight.

A longtime Brotherhood of Sleeping Car Porters organizer and president of the Montgomery NAACP, Nixon had led a march of 750 African American men to the Montgomery County courthouse to register to vote – in 1940.  He not only recruited King, he also recruited Rosa Parks, another long-time activist, for the campaign against segregation on city buses.

So it’s more than fitting that on this King Day, Mary Mitchell’s column memorializes Hazel Johnson, who died Wednesday at age 75.

Johnson shared the stage briefly with another great leader, Barack Obama, who worked on a campaign for asbestos abatement at Altgeld Gardens in the late 1980s, before heading on to law school and broader horizons.

Johnson began researching toxic contamination of the far south CHA development after her husband died of cancer in 1969 at the age of 41. She contacted public agencies and demanded information about the toxic waste dumps, landfills, incinerators and refineries that ringed the community, and when she didn’t get answers, she kept demanding.

Johnson – who also pioneered green jobs with training for Altgeld residents in environmental remediation — is the precursor of Van Jones and Green For All, Jerome Ringo (of Louisiana’s Cancer Alley) and the Apollo Alliance; and locally, of groups like Blacks In Green and Little Village Environmental Organization.  And People for Community Recovery continues its work under Johnson’s daughter, Cheryl.

Also part of her legacy is the ban on landfills on the Southeast Side, a long process initiated by Mayor Harold Washington after he toured Altgeld with Johnson in 1986.  In 2004 Waste Management was barred from accepting refuse in the last active landfill in the area.

Jobs crisis

When Martin Luther King Jr. launched the Poor People’s Campaign shortly before his assassination in 1968, it was in response to economic conditions that would look good today.

Unemployment in 1968 was 4 percent, 7 percent for African-Americans.  It’s double that or worse now, writes Isaiah J. Poole of the Center for America’s Future.

Poole calls for reigniting King’s drive for economic action, offering quotes from a sermon delivered by the civil right leader days before his assassination – quotes that ring true today.

Citing the Declaration of Independence, King declared that unemployment threatens its core commitments: “If a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness. He merely exists.”

To a political establishment that has abandoned action on the jobs crisis while it funds overseas wars, King declares: “On some positions, cowardice asks the question, is it expedient? And then expedience comes along and asks the question, is it politic? Vanity asks the question, is it popular? Conscience asks the question, is it right?”

Poole rejects “the constrictions on today’s political debate, which limit our horizons to variations of the discredited conservative notion that giving business what it wants — few rules to follow and even fewer taxes to pay — will lead to a revitalized middle-class America, when in fact we’ve already done this for more than a decade and what we have gained is a shrinking middle class caught in a race to the bottom.”

The Poor Peoples’s Campaign was necessary, King said, “because it is our experience that the nation doesn’t move around questions of genuine equality for the poor and for black people until it is confronted massively, dramatically in terms of direct action.”

Today, “we could use a massive, dramatic confrontation on behalf of the more than 27 million who are unemployed or underemployed today,” Poole writes. “The spirit of Martin Luther King Jr. would certainly be in its midst.”

Public workers

A year ago we noted King’s final campaign was on behalf of public service workers in Memphis.  A year later, attacks on public workers and their unions have ratcheted up considerably.

The Progressive points out that this shifts the blame for the nation’s economic problems away from the powerful and further weakens the meager recovery now underway.

Labor Notes argues it’s based on a number of myths –that public employees make more money than their private sector counterparts, that private enterprise is more efficient, that taxes are too high (the problem is really that tax system is unfair, with working families taxed more heavily than the very rich).

It’s the latest phase of a largely successful, decades-long drive to neutralize unions by severely limiting workers’ right to organize.

The latest manifestation in Illinois is what Labor Notes describes as a billionaires’ attack on teachers unions.  In a sign of bad times, Democratic leaders like Mayor Daley and Rahm Emanuel have endorsed limits on teachers’ strikes, though the last strike in Chicago was decades ago.  Emanuel also wants to cut pensions for existing city workers, although the state constitution bars such action.

Mike Klonsky points out that Emanuel’s “I’ll Hammer Teachers” program ignores the real problems facing Chicago schools and makes it much tougher to attact good teachers. (Miguel del Valle has spoken up forcefully in defense of teachers.)

Ambitious candidates may chase the latest wave of political opportunism, but Martin Luther King – who once vowed to “fight laws which curb labor” — would advise them to get on the right side of the arc of the universe, the one that bends toward justice.

Beware the Payday Loan Grinch

The Payday Loan Grinch will be downtown Monday – but don’t be afraid: payday loan reform advocates will be there too, singing carols warning shoppers of the dangers of payday installment loans.

A real-life grinch, along with members of the Monsignor John Egan Campaign for Payday Loan Reform, will be outside the PLS Loan Store, 337 S. Franklin, at 11 a.m. on Monday, December 13.

“Between a weak economy and the pressures of holiday shopping, the temptation to take out a payday loan can be particularly high,” said Dory Rand of the Woodstock Institute – but the loans can carry triple-digit interest rates, she warns.

“The payday Grinch’s high fees can sap working families’ assets and threaten their financial security,” said Lynda DeLaforgue of Citizen Action-Illinois.

Reforms won by the Egan Campaign in Springfield this year will cap interest rates and establish a range of consumer protections.  But they won’t go into effect until March of next year.

Payday loans are still a costly form of debt that targets those consumers who can least afford extra charges, the campaign warns.

DeLaforgue urges families under financial stress seek out a reputable consumer credit counselor and consider lower-cost options to payday loans, including small consumer loans with lower fees available from credit unions and community banks.

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