Daily Digest - December 18: Can Subprime Lending Really Be Safe?

Dec 18, 2014Rachel Goldfarb

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The Return of Subprime Lending (AJAM)

Matt Birkbeck says a new wave of subprime mortgages appear to be following much stricter rules and have far less usurious interest rates, but regulators are still watching closely.

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The Return of Subprime Lending (AJAM)

Matt Birkbeck says a new wave of subprime mortgages appear to be following much stricter rules and have far less usurious interest rates, but regulators are still watching closely.

Paid Maternity Leave Is Good for Business (WSJ)

Susan Wojcicki says that the United States is behind the rest of the world in not offering paid maternity leave to all mothers, and that such a policy makes good sense socially and economically.

Federal Reserve Says It Will Be ‘Patient’ on Interest Rate Timing (NYT)

Binyamin Appelbaum reports on the latest comments from Federal Reserve Chair Janet Yellen about when the Fed will start raising interest rates. The process won't begin before April.

Fired Walmart Worker Says She Had to Choose Between a Paycheck and a Child (The Guardian)

Lauren Gambino and Jessica Glenza profile one former Walmart employee who was still asked to work with dangerous chemicals after her doctor said they would endanger her pregnancy.

What Was the Job? (Pacific Standard)

Kyle Chayka says the gig economy brought with it a massive reinterpretation of what it means to have a job, leaving behind a disenfranchised workforce without any of the benefits it once enjoyed.

New on Next New Deal

Ten Years: Students Moving the Country Forward

Roosevelt Institute Vice President of Networks Taylor Jo Isenberg reflects on the Campus Network's tenth anniversary, and how Roosevelters can continuing pushing for a better country for all of us.

Two Contradictory Arguments That Dodd-Frank is Crony Capitalism

Roosevelt Institute Fellow Mike Konczal compares two mutually exclusive conservative analyses of what crony capitalism means and how to fix it, which suggest this isn't a useful concept in policy debates.

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Daily Digest - November 20: From the Banks to the Fed and Back Again

Nov 20, 2014Rachel Goldfarb

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New Scrutiny of Goldman’s Ties to the New York Fed After a Leak (NYT)

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New Scrutiny of Goldman’s Ties to the New York Fed After a Leak (NYT)

The leak has led to questions regarding the conflict of interest that arises when people advise the same banks they used to regulate, write Jessica Silver-Greenberg, Ben Protess, and Peter Eavis.

Are Financial Whistleblowers Worth It? Study Says Yes – to the Tune of $21.27bn (The Guardian)

Jana Kasperkevic reports on a new study that proves the value of financial whistleblowers. Rewards encourage whistleblowers to step up, and companies in such cases pay heavier penalties.

Loan Servicer Busted for Backdating, But Foreclosure Victims Say Shenanigans Haven’t Stopped (In These Times)

Ocwen Financial has admitted to a "glitch" involving back-dated loan modification letters, but Joel Sucher says the slow work to fix the problem follows familiar patterns.

Lenders Shift to Help Struggling Student Borrowers (WSJ)

Annamaria Andriotis reports on the plans of two major private student loan providers to lower interest rates, extend repayment periods, and modify loans.

Why It's So Hard for Millennials to Find a Place to Live and Work (The Atlantic)

Derek Thompson explains that cities that provide the best opportunity for economic mobility and cities that have affordable housing hardly overlap at all today.

New on Next New Deal

A Dem Who Can Explain that Fairness is Prosperity Will Sweep in 2016

Roosevelt Institute Senior Fellow Richard Kirsch argues that Democrats who focus on economic policies that emphasize fairness (which are the best ones for economic growth) will succeed.

Leadership Wanted: Governor Cuomo, Homeless Students Need College Support

Roosevelt Institute | Campus Network Leadership Director Kevin Stump proposes a new program to support homeless youth in achieving their college goals.

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Leadership Wanted: Governor Cuomo, Homeless Students Need College Support

Nov 20, 2014Kevin Stump

For homeless youth to make it through college, they need extra support, best provided through a government program of homeless liaisons.

For homeless youth to make it through college, they need extra support, best provided through a government program of homeless liaisons.

New York has been among the top 10 states with unaccompanied homeless youth (UHY) filing for federal financial aid for the last three years. In a private report to the National Association for the Education of Homeless Children and Youth, the United States Department of Education, reports that there were 2,215 college students applying for financial aid in New York who indicated on their Free Application for Federal Student Aid that they were homeless last year. This number does not include undocumented youth who are not eligible to apply for federal or state aid.

Unfortunately, these students are often left behind. It wasn’t until last year that New York changed an extremely outdated component of its $1 billion Tuition Assistance Program (TAP) that updated this 40-year-old in-state need-based financial aid program. The change made it so UHY are now eligible for the maximum TAP award of $5,165 that Dependent students are eligible for, versus the maximum TAP award of $3,025 available to Independent students.

In addition to outdated laws that limit the amount of aid they can receive, UHY face a number of other challenges including food insecurity, a lack of adult guidance and support, failure to access available support systems, lack of access to parental financial information, limited housing options, and a lack of financial means to live independently and safely.

New York should create a policy that models the federal McKinney-Vento Act on a college level. This landmark piece of legislation successfully creates safety nets and institutional support structures for K-12 students. By law, every school district in the country, and every school building in New York City, is required to have a liaison who is responsible for coordinating support and resources for homeless and unaccompanied youth. Every year, liaisons are required to undergo training to stay current on best practices to support and assist homeless students. Furthermore, their work has given lawmakers data and information on the best ways to support these communities.

There are more than 130,000 K-12 homeless students in New York. Among those students, nearly 11,000 11th and 12th graders approaching the end of their high school careers. These are only the numbers that are reported and do not account for the possibility of additional students who are in need.

Given the number of colleges and universities, the number of community based organizations and support networks that exist, and the high-level of poverty in New York, the state has the potential to become a leader in creating a framework of how states should build support systems for unaccompanied homeless youth to access and succeed in college.

Governor Cuomo should initiate the policy process to develop a law requiring a homeless liaison at every brick-and-mortar college and university in the state, to ensure that all former McKinney-Vento students are supported during their transition into college and throughout their tenure until graduation. The homeless liaison would be the first point of contact for professionals working with these young people and for the students who experience, or who are at risk of experiencing, homelessness while at college. The liaison would also be charged with coordinating all needed services. In addition, the liaison would be responsible for tracking and reporting all relevant data to help inform future policy regarding homeless college students and develop greater support services.

This kind of support and data-gathering could potentially exist without legislation. However, this issue is a prime example of where the state could do it better and more comprehensibly. With legislative protections and teeth to ensure sustainable and uniformed support is given, as well as appropriate resources for service delivery, training, technology, data collection, and future statewide policy initiatives, the liaisons will be able to provide better support to UHY in college. A statewide policy setting up liaisons would establish an infrastructure that can be used to easily implement future policy.

As economic inequality and homelessness rates remain high, and college attainment continues to be so crucial, it’s critical that New York take action to protect our most at-need college students to ensure that those who are pursuing their dreams don’t slip through the cracks.

Kevin Stump is the Roosevelt Institute | Campus Network Leadership Director.

 

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Leadership Wanted: Pushing for More College Attainment? Start in Public Housing.

Nov 6, 2014Kevin Stump

Public housing creates an opportunity to bring together resources to increase college attainment and success for some of New York City's neediest students.

“We are called to put an end to economic and social inequalities that threaten to unravel the city we love. And so today, we commit to a new progressive direction in New York,” Mayor de Blasio stated during his Inauguration Speech on January 1, 2014.

Public housing creates an opportunity to bring together resources to increase college attainment and success for some of New York City's neediest students.

“We are called to put an end to economic and social inequalities that threaten to unravel the city we love. And so today, we commit to a new progressive direction in New York,” Mayor de Blasio stated during his Inauguration Speech on January 1, 2014.

As I discussed in “The College Access Crisis Needs You, Mayor de Blasio,” part of the “new progressive direction” Mayor de Blasio envisions must include a radical transformation of how we prioritize and invest in college access pipeline opportunities to combat economic and social inequalities.

The City should bring together all of the housing-related agencies to develop a strategy that will initiate an aggressive plan to further integrate and leverage community partners and key stakeholders to close the college readiness gap among students living in NYC public housing. The New York City Housing Authority (NYCHA), whose mission is to “increase opportunities for low- and moderate-income New Yorkers by providing safe, affordable housing and facilitating access to social and community services,” is an ideal place to start.

There are well over 600,000 New Yorkers served by conventional public housing with an average family income of under $25,000 and nearly 250,000 families on a waiting list. As alarming as this reality is, it very clearly identifies hundreds of thousands of New Yorkers who would greatly benefit from a strategic shockwave of investments – both political and financial – to radically open up the opportunities pipeline, focusing on increasing college attainment.

Public housing developments are almost always located in communities that are low-income and high poverty, with a disproportionate concentration of minorities. They were intentionally built in these communities as a response of America’s Great Migration from 1915 to the 1970s, in which blacks migrated from the segregated south to the northern cities. Consequently, these cities never fully integrated and still remain economically and geographically segregated today. About 75 percent of public students who live in NYCHA housing are eligible for a free school lunch (an indicator to identify poverty) and more than 75 percent of these students are Black or Hispanic.

It’s no secret. A kid living in public housing performs worse than a kid who doesn’t. By a lot. Only 38 percent of NYCHA students passed their reading exams and just 41 percent passed their math exams. Among non-NYCHA students, nearly 50 percent of students passed their reading exams while nearly 52 percent of students passed their math exams. What’s more is that only about 55 percent of NYCHA students graduate from high school versus 61 percent of their non-NYCHA peers. This might help to explain why only 3 percent of CUNY freshman come from public housing and why those freshmen require more remedial course work than their non-public housing counterparts.

It is important to note that there is some work being done already. NYCHA offers a few scholarships for public housing students to pursue higher learning. NYCHA also partners with groups like the Educational Alliance. Unfortunately, these efforts are not only underfunded but often focus only on admissions related topics rather than actually preparing for and succeeding at college.

In addition to leveraging NYCHA and other housing-related agencies to reach New Yorkers in public housing, New York City has about forty other agencies serving more than eight million residents and employing about 300,000 public employees.

The city needs to use the public housing infrastructure to develop comprehensive college access centers that utilize and leverage existing projects, organizations, and networks such as the College Access Consortium of New York, GraduateNYC!, Bloomberg Philanthropies new initiative, the Partnership for Afterschool Education, and many others. This includes more than just test prep and admissions advising. A comprehensive college access center would provide full academic, financial, and social support preparing students and their family communities from 9th grade, supporting them while they earn their college degree, and coaching them through the beginning of their career. Integrated into NYCHA space, these centers would build a partnership made up of only the most proven and effective models that currently exist allowing us to see where innovation may be required for this much needed policy experiment to increase college attainment and fight inequality.

Similar to Naomi Klein’s “The Shock Doctrine,” which argues that leaders use crisis to push through policies, Mayor de Blasio should use the crisis of great economic disparity to fundamentally reimagine how New York City is tackling economic inequality through college access pipeline opportunities by using all of government and its tools, starting with public housing.

Kevin Stump is the Roosevelt Institute | Campus Network Leadership Director.

Photo via Flickr.

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Guest Post: A Review of Fragile By Design

Nov 3, 2014Mike Konczal

(With conservatives looking to make big gains Tuesday, it's important to understand how they understand the financial crisis. Luckily we have a guest post by David Fiderer, on a recent book about the crisis. For over 20 years, Fiderer has been a banker covering the energy industry. He is trained as a lawyer and is working on a book about the rating agencies.)

Pundit-Level Arguments Dominating Elite Business Schools Financial Crisis Discussions

by David Fiderer

(With conservatives looking to make big gains Tuesday, it's important to understand how they understand the financial crisis. Luckily we have a guest post by David Fiderer, on a recent book about the crisis. For over 20 years, Fiderer has been a banker covering the energy industry. He is trained as a lawyer and is working on a book about the rating agencies.)

Pundit-Level Arguments Dominating Elite Business Schools Financial Crisis Discussions

by David Fiderer

Fragile By Design: The Political Origins of Banking Crises and Scarce Credit is a tour de force, and not in a good way. The book’s history of U.S. banking is troubling. The narrative covering the period from the Civil War until the 1990s is highly selective and misleading. Worse, the section that covers U.S. banking over the past 25 years is a set of distortions and falsehoods that should be obvious to anyone with a basic knowledge of the recent financial crisis.

Yet the book has been greeted enthusiastically. It was recently considered by the Financial Times and McKinsey for the Business Book of the Year Award, and its thesis about the recent financial crisis has been presented by the authors at events hosted by the World Bank, the Bank of England, the San Francisco Fed, the Atlanta Fed and the SEC. “[I]f you are looking for a rich history of banking over the last couple of centuries and the role played by politics in that evolution there is no better study,” wrote The New York Times reviewer. “It deserves to become a classic.” The book’s false portrayal of the recent crisis, left unchallenged, is likely to be used as a standard reference work for conservatives intent on rewriting history.

The two authors, Prof. Charles Calomiris of Columbia and Prof. Stephen Haber of Stanford, are well known. Calomiris’s 67-page CV cites, among many accomplishments, his stints as a Visiting Research Fellow at the International Monetary Fund and as a Senior Fellow at the Bank of England, as well as his 21-year affiliation with the American Enterprise Institute. Haber, who teaches Political Science at Stanford, is a Senior Fellow at Stanford’s Hoover Institution.

The book’s central argument is that the proximate cause of the financial collapse was the risky lending mandated by Community Reinvestment Act (CRA) and by affordable housing goals set for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This familiar narrative, identified as “The Big Lie” by Joe Nocera, Barry Ritholtz, and others, is still deemed valid by a lot of people who should know better. Simply put, loan performance at Fannie and Freddie has always been exponentially superior to that of any other sector in residential mortgages, whereas the loan performance of private label residential mortgage securities has been radically worse than that of other sectors in the mortgage market. Most of the credit losses were tied to private mortgage securities. To state otherwise is a lie.

Calomiris and Haber embrace The Big Lie, and double down by tracing everything to Bill Clinton’s grand strategy of income redistribution as a response to economic inequality or as a sop to community activists at ACORN. Their story is as follows: in the 1990s banks sought government approval for proposed mergers and soon recognized that such approval was subject to certain conditions set by Clinton and his urban activist allies. The banks were compelled to book vast numbers of recklessly imprudent loans extended to the urban poor, by way of the CRA and GSE affordable housing goals.

Once banks started making ultra-risky loans under the CRA, they quickly started making ultra-risky loans to everyone else, because all these crappy loans could be sold to the GSEs, which then foisted them off onto unsuspecting investors who bought GSE mortgage securities. And once the GSEs started financing ultra-risky loans to poor people, they were forced to apply the same ultra-risky credit standards to everyone else. Eventually, the CRA and housing goals created a kind of Animal Farm dystopia, where everyone was equal because everyone’s mortgage was underwritten with the same recklessly imprudent terms.

In short, the GSEs, working in tandem with the banks and the investment banks, created and sold private mortgage securities, CDOs, and credit default swaps to unsuspecting investors. And when home prices stopped rising and the music stopped, the GSEs, the banks, and the investment banks were stuck holding those same private mortgage securities, CDOs, and credit default swaps, which is why many of them became insolvent.

No, I am not distorting Calomiris and Haber’s work.

The Financial Times, reviewing this book, says that “[t]hose on the left…tend to close their ears to this story, filing it under Republican disingenuity.” Sadly for the FT, this crackpot narrative has been debunked many times over. The Federal Reserve Board “found no connection between CRA and the subprime mortgage problems.” A subsequent Fed study found “lender tests indicate that areas disproportionately served by lenders covered by the CRA experienced lower delinquency rates and less risky lending.” Per the Minneapolis Fed: “The available evidence seems to run counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis.” These findings were echoed by the Richmond Fed.

The St. Louis Fed posed a question: “Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?” And the data offered a clear-cut answer: “No… We find no evidence that lenders increased subprime originations or altered pricing around the discrete eligibility cutoffs for the Government Sponsored Enterprises' (GSEs) affordable housing goals or the Community Reinvestment Act.” An earlier Fed study arrived at a substantially similar conclusion, as did nine out of ten members of the FCIC.

How do Calomiris or Haber address and respond to these studies? They don’t, and they aren’t alone. The lack of response to the critics of The Big Lie defines the entire genre. And these aren’t random writers; these are business professors at elite universities and think tanks who reject an empirical analysis framework for engaging their critics. Read Fault Lines by Raghuram Rajan at the University of Chicago. Read Guaranteed To Fail by Profs.Viral Acharya, Stijn Van Nieuwerburgh, Matthew Richardson, and Lawrence J. White, all at NYU. Or, on related topics, read “Rethinking FHA” by Prof. Joseph Gyourko at Wharton, or “Do We Need the 30-Year Fixed-Rate Mortgage?” by Prof. Anthony Sanders of George Mason University and Prof. Michael Lea at San Diego State. None of them compare loan performance of the GSEs, or FHA, or 30-year fixed rate loans, with that of other sectors in the same market.

It’s worth taking a minute to dissect the historical fantasy Calomiris and Haber construct. Their central narrative goes as follows:

Once the basic rules of this game were laid down in the early 1990s, the game unfolded in a predictable manner. Fannie and Freddie were forced to reduce their underwriting standards to accommodate increasing lending mandates to targeted groups. Importantly, those weaker standards were applied to all borrowers: to have done otherwise would have been a tacit admission that a portion of their portfolio was, in fact, high risk, which would have alarmed their shareholders. Many commercial banks, knowing that they could either sell high-risk loans to Fannie and Freddie or convert them into mortgage-backed securities guaranteed by Fannie and Freddie, jumped into the subprime securitization market. [Emphasis in the original.] […]

We cannot emphasize this point strongly enough: when Fannie and Freddie agreed to purchase loans the required only a 3% down payment, no documentation of income or employment, and a far from perfect credit score, they change the risk calculus of millions of American families, not just the urban poor. […]

As a matter of logic, it is conceivable that Fannie and Freddie could have selectively relaxed underwriting standards for targeted groups. As a practical matter, however, doing so would have been very difficult.

This is core to their story: affordability goals weren’t a small portion of GSEs’ loans. They effectively rewrote the entire mortgage market for everyone in the country.

Yet anyone who did a five-minute web search would demolish this notion. This link and this link are but two examples of many public filings that show how the GSEs used different credit standards for different types of borrowers, forgoing the entire logic of the Fragile by Design narrative. The entire premise of affordable housing goals was that the GSEs had the capacity to take on incremental exposures of higher-risk loans as a small counterweight to their huge portfolios of low-risk mortgages. Every business student knows basic portfolio theory.

And as a practical matter, just about every public utility, common carrier, pharmaceutical company, and hospital “effectively discriminates against most Americans by explicitly granting special arrangements to targeted groups.” Consider, for example, the rampant and institutionalized age discrimination seen at movie theater box offices. And yet, everyone who followed the companies knew that the GSEs used more relaxed standards for certain targeted groups.

Some of the authors’ zingers are harder to unpack. Consider the GSE loans they describe above, ones that “required only a 3% down payment, no documentation of income or employment, and a far from perfect credit score,” ones that changed “the risk calculus of millions of American families.”

There is zero evidence that the loans described by Calomiris and Haber ever existed. From 2001 through 2006, GSE originations that had loan-to-value (LTV) ratios of 95 percent or higher and FICO scores of 639 or lower represented between 1 and 2 percent of total originations. According to GSE credit guidelines, those borrowers had characteristics that disallowed any kind of reduced documentation, much less no documentation or employment.

Fannie and Freddie could not, by law, assume the primary credit risk on any mortgage with an LTV in excess of 80 percent. If a loan had an LTV higher than 80 percent, then the first loss was covered by private mortgage insurance. In addition, the GSEs’ policies prevented them from assuming 80 percent credit exposure on high-LTV loans. So, for example, if Fannie booked a loan had an LTV of 97 percent, the minimum insurance coverage would be 35 percent, so that Fannie’s net risk exposure would be no more than 62 percent of the LTV. The data is very clear that homes financed by the GSEs never experienced the steep rise, or drop, in prices that was measured by the Case-Shiller composite (see page 90).

In other words, the amount of low-down-payment loans available in the marketplace was never decided by the GSEs. It was decided by private mortgage insurers, which were not regulated by the federal government.

Business Models: The Difference Between Originate-to-Distribute and Buy-and-Hold

Calomiris and Haber blur commercial banks with non-banks and the GSEs, and they conflate GSE mortgage securities with private label mortgage securities and their progeny, throughout their text. Private label mortgage securities transfer credit risk and interest rate risk from the underwriting bank to the bondholders, whereas GSE mortgage securities do not transfer credit risk, only interest rate risk. All GSE mortgage bonds benefited from unconditional corporate guarantees.

Moreover, the financial meltdown of September 2008 was not triggered by bank failures; it was triggered by the failures of non-banks and by the unforeseen consequences of derivatives. The government had a clear legal path and precedent for dealing with bank failures like Wachovia, Washington Mutual, and IndyMac. But it had no clear path and no precedent for dealing with the imminent collapse of Lehman Brothers and AIG. This uncertainty about the fate of non-banks, which included the non-bank subsidiaries of bank holding companies, rocked the financial markets after Lehman filed for bankruptcy on September 15, 2008.

Remember that time everyone had to suddenly memorize all the financial acronyms? If you read about the financial crisis, you should know about CDOs (collateralized debt obligations); and about CDS (credit default swaps); and the initials MBS, which generally refer to the private label mortgage-backed securitizations, where most credit losses resided. Just one more serving of alphabet soup: CDS collapsed AIG, and CDO collapsed Citigroup, Merrill Lynch, UBS, MBIA and AMAC. Fannie and Freddie had nothing to do with CDOs and CDS.

Fannie and Freddie did hold large amounts of their own securities, but again, it made no difference whether they sold or held them, because their credit risk exposure never changed, and those holdings had nothing to do with regulatory capital. And the GSEs did hold about $225 billion of the most senior tranches of private mortgage securities. Court filings and settlements indicate that most of the losses were caused by fraud.

When the GSEs were taken over by the government in September 2008, Fannie’s serious delinquency rate was 1.36 percent, well below levels seen in the mid-1980s. And Freddie’s serious delinquency rate, 0.93 percent, was lower than the lowest national average ever recorded by the Mortgage Bankers Association. According to the MBA, the nationwide serious delinquency rate as of June 30, 2008 was 4.5 percent. For subprime mortgages it was almost 18 percent. Again, in terms of loan performance, the GSEs were in a class by themselves.

The Premise of The Big Lie

There’s only one reason why The Big Lie seemed so plausible to so many people. The polite word for it is social stereotyping. Affordable housing goals are set for “Central Cities, Rural Areas and Other Underserved Areas.” These goals target “low and moderate income borrowers.” A Financial Times columnist translates this into “the government’s euphemism for ethnic minority neighbourhoods.”

Calomiris and Haber do the same. They scrub away references to anything rural or to moderate-income borrowers. “At the core of this bargain was a coalition of two very unlikely partners: rapidly growing megabanks and activist groups that promoted expansion of risky mortgage lending to poor and intercity borrowers, such as the Association of Community Organizations for Reform Now (ACORN),” they write. They reference ACORN 11 times.

The book’s broader narrative about U.S. banking is framed around an urban/rural divide. Prior to the 1990s, the farmers in rural states were suspicious of nationwide banking that would concentrate economic power in the money centers of the Northeast. (The authors sidestep the impact of the National Banking system and the absence of a central bank until 1913.) Calomiris and Haber contrive another urban/rural divide to explain the CRA and affordable housing goals. This was the core of a “grand bargain” that favored a key constituency of the Democratic Party, the urban poor and urban activists like ACORN, at the expense of Republican constituencies in rural areas.

If you go in for that kind of stuff, then it makes perfect sense that any government program intended to benefit low-income people must corrupt the free marketplace and eventually create a financial disaster. Who needs empirical data to prove that? This kind of fact-free analysis, a staple of cable TV and certain media outlets, has become pervasive. But it has no place in a legitimate business setting or university setting. Determining whether or not a loan’s terms match “the market,” a much more useful debate, involves a very detailed analysis of the borrower and the loan product, which is way beyond the ken of Calomiris and Haber.

There is no evidence that CRA goals ever represented a material hurdle towards attaining regulatory approval of the large bank mergers in the 1990s. Of the 13,500 applications submitted to Fed, only 25 were denied, with eight being denied because of “unsatisfactory consumer protection or community reinvestment issues.” The GSEs, however, were subject to ability-to-repay regulations and other anti-predatory constraints put in place in 2000.

The irony is rich. This private label securitization system was built over decades, and at every step of the expansion of this predatory and abusive lending system conservative economists were there lending support. Calomiris in particular was an active participant, fighting against any prohibition against single premium credit insurance, opposing prohibitions on loans based on housing collateral that disregarded a borrower’s ability to repay, and writing in 1999 that 125 percent LTV lending was no big deal.

After skyrocketing in size and scope before the crisis, the securitization of the housing market is now dead. There’s debate on whether it can ever come back to life. As we discuss what the future of housing finance and the financial sector looks like, there needs to be a real accounting for what has happened in the past. Sadly, a group of elite academics are more dedicated to confusion and playing up innuendo than actual analysis and the truth.

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Daily Digest - September 19: This Bus Doesn't Stop for Big Money

Sep 19, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Catholic Nuns Take On Dark Money In Politics With Nationwide Bus Tour (ThinkProgress)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Catholic Nuns Take On Dark Money In Politics With Nationwide Bus Tour (ThinkProgress)

Sister Simone Campbell, the 2013 FDR Four Freedoms Awards laureate for Freedom of Worship, is leading a new Nuns on the Bus tour, this time focused on disenfranchised voters, writes Jack Jenkins.

Tenants Facing Eviction in Era of Skyrocketing Rents Need Legal Assistance (TAP)

Martha Bergmark emphasizes the need to support legal aid programs, noting that legal representation doubles tenants' chances of staying in their homes when fighting eviction.

Workers Deserve to Benefit from Their Productivity, Too (WaPo)

Harold Meyerson says newly proposed legislation from Rep. Chris Van Hollen that ties the performance pay tax deduction to workers' wage increases is necessary to ensure a fair deal for workers.

  • Roosevelt Take: Roosevelt Institute Fellow Susan Holmberg and Campus Network alumna Lydia Austin look at the broader problems with the performance pay provision in the tax code.

Does Silicon Valley Have a Contract-Worker Problem? (NY Mag)

Kevin Roose dives deep into the so-called "1099 Economy," in which start-ups have independent contractors galore, many of whom may legally qualify as employees.

Demonizing the Minimum Wage (New Yorker)

William Finnegan looks at the range of statements against raising the minimum wage, which consistently misrepresent minimum wage workers. They aren't just teenagers with after-school jobs.

New Republican Bill Would Paralyze National Labor Relations Board (In These Times)

Bruce Vail explains why and how the Republicans are aiming to gridlock the National Labor Relations Board, a goal that he says is primarily based in anti-union, anti-worker bias.

Tax Cuts Can Do More Harm Than Good (AJAM)

David Cay Johnston looks at a new report on tax cuts, which shows that short-term economic growth aside, badly structured tax cuts just push costs to the future and can incentivize bad investments.

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Daily Digest - August 25: The Mortgage Crisis, Act 2

Aug 25, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

You Thought the Mortgage Crisis Was Over? It's About to Flare Up Again (TNR)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

You Thought the Mortgage Crisis Was Over? It's About to Flare Up Again (TNR)

With a large number of mortgage relief measures scheduled to end in the coming year, David Dayen says that many foreclosures will seem as though they were only deferred from 2008.

Why the Robots Might Not Take Our Jobs After All: They Lack Common Sense (NYT)

Neil Irwin reports on MIT labor scholar David Autor's new paper, which argues that robots can't handle common-sense decision making, so they'll only be able to replace certain kinds of jobs.

  • Roosevelt Take: Autor presented a version of this scenario in his video speculation for the Next American Economy project.

Middle Class is Excluded from America's Economic 'Recovery' (The Guardian)

Heidi Moore points out that the recovery isn't much of one for most Americans, and the economists who gathered in Jackson Hole this weekend can't do much to fix that.

Fed Chair Cautious on Timing of Rate Rises, Questions Health of Job Market (AJAM)

Janet Yellen's first speech at the Jackson Hole conference defended her approach, arguing that caution is still needed because the long-term effects of the recession aren't yet clear.

Could America Accept Another FDR? (WaPo)

Fred Hiatt wonders whether modern political discourse and journalism would permit another person like Franklin D. Roosevelt, with his illness and complicated family, to make it to the White House.

Middle Class Households' Wealth Fell 35 Percent from 2005 to 2011 (Vox)

Danielle Kurtzleben reports on new data from the Census Bureau, which shows a dramatic change in U.S. households' net worth, particularly for the bottom three quintiles.

New on Next New Deal

The Ferguson Challenge to the Libertarians

Roosevelt Institute Fellow Mike Konczal says the profit-motivated criminal justice system in Ferguson, heavy on court fees and fines, looks a lot like the libertarian ideal of privatization – and it isn't working.

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Daily Digest - August 22: Sunshine the Cure for Tax Avoidance?

Aug 22, 2014Rachel Goldfarb

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Shareholders, Public Deserve Tax Transparency (WaPo)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Shareholders, Public Deserve Tax Transparency (WaPo)

Catherine Rampell argues that requiring publicly traded companies to make their tax returns public would cause companies, over time, to invest fewer resources in tax avoidance.

Homeowner Help Remains Elusive in $16.5bn Bank of America Fine (The Guardian)

David Dayen says homeowners shouldn't count on relief from bank settlements: banks will choose to "pay" as much of the penalty as permitted without helping homeowners.

Injustice in Ferguson, Long Before Michael Brown (Bloomberg Businessweek)

Peter Coy looks at how the frequently racist origins of the St. Louis area's municipal fragmentation created the inequalities that people in Ferguson are protesting today.

How a Part-Time Pay Penalty Hits Working Mothers (NYT)

Claire Cain Miller looks at a new analysis from Harvard economist Claudia Goldin, which shows that across the board, working fewer hours leads to a lower wage in the same job.

Obama Alums Accused of Selling Out (MSNBC)

Many Democrats are particularly concerned by influential Obama campaign staff working in roles that are not supportive of unions, writes Alex Seitz-Ward.

Low-Paid Jobs Now Pay Even Worse Than Before The Recovery Began (ThinkProgress)

Bryce Covert writes that the worst of the declining wages lie in particular sectors like food service, home and care workers, and retail, which employ many low-wage workers.

New on Next New Deal

Campus Network Looks Ahead for Policy Engagement

Roosevelt Institute | Campus Network National Director Joelle Gamble considers the Network's nine years of successes, and lays out some of the goals for the year ahead.

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Daily Digest - July 25: The Bad Science Behind the Anti-Woman Agenda

Jul 25, 2014Rachel Goldfarb

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Debunking the Bad Science on Abortion and Women's Health (The Hill)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Debunking the Bad Science on Abortion and Women's Health (The Hill)

Roosevelt Institute Fellow Andrea Flynn explains the truth behind the anti-abortion myths that are presented as fact by lawmakers who pass legislation that harms women's health.

Setting the Table for Housing Reform (Progressive Massachusetts)

Alex Lessin summarizes Roosevelt Institute | Boston's deep dive into housing policy, which led them to focus on increasing public participation at zoning meetings as a key step for fair housing.

Some Republicans Push Compassionate, Anti-Poverty Agenda Ahead of 2016 Contest (WaPo)

Zachary Goldfarb speaks to Roosevelt Institute Fellow Mike Konczal, who says many of these Republican reform ideas only put a nicer spin on radical proposals like the Ryan budget plan.

Parts of Paul Ryan's Poverty Plan Even a Liberal Can Love (U.S. News & World Report)

Fixing mandatory minimum sentencing guidelines and limiting unnecessary professional licensing in some occupations are opportunities for bipartisan agreement, writes Pat Garofalo.

United Airlines' Outsourcing Jobs to Company That Pays Near-Poverty Wages Is Shameful (HuffPo)

Robert Creamer decries United for eliminating hundreds of middle-class jobs for the sake of financial performance. He writes that companies can't be permitted to put stock performance ahead of people.

Forget Too Big to Fail. Banks Bro-down to Borrow, and It May Cause a New Crash (The Guardian)

Heidi Moore calls on regulators to push new requirements on banks for their short-term lending, which she sees as a key piece of financial regulation to keep banks from failing.

New on Next New Deal

White House Summit Speakers: Look Beyond Congress for Action on Working Families

With Congress in gridlock, Julius Goldberg-Lewis, Midwest Regional Coordinator for Roosevelt Institute | Campus Network, praises the White House Summit on Working Families' focus on states and businesses.

Big Data is Watching You

In his speculation on the future for the Next American Economy initiative, Mike Mathieu, founder of high-tech business incubator Front Seat, says data-mining is coming for the human brain.

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Daily Digest - July 11: Public Internet Infrastructure Provides a Link to the Future

Jul 11, 2014Rachel Goldfarb

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Government Should Invest in Fiber Optics (NYT)

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Government Should Invest in Fiber Optics (NYT)

Roosevelt Institute Fellow Susan Crawford writes that U.S. cities can increase competition and expand affordable high-speed Internet access to all residents by building municipal fiber networks.

Gap Between Minimum Wage and Tipped Wage Hits Record High (MSNBC)

Tipped workers make a much lower median wage, reports Ned Resnikoff, and tipped workers face a poverty rate twice that of other workers.

Fannie-Freddie Propose Liquidity Rules for Mortgage Insurers (Bloomberg)

Zachary Tracer and Clea Benson explain newly proposed capital requirements for mortgage insurers, which would demand that they hold a greater amount of liquid assets against their risk exposure.

The Verdict is in: Obamacare Lowers Uninsured (Politico)

The trend is unmistakable, writes David Nather: millions have newly obtained insurance thanks to the Affordable Care Act. Even those who oppose the law can't find anything bad to say about that.

Right-Wing “Populism” is a Joke: Poor-Bashing, Immigrant-Hating and a Revolting Agenda (Salon)

Heather Digby Parton explains how right-wing populism, which places blame for economic problems on "economic parasites," pushes policies that don't help the right's supposed base.

Losing Sparta: The Bitter Truth Behind the Gospel of Productivity (VQR)

Esther Kaplan looks at the closure of one highly productive, award-winning lighting fixture plant in Sparta, Tennessee to explain why productivity isn't enough to improve the economy.

A $13 Minimum Wage Isn’t Enough (In These Times)

Carlos Ballesteros says that organizers in Chicago want a union no matter the minimum wage increase they obtain, because they will still need consistent hours and scheduling.

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