Cars and Parts Springfield Swap Meet
Carroll Commencement
Fairborn commencement
Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > March > 06
Friday, March 6, 2009
Ellen Belcher: Community organizers had it right
When Barack Obama was running for president, some opponents dismissed his experience as a community organizer, questioning the value or importance of that work.
Besides the fact that community organizers now have one of their own in the White House, there’s another reason these folks who work on the street, trying to help families and neighborhoods, are looking pretty smart these days.
With a very few regulators and even fewer honorable Wall Street money-changers, they were among the first to predict that the predatory lending that was decimating neighborhoods was going to bring down more than poor families.
Community organizers saw that subprime lenders weren’t just ripping off gullible, low-income consumers. They understood that bad loans that were never going to be repaid were being bundled and bought by investors — from banks to hedge funds to your pension fund — who had no idea what they were purchasing.
They knew those “toxic assets” that Washington now wants to put in a “bad bank” — what great oxymorons — were based on inflated appraisals that encouraged people to use the equity in their homes as if it were a pot of gold.
Community organizers don’t often have degrees in high finance, but they did recognize a house of cards.
Some of them tried to blow the whistle by documenting the scale of what was happening in neighborhoods. But they were dismissed.
In 2004, Jim McCarthy, the head of the Miami Valley Fair Housing Center, gave a briefing on predatory lending in Dayton to U.S. Rep. Michael Oxley, then chair of the House Financial Services Committee. At the behest of U.S. Rep. Mike Turner, he and others argued that lenders’ financial model wasn’t sustainable and that big institutions were going to get creamed.
More recently, Turner has asked McCarthy if he feels like an “oracle.”
Turner, incidentally, was one of just seven Republicans in the U.S. House of Representatives to vote last week for legislation that would give bankruptcy judges so-called “cram down” authority to rewrite the terms of mortgage loans, including reducing principal or extending the life of the mortgage.
Lenders complain that the option would encourage people not to pay their mortgages and to file for bankruptcy, thereby driving up costs for responsible borrowers.
Supporters of the idea, however, argue that until the foreclosure crisis is dealt with, the economy will keep reeling. Moreover, they note that bankruptcy judges already can reduce the principal for loans on commercial property, second homes, cars and boats, so why not for primary residences if that’s what it takes to stop the real estate slide?
Because of Montgomery County’s huge number of foreclosures — it and Cleveland have been among the hardest hit areas in the state— Dayton has developed some genuine authorities on the subject. Turner has had McCarthy testify before Congress twice. McCarthy points to others who’ve worked tirelessly, including Stan Hirtle of Advocates for Basic Legal Equality; Beth Deutscher, of the HomeOwnership Center of Greater Dayton; attorney Charles Roedersheimer; and Richard Stock, of the University of Dayton’s Business Research Group.
At the state level, Bill Faith at the Coalition on Homelessness and Housing in Ohio has trenchantly exposed Republican and Democratic ignorance on the depth and implications of the foreclosure crisis in Ohio.
Aided by these people and others, Democratic state Rep. Mike Foley, of the Cleveland area (and a UD grad), is proposing legislation that would mandate a six-month time-out on foreclosures in the state and give common pleas judges “cram down” authority when considering foreclosures. (The federal legislation applies to bankruptcy judges.)
While his proposal is controversial and raises prickly constitutional questions, the contrast between the Ohio Bankers League testimony on the bill and that of Paul Bellamy, who directs the Cuyahoga County Foreclosure Prevention Program, was stunning.
The bankers have no suggestions about what to do. They just know what’s wrong with others’ ideas and point to the laws Ohio already has to regulate lenders. But if they worked, we wouldn’t be in this mess.
Bellamy’s chronicle of how the process is stacked to force foreclosure even when it’s not in a lender’s financial interest — though servicers of loans make out — is a case study in craziness.
Lest anyone think Bellamy is just a liberal community organizer on an ideological toot, he cites a speech by Federal Reserve Chairman Ben Bernanke, in which Bernanke says pretty much the same thing.
In the words of Bellamy, Ohio is in a “wealth-destroying crisis of unprecedented proportions.”
Lenders got us where we are. Maybe the community organizers can help get us out.
Permalink | Comments (7) | Post your comment | Categories: Columns, Ellen Belcher, National Politics, Ohio politics, Predatory lending
Editorial: Cutting Delphi retirees’ benefits has its costs
The New York bankruptcy judge who ruled last week that Delphi could stop paying health benefits and life-insurance premiums for 15,000 white-collar retirees didn’t invent that cost-cutting move. Many companies that are not in bankruptcy have stopped providing this benefit.
A survey of big companies last fall found that just 31 percent of businesses that offered health care coverage to employees offered it to retirees. In 1988, that number was 66 percent of large firms.
Knowing that others are in the same boat is scant consolation to the families who are trying to figure out how they’ll be able to afford health insurance until they become Medicare-eligible.
The issue for U.S. Bankruptcy Judge Robert Drain was whether Delphi could afford this expense. In light of Delphi’s awful balance sheet, it didn’t take much to persuade him that the auto supplier had no choice but to cancel the coverage.
“It is crystal clear to me that the debtor is well within its business judgment in assuming that it will need to eliminate the projected (post-retirement benefits) liability, which is projected at $1.1 billion, in order to reorganize,” he said in his ruling.
Since the company filed for bankruptcy protection in 2005, it has been hemorrhaging money. Delphi has lost more than $12 billion, even though it has closed 21 of its 29 U.S. factories, cut its hourly work force almost by half and its salaried employees by almost 40 percent.
Looked at one way, the company’s first reaction was not to renege on commitments to its retirees. That’s partially because, not long ago, the $70 million annual cost of the benefit wasn’t eye-catching; there were much, much bigger problems. But now, with the company so much smaller and still looking to save because the auto industry is so stressed, the spending sticks out.
Though Delphi has negotiated cuts in benefits for retired union workers, it didn’t have to go through that process for retirees who were salaried. Undoubtedly salaried workers are probably feeling bitter that they accepted the uncertainty of being in management in their working careers, and, now in retirement, they’re absorbing a burden that union workers have been spared.
The judge’s decision will have impact locally. It’s hard to say how many retirees here aren’t yet Medicare-eligible. But for those families, the financial shock is big. The cost of their insurance could be more than $1,000 a month for a retiree and a spouse. For some, finding a less expensive plan will be impossible because of pre-existing conditions.
Delphi certainly hasn’t been alone in encouraging workers to take early retirement, and, until the economic meltdown, that option was one some people wanted to grab. But with people’s retirement savings being ripped apart, with housing values (and thus home equity) falling, and with companies being able to change the terms of retirement packages, workers are going to be increasingly inclined to play it safe and stay on the job. You can’t blame them.
One consequence is that it’s going to be harder to trim payrolls the easy way, by asking for volunteers.
Permalink | Comments (3) | Post your comment | Categories: Auto industry, Economy, Editorials, Ellen Belcher
Editorial: Springboro is still waiting on school aid
This is the definition of crazy: Financial constraints are forcing a fast-growing local school district to close an elementary school that it knows it will be forced to reopen within three years.
If Gov. Ted Strickland’s proposed school funding reform can’t help avoid this problem, then the overhaul won’t be complete.
On the first day of school last fall, enrollment in Springboro grew by 270 students, or about 5 percent annual growth for the 5,500-student district. That sort of influx has been typical for the past several years.
Even with the slow economy, the young families that have already moved to this high-performing suburban district will send a flood of new kids to school during the next three years. An informal survey of local preschools and day care centers that the district conducted showed as many as 475 kids would be old enough to attend kindergarten in the district next year.
For a decade, Springboro has been trying to get out ahead of its rapid growth. When it built schools, it built them large enough to be ready for the influx. But, right now, the focus is not on construction, but on an immediate financial crisis.
Voters have rejected three requests to pass a levy for new operating money. The district is trying again in May, with a scaled-down 4.1-mill proposal (the previous try would have grown to 5.9 mills). Meanwhile, the district has pared its way to a balanced budget.
It also has undergone a “performance audit” by Ohio Auditor Mary Taylor’s office, designed to bring in outside eyes to look for efficiencies. That report is not done, but Superintendent David Baker said he has gotten some early feedback.
The suggestion: Close a school.
Auditors looked at the capacity of the buildings and argued that there is enough space at other schools to absorb students from one closed elementary school, achieving a significant savings for now.
Even with that savings, though, more cuts will be needed if the May levy fails. There also will be higher fees to participate in extracurricular activities, as well as reduced busing. This gets the district through the crisis of the moment, but it also means Dennis Elementary School will be 100 children over the design capacity, with 1,200 students next year.
Wealthy Springboro is one of the area’s best performing school districts, ranked “excellent with distinction” on its state report card. But with class size expected to creep near 30 in some rooms, the district’s ability to deliver that level of quality is endangered.
This situation is not unique to Springboro. Nearby Centerville, another high performer, also is trying again for a levy in May. And the pattern is familiar to those who recall past recessions. When money gets tight, even the best regarded schools have trouble passing levies.
Gov. Strickland says his school funding overhaul should keep districts from having to return to the ballot every two or three years just to keep operating at the same level. But when state aid projections for the governor’s plan came out, there was no sign of any big change in the way many districts — Springboro and Centerville among them — would be funded.
Gov. Strickland deserves credit for making a real run at school funding reform. But his plan’s key flaw is that the underlying fundamentals of the property tax-based system are not significantly changed. And for too many districts, that means actions that would otherwise seem crazy end up making sense. There’s something wrong with that.
Permalink | Comments (7) | Post your comment | Categories: Editorials, Education, Scott Elliott, Suburban Communities
