Perdido 03

Perdido 03

Saturday, May 22, 2010

Obama Plans To Sell Off Public Housing To Developers And Banks

Jesus, it just gets worse:

The Obama Administration’s move to the right is about to give conservatives a victory they could not have anticipated, even under Bush. HUD, under Obama, submitted legislation called PETRA to Congress that would result in the privatization of all public housing in America.

The new owners would charge ten percent above market rates to impoverished tenants, money that would be mostly paid by the US government (you and me, the taxpayers). To maintain the property, the new owners would take out a mortgage for building repair and maintenance (like a home equity loan), with no cap on interest rates.

With rents set above market rates, the mortgage risk would be attractive to banks. Either they make a huge profit on the mortgages paid for by the government. Or if the government lowers what it will pay for rents, the property goes into foreclosure. The banks get it and can sell it off to developers.

Sooner or later, the housing budget will be cut back and such foreclosures will happen. The structure of the proposal and the realities of Washington make it a virtual certainty.

The banks and developers make a fortune, with the taxpayers paying for it. The public loses its public housing property. The impoverished tenants lose their apartments, or have their rents go way up if they are forced into the private market. Homelessness increases. Government gets smaller. The banks and developers win. It is a Bank Bonanza! The poor and the public lose.

Wow - just like he's sold off public education to the for-profit school corporations, public housing now goes to banks and real estate developers.

As Juan Gonzalez covered in yesterday's New York Daily News, turning over subsidized housing to banks and developers (which he calls "predatory investors") leads to really, really bad outcomes for the tenants:

Like many New Yorkers, retired railroad engineer Hilary Saunders lived for decades in a rent-stabilized Mitchell-Lama apartment - a place a working-class guy like him could afford.

It was in Schomburg Plaza, two East Harlem high-rises that overlook Central Park.

But these days, Saunders and 4,000 other tenants at Schomburg and several other former Manhattan Mitchell-Lama developments are battling to keep their homes affordable. They are victims, they claim, of a "predatory investor," one of many that swept through the city during the housing bubble.

Such investors gobbled up hundreds of rent-stabilized buildings with big money from Wall Street, then tried to force out old tenants and drive up rents. Then the housing market crashed many owners can't meet their heavy debt load.

Tenants say their landlord, New Jersey-based Urban American Management, is so deep in debt it's trying to suck them dry.

The firm, backed by a Morgan Stanley-created investment fund, paid $918 million for the properties in 2007 at the height of the housing bubble. That was three times what the buildings had sold for only two years earlier.

"We're tired of being treated like second-class citizens in our own building," Saunders said Thursday. He and other tenants met with city Controller John Liu and other elected officials Thursday to plead for help.

"The new tenants get new kitchen cabinets, granite countertops, wood floors," Saunders said. "We get nothing new, and maintenance keeps getting worse."

Then there are the huge electric bills. Most of the developments use electricity for heating and power. Under prior owners, heating and electric were included in the total rent bill.

More than a year ago, Urban American installed separate meters for every apartment and started charging for electricity.

"Tenants were suddenly hit with electric bills of from $400 to as much as $1,000 a month," said Dina Levy, head of organizing at the Urban Homesteading Assistance Board.

Exactly what is happening at Schomburg will happen everywhere if Obama gets his way.

Every week brings a new outrage from this corporatist.

Bush/Cheney never dreamed of privatizing public housing and public education.

But Obama does.

And just wait until he gets his hands on Social Security.

That's next on his list of Change We Can Believe In.

He's packed his "debt commission" with a bunch of Social Security privatizers and he keeps saying "every option is on the table."

You can bet he will do some serious damage to that program.

Apparently there is no problem that Obama does not think can be solved by privatizing it.

How's that working in the gulf?


  1. Just imagine how the real estate vultures are salivating at the thought of sinking their fangs into the Riis and Smith Houses along the East River in Lower Manhattan.

    People must understand that privatization - or Structural Adjustment Programs, as they were comprehensively implemented by the IMF when they insisted on destroying the civil service, retirement systems and public sectors of developing countries that were ensnared in credit crises - is what Obama was hired to do. That and forever neutralize black politics.

    Just as a Republican was needed to open up trade with China, a Democrat is needed to destroy the teacher unions, privatize the schools and cut back Social Security and Medicare.

    It's nothing personal, it's just Business.