Write Down the 11 Million
We’re entering the 99 percent spring, with escalating actions starting across the country next Tuesday targeting America’s biggest tax dodgers. On April 24, shareholder actions will begin at General Electric, Wells Fargo, Bank of America, and dozens of other corporations. Americans are renewing the fight to fix our economy and to hold the big banks accountable for the misdeeds that have left millions out of work and out of homes.
Last month in The Nation, I wrote about three issues that allow us to thread different strands of activity through a common analysis of how Wall Street, big banks, and corporations have profited by tanking and then reorganizing the economy: housing, student debt, and the devaluing of work.
Of those three issues, the bravest activists—and the highest stakes—may be found in the housing crisis. Right now in America there are nearly 11 million homeowners who are threatened by foreclosure or are underwater—11 million—who collectively hold nearly $800 billion in negative home equity. In communities of color, overall wealth has been stripped by 60 percent since 2008—largely a consequence of the devastation of the housing market.
These 11 million are struggling, and they are in a lot of trouble. But they also understand what is going on in the economy and are politically aware; they know how they got here; and they’re leading the battle to save their communities. Through the “Occupy Our Homes” movement, some are refusing to leave their homes, nonviolently resisting foreclosure with the help of Occupy, community groups, and religious leaders.
Nationally, coalitions like New Bottom Line and the Campaign for a Fair Settlement are pushing a broad-based campaign to reduce mortgage principals to fair market value, giving the 11 million a fighting chance. By and large, the 11 million worked hard, played by the rules, and through the actions of the banks are now drowning in debt. That negative equity is holding back a true recovery for all Americans, so it should be in everyone’s interest to do large-scale principal reduction. But not surprisingly, the same banks that got us in this mess are resisting.
Several of the big banks agreed to a $25 billion settlement with the attorneys general in February. The settlement opened the door to principal reduction, for some but it’s not nearly enough—and the banks' claim that they can’t afford more is laughable.
Six states are already diverting funds that were meant for underwater homeowners into their general funds, turning their back on homeowners who were guaranteed help. Along with Wisconsin's Scott Walker, Chris Christie was the latest to turn the trick, abandoning thousands of homeowners in New Jersey.
The initial AG settlement doesn’t even address the 60 percent of homeowners whose mortgages are owned by Fannie Mae and Freddie Mac. So far, Fannie and Freddie have refused any principal write-downs—even though it will save taxpayers money in the long run.
That brings us back to the 11 million families who are standing up and increasingly sitting in to defend their homes and communities. In addition to joining growing protests demanding principal write downs, they are going to start asking politicians, "which side are you on? Banks, or ours?"
Two months ago, POLITICO reported that foreclosures could become a “swing state issue.” In states like Florida, Pennsylvania, Nevada, Ohio and Michigan—where tens of thousands of homeowners are looking for leaders to make some sense of the last five years—the “homeowner at risk” could well be the “soccer mom” of 2012, a group that demands attention, and will vote accordingly.
Political leaders, including the Obama administration, have a clear choice and can do the right thing for homeowners by helping to force a serious second settlement. The choice isn’t hard at all: Many economists believe a second settlement is needed to bolster the housing market and the overall recovery, so in this case the right thing is a win-win for the White House.
As we ready for the 99 percent Spring, there is a simple demand that should increasingly serve as a rallying cry: $300 billion or more from the banks to reduce mortgage principals to fair market value, as a way to lean into the recovery and help America’s underwater homeowners, their neighbors, and their communities.
If underwater homeowners unite, in real numbers, and if the protesters stand with them, we can force the banks, Fannie and Freddie, and politicians to do the right thing. A first step in holding banks accountable, rebalancing the economy, and repairing a democracy threatened by the outsize influence of Wall Street and big banks.
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