Housing https://www.morningsidecenter.org/ en The Rise of Multigenerational Living https://www.morningsidecenter.org/teachable-moment/lessons/rise-multigenerational-living <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>The Rise of Multigenerational Living</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong>To the Teacher</strong></p> <p>Roughly one in four young adults between the ages of 25 and 34 are now <a href="https://www.cnbc.com/2022/08/19/more-americans-live-in-multi-generational-households-to-save-money.html">living</a> with their parents or grandparents, a figure that has nearly quadrupled since 1971.</p> <p>In this lesson, students read about and discuss the challenging economic conditions that have pushed many young people to live with their older relatives. In a second reading, they explore some of the positive and negative aspects of multigenerational living.</p> <p>&nbsp;</p> <!-- THEME DEBUG --> <!-- THEME HOOK: 'filter_caption' --> <!-- BEGIN OUTPUT from 'core/modules/filter/templates/filter-caption.html.twig' --> <figure role="group"> <img alt="Student Debt Protest" data-entity-type="file" data-entity-uuid="c762d0a1-8edc-47a6-9954-5deeea0dfbd0" src="/sites/default/files/inline-images/student%20debt%20protest%202022.jpg" width="2048" height="1548" loading="lazy"> <figcaption><em>Student debt is one reason more young adults are living with their parents. 2022</em>&nbsp;s<em>tudent debt protest, by&nbsp;<a href="https://www.flickr.com/photos/aaup/52220667419">Mike Ferguson/AAUP</a></em></figcaption> </figure> <!-- END OUTPUT from 'core/modules/filter/templates/filter-caption.html.twig' --> <hr> <h3><br> <strong>Introduction</strong></h3> <p>Ask students to share their responses to these prompts:</p> <ul> <li>What do you think are the advantages of young adults (people in their twenties and thirties) living with their parents or other older relatives?</li> </ul> <ul> <li>What are the disadvantages?</li> </ul> <ul> <li>Do you think the number of young adults living with older family members is increasing or decreasing? Why do you think this is happening?</li> </ul> <p>Tell students that more and more young adults are living with older family members. Today we’ll read about why this happening, and consider the upsides and some downsides of multigenerational living.</p> <hr> <p><br> <strong>Reading One</strong></p> <h3><strong>Why Are So Many Young People Now Living with Older Relatives?</strong></h3> <p><a href="https://www.morningsidecenter.org/sites/default/files/documents-pdfs/Multigenerational%20Living%20Handout.pdf"><strong><em>pdf version</em></strong></a><br> <br> <br> Roughly one in four young adults between the ages of 25 and 34 are now <a href="https://www.cnbc.com/2022/08/19/more-americans-live-in-multi-generational-households-to-save-money.html">living</a> with their parents or grandparents, a figure that has nearly quadrupled since 1971 when that data first started being collected.</p> <p>The trend has grown steadily over several decades, although the Covid pandemic greatly escalated it. Nearly a third of millennials and Gen Zers <a href="https://www.lendingtree.com/home/mortgage/living-with-parents-survey/">moved</a> back home during the pandemic, and two-thirds of those young adults remain at home with their parents today.</p> <p>In no small part, this is the result of rising housing prices, deepening student debt, and stagnant wages that have constrained young peoples’ living opportunities and driven them to live with their parents – regardless of how well they get along as a family.</p> <div> <p>A 2022 survey from the Pew Research Center <a href="https://www.pewresearch.org/social-trends/2022/03/24/financial-issues-top-the-list-of-reasons-u-s-adults-live-in-multigenerational-homes/">found</a> that financial issues were the most common major reason for why adults choose to live in multigenerational households, with results varying across income levels. “[L]ower-income adults,” the report explained, “are more likely to say the living arrangement helps them financially: 50% say it does at least a little, compared with 36% of middle-income adults and 24% of upper-income adults.”</p> <p>In a June 2022 analysis for Marketplace, reporter Janet Nguyen <a href="https://www.marketplace.org/2022/08/17/money-and-millennials-the-cost-of-living-in-2022-vs-1972/">compared</a> the cost of living for young adults from 1972 to 2022 as a way of explaining this shift towards multigenerational living. Nguyen wrote:</p> </div> <blockquote> <p>Many young adults grew up hearing stories about their parents purchasing their first home while they were in their 20s.</p> <p>But for a lot of millennials these days, that seems like a fantasy.</p> <p>Young adults, many burdened by financial struggles, are now living with their folks at a higher rate than people of their age did 50 years ago….</p> <p>Young adults face rising student debt and housing costs on top of the inflation that reached unnerving levels over the past year. Consumer prices <a href="https://www.marketplace.org/2022/07/13/what-does-broad-based-inflation-look-like-down-the-road/">jumped 9.1%</a> annually in June, the highest rate in 40 years, although there are signs inflation is cooling down….</p> <div> <p>To make matters worse, Americans’ wages have stagnated since the 1970s, with worker productivity <a href="https://www.epi.org/productivity-pay-gap/">growing three times more than pay.</a><br> &nbsp;</p> </div> </blockquote> <p>Nguyen compared the cost of home ownership now, versus in 1972. She also compared the cost of college now, versus what might have been expected in 1972:</p> <blockquote> <p><strong>Median cost of a home</strong> (in inflation-adjusted dollars)<br> 1972: $189,500<br> 2022: $440,300</p> <p><strong>Cost of college per year</strong> (in inflation-adjusted dollars)<br> 1971-72:&nbsp;&nbsp;$10,000 (public four-year college);&nbsp;$20,700 (private nonprofit four-year college)<br> 2021-22:&nbsp; &nbsp;$24,600 (public four-year college);&nbsp;$56,100 (private nonprofit four-year college)</p> </blockquote> <p>Nguyen writes that almost <a href="https://www.lendingtree.com/home/mortgage/homeownership-renting-survey/">half of renters</a> think they will never be able to own a home, largely because of the inability to afford a down payment. According to Diane Yentel, the president and CEO of the National Low Income Housing Coalition, “When housing becomes too expensive, people rent for longer periods, which in turn drives up the rent for everyone.”</p> <div> <p>&nbsp;As for the cost of tuition, Nguyen writes: “Climbing costs have <a href="https://www.marketplace.org/2022/03/15/the-jurys-still-out-on-that-1-6-trillion-in-student-loan-debt/">saddled millions with student debt</a> that they struggle to pay off after graduating from college, forcing many to postpone or abandon their hopes of purchasing a home or starting a family. On top of rising costs, graduates deal with <a href="https://www.marketplace.org/2021/02/26/why-is-there-so-much-resistance-to-forgiving-50000-in-student-debt/">accruing interest on their loans</a>.”</p> <p>Nguyen also notes that the cost of buying a new car has nearly doubled in the same timeframe and out-of-pocket medical costs have also increased significantly.</p> <p>Student loan debts have been an especially weighty burden for young people. A 2021 report from the National Association of Realtors <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-the-impact-of-student-loan-debt-full-report-09-14-2021.pdf">found</a> that a majority of student loan borrowers were holding off on moving out of a parent’s home or buying a home of their own because of student debt.</p> <p>Writing for <em>Business Insider</em> in September 2021, economic reporters Ayelet Sheffey and Hillary Hoffower <a href="https://www.businessinsider.com/student-loan-debt-holding-back-homebuying-national-association-realtors-poll-2021-9">summarized</a> this report and its implications for young people:</p> </div> <blockquote> <div> <p>That white picket fence keeps drifting further out of reach for millennials, who feel chained to the renting life because of student debt.</p> <p>More than half (51%) of borrowers are delaying the purchase of a home because of their student debt, according to a <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-the-impact-of-student-loan-debt-full-report-09-14-2021.pdf">report</a> the National Association of Realtors (NAR) released on Tuesday. The poll, conducted by Morning Consult, surveyed 1,995 student-loan holders and found that of the 51% who have had to push back homeownership because of student debt, 60% of them are millennials — "by far" the most affected group, the report stated.</p> <p>"Aside from just purchasing a home, this report finds that more than half of those with student loan debt have delayed some form of major life choice," NAR President Charlie Oppler, CEO of Prominent Properties Sotheby's International, said in a statement. "Student loan debt isn't just seeping into housing affordability. It's also plaguing other aspects of people's lives."</p> <p>Other main findings of the report include:</p> <ul> <li>36% of borrowers said student debt delayed their decision to move out of a family member's home, with 52% of Black borrowers saying the same thing</li> <li>31% of millennials would use additional funds to purchase a home in the future with no student debt</li> <li>28% of Black borrowers would use additional funds to purchase a home in the future with no student debt.</li> </ul> </div> <div> <p>&nbsp;</p> <p>In June, Dept. of Housing and Urban Development Secretary Marcia Fudge <a href="https://www.businessinsider.com/student-loan-debt-black-homeownership-housing-hud-secretary-marcia-fudge-2021-6">told</a> Axios that student debt is a barrier to homeownership — especially for Black borrowers. "Who has student debt? Poor people, Black people, brown people," Fudge said. "We're the people who carry most debt. And so the system's already skewed toward us not being creditworthy."</p> <p><a href="https://www.businessinsider.com/student-loan-debt-holding-back-homebuying-national-association-realtors-poll-2021-9">https://www.businessinsider.com/student-loan-debt-holding-back-homebuying-national-association-realtors-poll-2021-9</a></p> </div> </blockquote> <div> <p><br> Youth activists are pushing for free college tuition and for expanding efforts to forgive student debt. Others are organizing for affordable housing.</p> <p>In the meantime, many young people are addressing these challenges by moving in with older relatives. Navigating these new living arrangements is becoming a pressing topic of public conversation.</p> <p>&nbsp;</p> <p><strong>For Discussion:</strong><br> &nbsp;</p> </div> <ol> <li>What most struck you about the reading? Do you have any questions about what you read?<br> &nbsp;</li> <li>According to the reading, why are more young adults living with their parents? What factors do you think are the most significant?<br> &nbsp;</li> <li>Do you have family members or friends who are living in multi-generational households because they can’t afford a place of their own and/or because student loans make living on their own impossible?<br> &nbsp;</li> <li>What do you think should be done about rising housing costs? What should be done about sustainable tuition debt?&nbsp;<br> &nbsp;</li> <li>Are there other reasons, beyond the financial issues mentioned in the reading, why young adults might choose to live in multigenerational households?&nbsp;</li> </ol> <div> <hr> <p>&nbsp;</p> <p><strong>Reading Two</strong></p> </div> <h3><strong>The Pros &amp; Cons of Multigenerational Living</strong></h3> <p><a href="https://www.morningsidecenter.org/sites/default/files/documents-pdfs/Multigenerational%20Living%20Handout.pdf"><strong><em>pdf version</em></strong></a><br> <br> As more and more adults in their 20s and early 30s have lived in the homes of parents and older relatives, social norms and attitudes about such multi-generational households are beginning to shift. While sometimes young people are forced to live with other family members for economic reasons, often these shared living arrangements prove to be beneficial.</p> <div> <p>In a July 2020 article on “Boomerang Kids” in The Atlantic, staff writer Joe Pinsker <a href="https://www.theatlantic.com/family/archive/2020/07/pandemic-young-adults-living-with-parents/613723/">discussed</a> some of the benefits of living in a family home. Pinsker wrote:</p> </div> <blockquote> <p>In many segments of American society, living with one’s parents is seen as a mark of irresponsibility and laziness. The wave of young adults who have recently relocated [during the pandemic] is a symptom of a grave economic and public-health catastrophe, but living at home is not in and of itself a bad thing. In fact, one could even argue that it’s been unjustifiably stigmatized….</p> <p>[L]iving at home doesn’t seem to harm most parent-child relationships. <a href="https://www.pewsocialtrends.org/2012/03/15/the-boomerang-generation/">A 2011 Pew survey</a> of 25-to-34-year-olds who lived at home found that about half of them said doing so had no effect on their relationship with their parents; the remaining half was split almost evenly between those who said their relationships had gotten better and those who said their relationships had gotten worse.</p> <p>In emerging adulthood, people “generally get along really well with their parents, much better than they did as adolescents,” [said Clark University psychology professor Jeffrey Jensen Arnett], referencing hundreds of interviews he’s done with 18-to-29-year-olds and their parents over the years. “The overwhelming consensus is, Man, we’re glad adolescence is over, because that was a contentious time.”</p> <p>This opens up the possibility of wider-ranging conversations and deeper connection. Whereas teens are prone to hiding parts of themselves from their parents, Arnett said, emerging adults are usually more forthcoming. “It’s really gratifying to their parents, because parenting is a lot of work,” he told me. Parents’ attitude, in his experience is: “Now the payoff finally comes.”</p> <p>“It’s been a blessing,” Peter Walker said of having his daughter back home. “We get to connect and chat whenever we’d like.”</p> </blockquote> <p>Pinsker goes on to note that social attitudes about the issue have changed significantly in recent years:</p> <blockquote> <p>Since Arnett started studying this life stage nearly 30 years ago, he’s seen the stigma around living at home weaken. One cause of this shift, he thinks, is the immigration patterns of the past few decades. In interviewing the families of young adults, Arnett has noticed that many immigrants from Asia, Africa, and Latin America are accustomed to different norms around living at home, and thus hold <a href="http://www.pewresearch.org/fact-tank/2018/04/05/a-record-64-million-americans-live-in-multigenerational-households/">a more positive view</a> of it.</p> <p>For some parents, he told me, “It’s more of a worry … if their kids move out in their 20s: Don’t they like their parents? Why are they moving into an apartment half a mile away? What’s wrong with that household?”....The pandemic might… further update notions of what living at home symbolizes.</p> <p>“There’s a thing that we sometimes call ‘cultural lag’—society begins to change, but our cultural beliefs take a little longer to catch up,” [said Karen Fingerman, human development and family sciences professor at the University of Texas at Austin]. “I think that was happening already, but with this big increase in the number of young adults who are going to be residing with their parents, and with a very clear explanation for why that occurred, I think the culture will shift, and people will very much consider this a normal pattern now.”</p> <p><a href="https://www.theatlantic.com/family/archive/2020/07/pandemic-young-adults-living-with-parents/613723/">https://www.theatlantic.com/family/archive/2020/07/pandemic-young-adults-living-with-parents/613723/</a><br> &nbsp;</p> </blockquote> <div> <p>Of course, living with one’s parents can come with challenges -- especially if there have been tensions in the relationship. And then there is the challenge of privacy and setting boundaries. Of particular relevance for young adults is navigating romance and dating while living under their parents’ roof, an issue that grew in prominence during the Covid lockdown, when many millennials and Gen-Zers moved back home.</p> <p>In a November 2020 article in The Daily Beast, comedian Nikki Frias (who is 32) shared some of her experiences with dating after moving back home during lockdown. Frias wrote:</p> </div> <blockquote> <div> <p>Unfortunately, like<a href="https://www.nbcnews.com/news/us-news/young-people-are-moving-home-more-ever-during-pandemic-n1240258"> </a><a href="https://www.nbcnews.com/news/us-news/young-people-are-moving-home-more-ever-during-pandemic-n1240258">the other 52 percent of people</a> living at home with their parents<a href="https://www.thedailybeast.com/was-a-michigan-maga-rally-behind-a-pregnant-medical-workers-family-wide-covid-19-outbreak"> </a><a href="https://www.thedailybeast.com/was-a-michigan-maga-rally-behind-a-pregnant-medical-workers-family-wide-covid-19-outbreak">due to Covid</a>, moving back meant answering intrusive questions about dating and continuously reminding them I won’t get murdered every time I leave the house….</p> <p>Yes, my parents’ home comes stocked with Costco snacks, free cable, and a daily reminder that my “dinner is in the microwave,” but I forget the expectation in return is many, many questions and comments….</p> </div> <div> <p>I scour the internet for some form of relevance when it comes to living at home with parental woes only to end up on Reddit reading… others complaining of taking care of their parents, maintaining a household and trying to find love.</p> <p>Surprisingly many comments ended with a positive outcome on their situation “…I know I have missed out on a couple dates because of my situation, but even more, people were accepting and understanding.”</p> </div> <div> <p><a href="https://www.thedailybeast.com/help-im-32-back-living-with-my-parents-and-trying-to-date">https://www.thedailybeast.com/help-im-32-back-living-with-my-parents-and-trying-to-date</a></p> </div> </blockquote> <p><br> As living costs go up, there is reason to believe that multigenerational living will become increasingly common, and that conversations about navigating this type of living arrangement will spread.</p> <p>&nbsp;</p> <p><strong>For Discussion:</strong><br> &nbsp;</p> <ol> <li>What struck you in this reading? Do you have any questions about what you read?</li> </ol> <ol start="2"> <li>Do you think that social attitudes about multi-generational living have changed over time? How?</li> </ol> <ol start="3"> <li>Does your family have a history of multigenerational living? If so, what have been some pros and cons to this way of living?</li> </ol> <ol start="4"> <li>The growth of multigenerational living raises the question of what value our society places on being independent versus recognizing our interdependence with others. What do you think is the importance of each? Can you see ways people might meet their need for independence and reap the benefits of multigenerational living at the same time? How?</li> </ol> <div> <p>&nbsp;</p> <p><em>–Research assistance provided by Sean Welch.</em></p> </div> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>Laura McClure</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2023-03-22T13:36:54-04:00" title="Wednesday, March 22, 2023 - 13:36">March 22, 2023</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Wed, 22 Mar 2023 17:36:54 +0000 Laura McClure 1742 at https://www.morningsidecenter.org America’s crisis of affordable housing: From Yimbys to Housing as a Human Right https://www.morningsidecenter.org/teachable-moment/lessons/americas-crisis-affordable-housing-yimbys-housing-human-right <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>America’s crisis of affordable housing: From Yimbys to Housing as a Human Right</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong>To the Teacher:</strong></p> <p>The United States is suffering from a crisis of affordable housing. An estimated 11 million American households spend more than half their income just to keep a roof over their heads. The skyrocketing price of housing has led to an epidemic of evictions and widespread displacement of people, particularly in urban areas, where rent and home prices are rising far faster than incomes.</p> <p>In the face of these mounting problems, a debate has emerged about solutions to the crisis. Some housing advocates support a movement called Yimby (short for “Yes In My Back Yard”), which proposes market-led development of new housing units. &nbsp;But others argue that these projects can end up benefiting developers rather than lower-income residents.&nbsp;</p> <p>This lesson consists of two student readings on this issue. The first examines the arguments for and against Yimby-style development. The second looks at solutions that go beyond market-focused fixes, considering alternative ways to ensure that all people have access to affordable housing.</p> <p>&nbsp;</p> <hr> <h3>Reading One: The Yimby Solution: Pros and Cons</h3> <p>&nbsp;</p> <p>The United States is suffering from a crisis of affordable housing. An estimated 11 million American households spend more than half their income just to keep a roof over their heads. The skyrocketing price of housing has led to an epidemic of evictions and widespread displacement of people, particularly in urban areas, where rent and home prices are rising far faster than incomes.</p> <p>In the face of these mounting problems, a debate has emerged about solutions to the crisis. One response to the question of housing affordability has come from the Yimbys. These affordable housing advocates, whose name stands for “Yes In My Back Yard,” argue for dramatic increases in urban development. They contend that increasing housing supply will be enough to ease the pressures of high housing demand and therefore lead to lower housing prices that more people can afford. Erin McCormick, a staff writer at The Guardian, describes the Yimbys in an October 2, 2017 <a href="https://www.theguardian.com/cities/2017/oct/02/rise-of-the-yimbys-angry-millennials-radical-housing-solution">article</a>: &nbsp;</p> <p>&nbsp;</p> <blockquote> <p>“The movement is fueled by the anger of young adults from the millennial generation, many of whom are now in their late 20s and early 30s. Rather than suffer in silence as they struggle to find affordable places to live, they are heading to planning meetings en masse to argue for more housing – preferably the very kind of dense, urban infill projects that have often generated neighborhood opposition from nimbys (‘not in my back yard’).<br> <br> The birthplace of the Yimby movement, the San Francisco Bay Area, has among the highest rents in America. It added 307,000 jobs between 2010 and 2013, but built fewer than 40,000 new housing units, according to state of California estimates.<br> <br> ‘It’s clear that this is a housing shortage – and the answer is to build housing,’ says Laura Foote Clark, who heads San Francisco-based Yimby Action. ‘You generate policy by yelling about things.’”</p> <p>&nbsp;</p> </blockquote> <p>By supporting greater urban density, the Yimbys stand in contrast to the traditional "Nimby"—or “Not In My Back Yard”—position held by many homeowners' groups. These groups often try to block new developments because they are worried that the construction will be a nuisance or that parking will become more difficult, or because they prefer single-family houses in the neighborhood rather than larger buildings.</p> <p>However, not all opposition to large development projects comes from such property owners. Some long-time pro-tenant and anti-displacement community groups oppose Yimby-backed development projects as well, arguing that they often end up benefiting developers rather than lower-income residents.</p> <p>In a July 20, 2017, <a href="http://www.sfexaminer.com/dear-yimbys-brutal-unfettered-market-wont-stop-displacement/">op-ed</a> in the San Francisco Examiner, housing rights advocates Leslie Dreyer, Joseph Smooke, and Sarah Sherburn-Zimmer argued that just promoting more development, without making sure the new housing created is actually affordable, will not solve the housing crisis. In opposition to the Yimby platform, they write:</p> <p>&nbsp;</p> <blockquote> <p>“Lobbying for market-rate development without a strategy to keep low-income, senior, and disabled tenants in their neighborhoods is pro-displacement, not pro-housing, as your platform implies. Calling for housing deregulation won’t solve our housing crisis; it will simply make rich people richer — look at what deregulation and privatization have done to other basic needs like water and health care.….</p> <p>Saying build, baby, build can add pied-à-terres, vacant investment properties and Airbnbs, but there is no data proving this tactic will provide real homes for people who actually need them.”</p> </blockquote> <p>&nbsp;</p> <p>The housing rights advocates go on to counter the Yimby argument that “Today’s new, expensive housing becomes tomorrow’s inexpensive housing.”</p> <p>“This theory doesn’t hold true for San Francisco, nor likely any other city strangled by the current global speculative market,” the activists write. They note University of California-Berkeley’s Urban Displacement Project research showing that:</p> <ul> <li>Constructing lots of market-rate units does not immediately drive rents down – in fact this could take generations and “may never actually work to relieve displacement pressures.”<br> &nbsp;</li> <li>Subsidizing units for low-income people has more than twice the impact on reducing displacement pressures.<br> &nbsp;</li> <li>Housing development in the short term in San Francisco can’t create a dent in affordability or displacement.<br> &nbsp;</li> <li>At the regional scale, producing more market-rate housing will decrease housing prices in the long term. But at the local scale, new luxury buildings could send signals to the market that such neighborhoods are desirable for wealthier residents, resulting in new demand.</li> </ul> <p>In contrast to the Yimbys, advocates such as Dreyer, Smooke, and Sherburn-Zimmer believe that reliance on the market alone is not sufficient to solve the housing crisis, and that more substantive solutions will be needed to make housing a human right.</p> <p>&nbsp;</p> <p><strong>For Discussion:</strong></p> <ol> <li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</li> <li>What do Yimby and Nimby stand for? What are the differences between the two?</li> <li>The Yimbys argue that the housing affordability crisis can be solved by building more market-price houses and apartment buildings. What is their reasoning?</li> <li>What are the arguments against Yimbys who would rely on the market to create affordable housing? Do you find these convincing? Why or why not?</li> <li>When it comes to providing housing for those who need it, the interests of long-time residents of a neighborhood can sometimes conflict with the interests of those looking to build new homes. Why might this tension occur? How do you think the interests of different groups might be balanced?</li> <li>Is there a shortage of affordable housing in your area? If so, is there a debate about how to address it?</li> </ol> <p>&nbsp;</p> <p>&nbsp;</p> <hr> <h3>Reading Two: PHIMBYs and Public Housing</h3> <p>&nbsp;</p> <p>Those who believe that simply building more market-rate units will not do enough to make housing affordable in this country have other ideas about how to solve the problem of high housing costs.</p> <p>One policy that has gained considerable support is known as “inclusionary zoning.” As a report from the National Housing Conference <a href="https://www.nhc.org/wp-content/uploads/2017/10/What-makes-inclusionary-zoning-happen.pdf">explains</a>: “Inclusionary zoning (IZ) programs use local control over the regulation of land use to require or incentivize the production of affordable housing as part of market rate housing development.”</p> <p>Cities have zoning rules that often limit the size of buildings in a particular area (or limit what those buildings can be used for).&nbsp; “Inclusionary zoning” means that in exchange for being allowed to build a larger building in an area than the zoning would normally permit, a developer might agree that 20 percent of the apartments in a building will be priced below market rate and made available to families with limited incomes.</p> <p>While inclusionary zoning has become increasingly popular, some advocates argue for a more direct public role in creating affordable housing – “social housing.”</p> <p>In California, some advocates for social housing call themselves PHIMBYs (Public Housing In My Back Yard). They favor similar pro-density policies to the Yimbys, but believe that instead of providing incentives to private developers to create affordable housing, it should be funded directly by federal, state, and local governments.</p> <p>Benjamin Schneider, editorial fellow at CityLab, explained the recent emergence of PHIMBY-ism in an April 13, 2018 <a href="https://www.citylab.com/equity/2018/04/nimbys-yimbys-and-phimbys-oh-my/557927/">article</a>: “It might seem like PHIMBYs should have a lot of common ground with Yimbys. They disagree about what kind of housing California should build—whether built by private developers, nonprofits, or the state—but both groups concur that transit-accessible neighborhoods will need to densify to accommodate housing, one way or another.”</p> <p>A much-discussed <a href="https://peoplespolicyproject.org/2018/04/05/a-plan-to-solve-the-housing-crisis-through-social-housing/">2018 paper</a> by the thinktank People’s Policy Project laid out how the U.S. government could build 10 million public housing units in ten years. Authors Peter Gowan and Ryan Cooper&nbsp;described how Sweden undertook “perhaps the most aggressive public housing plan of any country relative to its size.”&nbsp; In the mid-1960s, at a time when Sweden’s population was about 8 million, the Swedish government set a goal of building 1 million new housing units. The government achieved this goal in less than a decade – leading to an actual oversupply of affordable housing for decades afterward.</p> <p>Similar social housing experiments have taken place in countries including Austria and Finland, with governments stepping in to provide significant amounts of high-quality, affordable housing. Unlike traditional public housing projects in the U.S., under these initiatives, any resident can apply to live in the new buildings. The amount of rent residents owe is based on their ability to pay.</p> <p>In an April 5, 2018 <a href="https://www.theguardian.com/society/2018/apr/05/why-we-need-social-housing-in-the-us">article</a> in <em>The Guardian</em>, Matt Bruenig, founder of the People’s Policy Project, explains the advantages of a social housing approach to solving the affordable housing crisis, as opposed to market-led approaches:</p> <p>&nbsp;</p> <blockquote> <p>“First, social housing could be built at lower cost. The interest rates on government debt are lower than the interest rates on almost any other kinds of financing, including the bank loans relied upon by private developers. Additionally, local governments in many cities already own around a fifth of their city’s land, a figure that excludes public parks. It means that, unlike a private developer, municipalities could have zero land acquisition costs in many cases. Savings from lower interest rates, lower land acquisition costs, and the ability to forgo profits could be used to offer new housing at much lower rents.<br> <br> Second, social housing could be built more efficiently. Both the yimbys and anti-gentrification campaigners seem to agree that private developers will build units at the top end of the market first. But this is not an efficient allocation of short-term construction resources. A municipal builder could redirect those same construction resources towards middle-income housing with smaller square footage per unit and fewer frills and amenities. By starting at the middle-end rather than working through luxury developments first, housing supply is added in a way that addresses the concerns of anti-gentrification campaigners.<br> <br> Finally, social housing ensures that the public owns the resulting land and housing assets rather than private investors or homeowners. This gives municipalities more flexibility in managing their city’s housing stock, ensures that profits (if charged) flow to the public instead of affluent people, and avoids creating even more people who have an interest in blocking further housing development.”</p> </blockquote> <p>&nbsp;</p> <p>Whether policymakers follow the Yimbys toward market-driven development, the PHIMBYs toward public development, or the Nimbys toward no solution at all, depends in part on what the public demands in coming years.</p> <p>&nbsp;</p> <p><strong>For Discussion: </strong></p> <ol> <li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</li> <li>What is “inclusionary zoning”? What do you think some of the pros and cons of this policy might be?</li> <li>What does PHIMBY stand for? How are PHIMBYs different from Yimbys or Nimbys? How are they similar?</li> <li>What are some of the advantages of social housing? How is it different than traditional public housing projects in the United States?</li> <li>Having learned about PHIMBYs, Nimbys, and Yimbys, where do you stand? Which group do you agree with most? Explain your position.</li> <li>Can you think of other solutions to the affordable housing crisis that are not discussed in these articles? What might some other ideas be?</li> </ol> <p>&nbsp;</p> <p>&nbsp;</p> <hr> <p><em>— Research assistance provided by John Hess</em></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>Sara Carrero</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2018-07-24T11:41:55-04:00" title="Tuesday, July 24, 2018 - 11:41">July 24, 2018</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Tue, 24 Jul 2018 15:41:55 +0000 Sara Carrero 1215 at https://www.morningsidecenter.org Roots of Racial Injustice: Housing https://www.morningsidecenter.org/teachable-moment/lessons/roots-racial-injustice-housing <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>Roots of Racial Injustice: Housing</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>&nbsp;</p> <h4>Gathering</h4> <p>What is the racial makeup of your neighborhood?&nbsp;&nbsp;</p> <p>&nbsp;</p> <hr> <h4>&nbsp;</h4> <h4>Introduction</h4> <p><br> Write this fact on the board:</p> <ul> <li>Black families have less than one-tenth the wealth of white families in the U.S.&nbsp;</li> </ul> <p><br> Note: Wealth is different from income. Household wealth is the measure of the total assets a family has (their home, savings, a car), minus any liabilities, such as a home mortgage and other debt.</p> <p><br> Share that:</p> <ul> <li>The median wealth for black households in the U.S. in 2016 was:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $13,460</li> <li>The median wealth for white households in the U.S. in 2016 was: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $142,180&nbsp;</li> </ul> <p><br> Median means that half of people fall above this number, half below.</p> <p><br> Ask participants:&nbsp;</p> <ul> <li>What impact might it have on a family to have one-tenth of the wealth of another family?&nbsp; Consider the impact on the family’s housing, education or health. &nbsp;</li> <li>What might be the impact on future generations of this family?&nbsp;</li> </ul> <p><br> List participants’ responses on the board.</p> <p><br> Share that:</p> <ul> <li>About two-thirds of the average family’s wealth comes from the value of their home.</li> <li>Black families are much less likely to own their own home than white families (41% vs. 64%), and home values are lower in Black communities that white, on average.</li> </ul> <p><br> Today we will discuss some reasons why things came to be this way.</p> <p>&nbsp;</p> <hr> <p>&nbsp;</p> <h4>Small Group Reading and Discussion<br> &nbsp;</h4> <p>Ask participants to break into groups of 3-5.&nbsp; Give each group copies of this handout: <strong><a href="http://www.morningsidecenter.org/sites/default/files/documents-pdfs/A%20LIttle%20History%20of%20Housing.pdf">A Little History of Housing</a></strong>. The handout is also included at the bottom of this lesson.</p> <p><br> <strong>1. </strong>Ask participants to read Part One, and then, in their small groups, discuss the question at the end of part 1:</p> <blockquote> <ul> <li>Do you think we still see evidence of these early policies today? Where?</li> </ul> </blockquote> <p><br> <strong>2. </strong>Ask participants to read Part Two, and then, in their small groups, discuss the question at the end of that section.&nbsp; Next, ask participants to report back to the whole class on their discussion about this question: &nbsp;</p> <blockquote> <ul> <li>The Constitution’s 14th Amendment guarantees all citizens “equal protection of the laws.” Do you think the FHA’s policies violated the 14th Amendment? Why or why not?</li> </ul> </blockquote> <p>Note: The 13th, 14th and 15th Amendments (the “Reconstruction Amendments”) were all passed after the Civil War in an effort to establish equality for African Americans. The amendments are included at the bottom of the reading.</p> <p><br> <strong>3.&nbsp; </strong>Ask participants to read Part Three, and then, in their small groups, discuss the question at the end of that section. Next, ask participants to report back to the whole class on their discussion about this question:</p> <blockquote> <ul> <li>Which policy do you think has the greatest impact on us today? Why?</li> </ul> </blockquote> <p>Tally responses, and see if the group has a consensus on this.</p> <p><br> <strong>4. </strong>Ask participants to read Part Four, and then, in their small groups, discuss the question at the end of that section:</p> <ul> <li>If you know the story of previous generations in your family, do you know if they were affected by policies we have read about? How?<br> <br> &nbsp;</li> </ul> <hr> <p>&nbsp;</p> <h4>Whole-Group Discussion<br> &nbsp;</h4> <p>Reconvene the whole group.&nbsp;</p> <p><br> Read aloud this quote by David Callahan of the public policy group Demos, which challenges those who have privilege and wealth to consider where this wealth came from:&nbsp;</p> <blockquote> <p>“….Family wealth can take generations to build – and confers advantages that grow over time. If your great-grandparents bought a home, chances are that your grandparents inherited at least some wealth from them. Which maybe means that your parents didn't have to take out loans to go to college and got a helping hand with a down payment for a house early in life in a neighborhood with top schools. Which means that you got a great public education instead of a lousy one, allowing you to get into a good college and set yourself up to confer advantages on your own kids. And so on.”</p> </blockquote> <p><br> Discuss some or all of the following questions:<br> &nbsp;</p> <ol> <li>Given the generational “multiplier effect” Callahan describes, how do you think the housing policies we have been discussing may have either benefited or harmed your family?<br> &nbsp;</li> </ol> <ol start="2"> <li>Are most of the students at your school predominately from one racial group or ethnicity? If so, do you think discriminatory housing policies may have affected this? How?<br> &nbsp;</li> </ol> <ol start="3"> <li>Is your neighborhood or community primarily made up of people from one racial group or ethnicity? If so, do you think discriminatory housing policies may have affected this?&nbsp; How?<br> &nbsp;</li> </ol> <ol start="4"> <li>If your community and/or school are racially segregated, has this resulted in fewer interracial friendships? What are some of the consequences of missing out on cross-racial friendships?<br> &nbsp;</li> </ol> <ol start="5"> <li>If your school and/or community are diverse, how do you think this came to be?<br> &nbsp;</li> </ol> <ol start="6"> <li>If you don’t know your community’s racial history, how might you research it?<br> &nbsp;</li> </ol> <ol start="7"> <li>How would you respond to someone who argues that segregation results from the prejudiced actions of individuals (real estate agents, individual homeowners, lenders, and landlords)?<br> &nbsp;</li> </ol> <ol start="8"> <li>In his book The Color of Law, Richard Rothstein explains how governments at all levels used laws, ordinances, procedures, and non-enforcement to keep black people from buying or renting in white neighborhoods – and how these government policies harmed African American citizens. Rothstein believes that federal housing policy violated the U.S. Constitution’s protections against discrimination under the law, and that “if there's a violation of those constitutional provisions, there's a constitutional obligation to remedy it, to reverse that violation.”</li> </ol> <blockquote> <p>Discuss:</p> </blockquote> <blockquote> <ul> <li>What do you think of Rothstein’s reasoning?</li> <li>What might we propose to remedy this situation?</li> </ul> </blockquote> <p>&nbsp;</p> <hr> <h4><br> Closing</h4> <p><br> What is one thing you’d like to better understand about your home or community and how you came to live there?</p> <p>&nbsp;</p> <hr> <h4>&nbsp;</h4> <h4>Sources<br> &nbsp;</h4> <p><a href="https://www.epi.org/publication/the-color-of-law-a-forgotten-history-of-how-our-government-segregated-america/">https://www.epi.org/publication/the-color-of-law-a-forgotten-history-of-how-our-government-segregated-america/</a></p> <p><a href="https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america">https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america</a></p> <p><a href="https://www.smithsonianmag.com/history/how-federal-government-intentionally-racially-segregated-american-cities-180963494/">https://www.smithsonianmag.com/history/how-federal-government-intentionally-racially-segregated-american-cities-180963494/</a></p> <p><a href="https://thenib.com/america-s-shameful-history-of-housing-discrimination">https://thenib.com/america-s-shameful-history-of-housing-discrimination</a></p> <p><a href="http://www.demos.org/blog/11/11/13/how-gi-bill-left-out-african-americans">http://www.demos.org/blog/11/11/13/how-gi-bill-left-out-african-americans</a></p> <p><a href="https://www.asu.edu/courses/aph294/total-readings/silver%20--%20racialoriginsofzoning.pdf">https://www.asu.edu/courses/aph294/total-readings/silver%20--%20racialoriginsofzoning.pdf</a></p> <p><a href="https://www.americanprogress.org/issues/race/reports/2016/12/15/294374/the-united-states-history-of-segregated-housing-continues-to-limit-affordable-housing/">https://www.americanprogress.org/issues/race/reports/2016/12/15/294374/the-united-states-history-of-segregated-housing-continues-to-limit-affordable-housing/</a></p> <p><a href="https://livingnewdeal.org/glossary/national-housing-act-1934/">https://livingnewdeal.org/glossary/national-housing-act-1934/</a></p> <p><a href="https://www.npr.org/2017/05/17/528822128/the-color-of-law-details-how-u-s-housing-policies-created-segregation">https://www.npr.org/2017/05/17/528822128/the-color-of-law-details-how-u-s-housing-policies-created-segregation</a></p> <p><a href="https://www.huffingtonpost.com/preeti-vissa/how-the-us-government-pro_b_1005228.html">https://www.huffingtonpost.com/preeti-vissa/how-the-us-government-pro_b_1005228.html</a></p> <p><a href="https://www.asu.edu/courses/aph294/total-readings/silver%20--%20racialoriginsofzoning.pdf">https://www.asu.edu/courses/aph294/total-readings/silver%20--%20racialoriginsofzoning.pdf</a></p> <p><a href="https://www.americanprogress.org/press/release/2018/02/21/447047/release-new-cap-report-concludes-black-white-wealth-gap-widening-targeted-policies-necessary-close/">https://www.americanprogress.org/press/release/2018/02/21/447047/release-new-cap-report-concludes-black-white-wealth-gap-widening-targeted-policies-necessary-close/</a></p> <p><a href="https://www.brookings.edu/blog/the-avenue/2015/12/08/census-shows-modest-declines-in-black-white-segregation/">https://www.brookings.edu/blog/the-avenue/2015/12/08/census-shows-modest-declines-in-black-white-segregation/</a></p> <p><a href="https://www.vox.com/2018/3/5/17080218/school-segregation-getting-worse-data">https://www.vox.com/2018/3/5/17080218/school-segregation-getting-worse-data</a></p> <p><a href="https://www.epi.org/blog/the-racial-wealth-gap-how-african-americans-have-been-shortchanged-out-of-the-materials-to-build-wealth/">https://www.epi.org/blog/the-racial-wealth-gap-how-african-americans-have-been-shortchanged-out-of-the-materials-to-build-wealth/</a></p> <p><a href="http://www.pbs.org/tpt/slavery-by-another-name/themes/reconstruction-amendments/">http://www.pbs.org/tpt/slavery-by-another-name/themes/reconstruction-amendments/</a></p> <p>&nbsp;</p> <hr> <p>&nbsp;</p> <h3>Reading:&nbsp; A Little History of Housing</h3> <p>(<a href="http://www.morningsidecenter.org/sites/default/files/documents-pdfs/A%20LIttle%20History%20of%20Housing.pdf">Click here for the pdf version</a>.)</p> <h4><br> Part One: After Slavery</h4> <p><br> In 1900, 35 years after slavery ended, four-fifths of African-Americans in the South lived in rural areas. But at the beginning of the twentieth century, many African-Americans began moving from rural areas of the South to southern cities.</p> <p><br> City governments in this part of the country, reacted by passing laws to promote racial segregation.</p> <p><br> On May 15, 1911, the mayor of Baltimore, J. Barry Mahool, signed into law the country’s first racial segregation ordinance. The law prohibited blacks from buying a house on a block that was majority white. The mayor explained:&nbsp;</p> <p><br> “Blacks should be quarantined in isolated slums in order to reduce the incidents of civil disturbance, to prevent the spread of communicable disease into the nearby white neighborhoods, and to protect property values among the white majority.”</p> <p><br> During early 1900s, in what came to be known as the Great Migration, some 6 million African Americans moved north to escape the violence and terror they experienced in the rural south.&nbsp; As blacks began to move into northern cities, many of these cities followed Baltimore’s lead in legislating where blacks could and could not live.</p> <p><br> The Supreme Court ruled against these laws in 1917. However, cities continued to encourage segregation with city planning language that was less overtly racial.</p> <p>&nbsp;</p> <p><strong>Discuss:&nbsp;</strong></p> <ul> <li>What are your thoughts and feelings about what you just read?<br> &nbsp;</li> <li>Do you think we still see evidence of these early policies today? Where? How?</li> </ul> <p>&nbsp;</p> <div> <hr> <p>&nbsp;</p> </div> <h4>Part Two: The federal government legislates housing<br> &nbsp;</h4> <p>During the Great Depression of the 1930s, millions of people were unable to pay their mortgages and lost their homes. The banks that survived virtually stopped lending money for home purchases. In 1934, Congress passed the National Housing Act to resuscitate the housing industry and make it possible for people to obtain mortgages once again.</p> <p><br> The newly created Federal Housing Administration (FHA) regulated and revamped the mortgage process, and most importantly, insured home mortgages so that the banks were able to lend money without fear of not getting paid back.</p> <p><br> Unfortunately, the help the FHA provided went almost entirely to white people. FHA policies excluded and segregated black people:&nbsp;</p> <ul> <li>The FHA refused to insure mortgages in or near black neighborhoods.<br> &nbsp;</li> <li>The FHA subsidized the construction of huge housing developments that explicitly excluded blacks.<br> &nbsp;</li> <li>The Home Owners Loan Corporation (a federal agency) produced maps that designated white neighborhoods as safe for loans and black neighborhoods as unsafe for loans.<br> &nbsp;</li> <li>These maps were then used by other agencies insuring home loans like the FHA and the Veterans Administration.<br> &nbsp;</li> <li>New housing projects were segregated by race—sometimes bringing segregation to areas that had been integrated racially before.</li> </ul> <p><br> The FHA based their discrimination on the theory that blacks moving into white areas would reduce property values and thereby put the loans at risk. However, there were no studies to support this idea. In fact, African American home buyers often increased the property values because they were willing to pay higher purchase prices to move into a white neighborhood.</p> <p><br> The Underwriting Manual of the FHA was quite explicit:&nbsp; "Incompatible racial groups should not be permitted to live in the same communities." The manual also recommended that highways be used as a physical divider between black and white neighborhoods. These barriers continue to divide city neighborhoods today, often cutting off black neighborhoods and depriving them of growth.</p> <p><img alt="FHA Manual" data-entity-type="file" data-entity-uuid="ee7c0988-7cd9-4177-9845-56035d04dd02" src="/sites/default/files/inline-images/FHA%20Manual.jpg" width="715" height="233" loading="lazy"></p> <p>&nbsp;</p> <p><strong>Discuss:</strong><br> &nbsp;</p> <ul> <li>What are your thoughts and feelings about what you just read?<br> &nbsp;</li> <li>The Constitution’s 14th Amendment guarantees all citizens “equal protection of the laws.” Do you think the FHA’s policies violated the 14th Amendment? Why or why not?</li> </ul> <p>&nbsp;</p> <p>Note: The 13th, 14th and 15th Amendments (the “Reconstruction Amendments”) were all passed after the Civil War in an effort to establish equality for African Americans. The amendments are included at the bottom of the reading.</p> <p>&nbsp;</p> <div> <hr> <p>&nbsp;</p> </div> <h4>Part 3:&nbsp; After World War 2<br> &nbsp;</h4> <p>The segregation policies continued through the 1940s and 1950s.<br> &nbsp;</p> <ul> <li>During World War II, the FHA would not approve a new housing development for whites until a six-foot wall was built to separate the development from a black neighborhood. Detroit’s “Eight Mile Wall” (named for its location, not for its length) still exists, though it is no longer a racial housing barrier.<br> &nbsp;</li> </ul> <ul> <li>From the end of the 1930s to the mid 1950s, the FHA supported over 60% of home purchases in the U.S. Only 2% of these loans went to black Americans.<br> &nbsp;</li> </ul> <ul> <li>The GI Bill (also known as the Serviceman's Readjustment Act of 1944) was a law that provided a range of benefits for returning World War II veterans, including low-interest housing loans and college aid. It was enormously successful in helping returning white veterans get a leg up in society after the war. But black vets were largely excluded from the benefits. For example, of the first 67,000 mortgages supported by the Veterans Administration under the GI Bill, only 100 went to blacks. This was largely because the FHA would not guarantee mortgages for black families.<br> &nbsp;</li> </ul> <ul> <li>The late 1940s and 1950s saw many large-scale suburban housing developments supported by the FHA. The houses were inexpensive and the down payments were small. Most excluded blacks.</li> </ul> <p><br> <strong>Discuss:</strong><br> &nbsp;</p> <ul> <li>What are your thoughts and feelings about what you just read?<br> &nbsp;</li> <li>Which policy do you think has the greatest impact on us today? Why?</li> </ul> <p>&nbsp;</p> <hr> <p>&nbsp;</p> <h4>Part 4:&nbsp; What the Civil Rights Movement Won<br> &nbsp;</h4> <p>In 1968, as a result of a massive civil rights movement, Congress passed the Fair Housing Act, which made overt racial discrimination less prevalent. But it included only weak enforcement provisions and no measures to reverse or mitigate past government-sanctioned segregation or compensation for victims of those discriminatory policies.</p> <p><br> Under the Fair Housing Act, black Americans could buy a house wherever they wanted (at least officially). But at that point, houses were nowhere near as affordable as they had been in the 1940s and 1950s. And home prices have continued to rise since then. FHA-financed suburban homes that whites bought in the 1950s for about twice the median income now sell for about 6-8 times the median income. The post-World War II FHA-financed houses in Levittown, NY, which were not available to blacks, sold for $8,000. Today, they sell for $400,000.</p> <p><br> <strong>Discuss:</strong><br> &nbsp;</p> <ul> <li>What are your thoughts and feelings about what you just read?<br> &nbsp;</li> <li>If you know the story of previous generations in your family, do you know if they were affected by policies we have read about? How?<br> &nbsp;</li> </ul> <div> <p>&nbsp;</p> </div> <hr> <p>&nbsp;</p> <h4>The 'Reconstruction Amendments'<br> &nbsp;</h4> <p><strong>The 13th Amendment to the U.S. Constitution Article XIII</strong>&nbsp;&nbsp;<br> Ratified December 6, 1865</p> <p>Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.</p> <p>Section 2. Congress shall have power to enforce this article by appropriate legislation.</p> <p>&nbsp;</p> <p><strong>The 14th Amendment to the U.S. Constitution Article XIV (Section 1 of 5 sections)</strong><br> Ratified July 9, 1868</p> <p>Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.</p> <p>&nbsp;</p> <p><strong>The 15th Amendment to the U.S. Constitution Article XV</strong><br> Ratified February 3, 1870</p> <p>Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.</p> <p>Section 2. The Congress shall have power to enforce this article by appropriate legislation.</p> <p>&nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>Laura McClure</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2018-05-19T12:22:37-04:00" title="Saturday, May 19, 2018 - 12:22">May 19, 2018</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Sat, 19 May 2018 16:22:37 +0000 Laura McClure 1202 at https://www.morningsidecenter.org The 'Poor Doors' Controversy https://www.morningsidecenter.org/teachable-moment/lessons/poor-doors-controversy <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>The &#039;Poor Doors&#039; Controversy</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h4>Goals</h4> <ul> <li> <p>to define what is meant by poor doors</p> </li> <li> <p>to learn about the current controversy about poor doors</p> </li> <li> <p>to use a graphic organizer to analyze different points of view about poor doors</p> </li> <li> <p>to develop a well-informed opinion about the poor-door controversy</p> </li> <li> <p>to construct a persuasive written or spoken argument</p> </li> </ul> <hr> <h4><br> 1.&nbsp;&nbsp;&nbsp; Introduction</h4> <p>Explain to students that today they will be exploring a controversy that has been in the news about something that has come to be called "poor doors." To help students understand what poor doors are, and what the controversy is about, have them read <a href="#reading">The Poor Door Controversy</a>&nbsp;below.</p> <h4>2.&nbsp;&nbsp;&nbsp; &nbsp;Opinion Continuum Activity</h4> <p>Help students think about the poor-door controversy by doing an opinion continuum activity with them. Explain that for this activity they will be asked where they stand regarding some statements.</p> <p>Post a sign on one side of the classroom that says "Strongly Agree" and another on the opposite side that says "Strongly Disagree." Connect the signs with yarn, string, or masking tape on the floor, so that students can see that there is a continuum between the two extreme opinions. Tell students that you will read a statement, after which they will stand up and move to the appropriate place along the continuum, depending on their own opinion about the statement.</p> <p>After you read the statement, give students a chance to position themselves. Give them another minute to talk with the people near them about why they are standing where they are. Then ask each group of students to explain to the other groups why they are standing where they are. Afterwards, give students a chance to change their position if their view has changed. Have one or more students explain what persuaded them to change their position.</p> <p>Repeat the process for each opinion on the list below. If you don't have time for all the opinions, select just a few, being sure that they represent different perspectives.<br> &nbsp;<br> Opinions About Poor Doors for the Opinion Continuum</p> <ul> <li>Building affordable housing is more important than which door people use.</li> <li>People who pay more on an airplane get more comfortable seats and better food than people who pay less. The same should hold true for doors to apartment buildings.</li> <li>Walking into a building should not be any different based on income status.</li> <li>Separate doors keep costs down for residents who can't afford fancy lobbies and concierges.</li> <li>Having low-income residents use less attractive entries is a form of segregation and should not be allowed.</li> <li>People who pay more for housing should be able to have more luxuries in their lobbies than people who pay less.</li> </ul> <h4><br> 3. T-Chart of Arguments</h4> <p>Students may do the following part of the activity alone or in small groups.</p> <p>Explain to students that the rest of the poor-doors lesson will involve writing. Make a T chart on the board that looks like this, and have each student or group of students copy it on paper.</p> <p>&nbsp;</p> <table border="1" cellpadding="0" cellspacing="0"> <tbody> <tr> <td>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <div>&nbsp;In favor of separate doors &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</div> <p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</p> </td> <td>&nbsp; &nbsp; &nbsp; Opposed to separate doors &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</td> </tr> <tr> <td>&nbsp;<br> &nbsp;<br> &nbsp;<br> &nbsp; <p>&nbsp;</p> </td> <td>&nbsp;</td> </tr> </tbody> </table> <p>&nbsp;</p> <p>Have students generate lists of arguments in favor of separate doors and opposing separate doors. Walk around the classroom offering guidance to those who need it. Once students' have finished their lists, ask them to share their arguments. Record the arguments on the T chart on the board so that you have a completed T chart that includes everyone's work.</p> <h4><br> 4.&nbsp;&nbsp;&nbsp; Persuasive essay</h4> <p>Tell students that they are going to write a persuasive essay about poor doors. Remind them, if necessary, that in a persuasive essay, the writer tries to convince the reader that a particular opinion is correct. Explain that you will walk them through the preparation process step by step.<br> You can either read the following questions aloud and give students a chance to write their answers in class, or you can print out the questions and give them to the students on their own.</p> <p>A. What is your opinion about poor doors? Write your opinion in one sentence.</p> <p>B. What is one argument that supports your opinion? Write a sentence stating it.</p> <p>C. What is another argument that supports your opinion? Write a sentence stating it.</p> <p>D. What is a third argument that supports your opinion? Write a sentence stating it.</p> <p>E. What is an argument that someone might use to support a point of view that is different from yours? Write it by completing this sentence: Some people might argue that...</p> <p>F. How would you respond to that argument? Write your response in a sentence.</p> <p>&nbsp;<br> Explain to students that they now have an outline of their essay.</p> <p>The first sentence (A) is the thesis. The thesis goes at the end of the first paragraph. Before the thesis, students should write a few sentences that introduce the topic of poor doors and explain that poor doors are controversial.</p> <p>Each of the next three sentences (B,C, and D) is the topic sentence of a paragraph that supports the thesis. To complete each paragraph, students will fully explain the argument they stated in the topic sentence.</p> <p>Explain that sentences E and F are called "acknowledging the opposition and disposing of it." They go into a paragraph that students should insert after the thesis paragraph.</p> <p>Have each student write an ending to the essay. The final paragraph starts with their thesis statement (written in different words) and some kind of conclusion.<br> &nbsp;<br> In summary, the construction of the essay is:</p> <p>Paragraph 1: Introduce the controversy and then state your thesis ( sentence A).<br> Paragraph 2: "Acknowledge the opposition and dispose of it" (includes sentences E and F).<br> Paragraph 3: Argument 1 for your thesis (includes sentence B)<br> Paragraph 4: Argument 2 for your thesis (includes sentence C)<br> Paragraph 5: Argument 3 for your thesis (includes sentence D)<br> Paragraph 6: Restate the thesis and make a conclusion.</p> <p>&nbsp;<br> If your class has engaged in peer editing, you may want them to do so with their essay drafts. Have students revise their drafts as necessary and turn them in.</p> <h4><br> 5. &nbsp;Taking Action</h4> <p>If students are engaged in the subject and have strong feelings about it, talk with them about possible action steps. How might students use what they've learned and the arguments they have developed to make a difference? Support students in developing and implementing a plan of action.</p> <h4><a id="reading" name="reading"></a></h4> <hr> <p>&nbsp;</p> <h4>The Poor-Door Controversy</h4> <p>&nbsp;</p> <p>In expensive cities like New York and London, housing is at a premium, which means that prices—for renting and purchasing—are very high. People who are less than rich (in other words, most people) find themselves getting shut out of these cities because they simply can't afford to live there.</p> <p>One way government has addressed this issue is to require that new apartment buildings must include a small number of units specified as "affordable housing" that cost less and that are available to people with lower incomes.&nbsp;</p> <p>But what does this look like in real life? In some of these new buildings, the lower-paying residents must use different entrances than their wealthy neighbors. The wealthy enter through lavishly decorated lobbies staffed by concierges (more commonly called doormen), while the non-wealthy enter through no-frills side entrances. Once inside, the wealthy residents get their mail and dispose of their garbage in one set of facilities, the non-wealthy in a different set. Sometimes the less wealthy residents are denied access to building amenities (like a gym) that the wealthy residents enjoy. &nbsp;</p> <p>Some people accept this arrangement as sensible; others criticize it as income-based segregation.</p> <p>What do you think?</p> <p>For additional information:</p> <p><a href="http://www.nytimes.com/2014/08/27/nyregion/separate-entryways-for-new-york-condo-buyers-and-renters-create-an-affordable-housing-dilemma.html?_r=0">"Poor Door" in a New York Tower Opens a Fight Over Affordable Housing</a><br> <a href="http://www.theguardian.com/society/2014/jul/25/poor-doors-segregation-london-flats">Poor doors: the segregation of London's inner-city flat dwellers</a><br> &nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>fionta</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2014-09-05T10:04:40-04:00" title="Friday, September 5, 2014 - 10:04">September 5, 2014</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Fri, 05 Sep 2014 14:04:40 +0000 fionta 522 at https://www.morningsidecenter.org Homelessness in the U.S.: Is There a Solution? https://www.morningsidecenter.org/teachable-moment/lessons/homelessness-us-there-solution <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>Homelessness in the U.S.: Is There a Solution?</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>&nbsp;</p> <h4>&nbsp;<br> To the Teacher:</h4> <p>In the United States today, over 600,000 people are homeless. Certain sectors of the population, including veterans, the mentally ill, and young people are disproportionately represented in this number. While the problem of homelessness has been a daunting one, some new thinking about solutions has emerged in recent years.<br> &nbsp;<br> One of the states that has most effectively combated homelessness is Utah. Although it is known as a politically conservative state, Utah has adopted an usually radical solution to homelessness: namely, providing free, permanent housing to all those who need it. The results of this program have been remarkable: the state has seen a 74 percent decrease in chronic homelessness, as well as taxpayer savings of about $5000 per program participant. This success has prompted other states to consider similar programs.<br> &nbsp;<br> This lesson consists of two student readings. The first reading takes a general look at homelessness in the U.S. today. While the number of people who are homeless throughout the country has declined over the past three years, the problem remains a serious one, particularly for young adults aged 18-24. The second reading examines Utah's program to address homelessness and explores whether it points toward a solution to this persistent problem. Questions for discussion follow each reading.<br> &nbsp;</p> <hr> <p>&nbsp;</p> <h4>Student Reading 1:<br> Homeless in America</h4> <p>Over 600,000 people are homeless in the United States today. This number includes many young people (ages 18-24), as well as veterans and mentally ill people.<br> &nbsp;<br> While the total number of homeless people in the U.S. has declined over the past three years, this trend does not hold in 23 states, including Texas, New York, and California. As NPR journalist <a href="http://www.npr.org/blogs/thetwo-way/2013/11/21/246589487/number-of-homeless-declines-again-but-gains-arent-universal">Bill Chappell</a> reported in a November 21, 2013 article:&nbsp;</p> <p class="rteindent1">The number of homeless people in the U.S. shrank from 2012 to 2013, according to a large government study that found the number of veterans and others who are homeless declined for the third straight year. But homeless numbers rose in New York and other states, according to the Department of Housing and Urban Development... TheHUD study uses data from a count conducted by U.S. shelters on a single night, in which they reported how many people were using their facilities, and how many were left without shelter...The tally found that 610,042 people were homeless on that night, reflecting a drop of nearly 4 percent from 2012 to 2013, the agency says. Of that number, 36 percent — 222,197 people — were in families, representing a drop of 7 percent for that group.</p> <p>The HUD study included a number of troubling findings, including:&nbsp;</p> <ul class="rteindent1"> <li>More than a third of all homeless people (35 percent) live in abandoned buildings and cars or under bridges, the report says, and this includes children.</li> <li>Nearly a quarter of America's homeless are under 18.</li> <li>The largest one-year increases in homeless in 2012 were in New York (7,864 people), followed by California (5,928), South Carolina (1,629), Massachusetts (1,528), and Maine (623).</li> </ul> <p>Young adults aged 18-24 make up a growing segment of the homeless population. Young people have suffered disproportionately from the economic recession that began in 2008 and from our precarious job market. As reporter Susan Saulny wrote in a December 18, 201, &nbsp;<a href="http://www.nytimes.com/2012/12/19/us/since-recession-more-young-americans-are-homeless.html?_r=0">New York Times</a> article:&nbsp;</p> <p class="rteindent1">Across the country, tens of thousands of underemployed and jobless young people, many with college credits or work histories, are struggling to house themselves in the wake of the recession, which has left workers between the ages of 18 and 24 with the highest unemployment rate of all adults.<br> &nbsp;<br> Those who can move back home with their parents — the so-called boomerang set — are the lucky ones. But that is not an option for those whose families have been hit hard by the economy, including [24 year-old homeless man Duane] Taylor, whose mother is barely scraping by while working in a laundromat. Without a stable home address, they are an elusive group that mostly couch surfs or sleeps hidden away in cars or other private places, hoping to avoid the lasting stigma of public homelessness during what they hope will be a temporary predicament.<br> &nbsp;<br> These young adults are the new face of a national homeless population, one that poverty experts and case workers say is growing. Yet the problem is mostly invisible. Most cities and states, focusing on homeless families, have not made special efforts to identify young adults, who tend to shy away from ordinary shelters out of fear of being victimized by an older, chronically homeless population....<br> &nbsp;<br> For generations, services for the homeless were directed to two groups: dependent children and older people. There was scant attention focused on what experts now call "transitional age youth" — young adults whose needs are distinct.</p> <p>Faced with the challenge of aiding a diverse and changing homeless population, advocates are looking for innovative and practical solutions that can address the immediate needs of those on the street and offer hope of a long-term solution.&nbsp;<br> &nbsp;</p> <h4>For Discussion:</h4> <ol> <li>Do students have any questions about the reading? How might they be answered?</li> <li>According to the reading, what were some positive findings of recent HUD studies on U.S. homelessness? What were some discouraging findings?</li> <li>The reading cites some reasons for the increasing number of homeless youth aged 18-24.</li> </ol> <p>&nbsp;Ask students: What factors do you think explain the high number of homeless people in this country?&nbsp; Record student responses.&nbsp;<br> &nbsp;<br> Then share with students that according to a report by the <a href="http://www.mayors.org/pressreleases/documents/hungerhomelessnessreport_121208.pdf">U.S. Conference of Mayors</a>, the main causes of homelessness include:&nbsp;</p> <ul> <li>Poverty, mostly due to low wages</li> <li>Lack of jobs</li> <li>Rising rents that people with low incomes can't afford</li> <li>High utility costs</li> </ul> <p>Mental health and drug problems can contribute to homelessness, but they are not the top causes.</p> <p>&nbsp;&nbsp;</p> <hr> <h4><br> Student Reading 2:<br> Housing First: Utah's Solution to Homelessness</h4> <p>While the problem of homelessness has been a daunting one, some new solutions may be on the horizon.<br> &nbsp;<br> One of the states that has most effectively combated homelessness in recent years is Utah. Although it is known as a politically conservative state, Utah has adopted an usually radical solution to homelessness: namely, providing free, permanent housing to all those who need it. Even more unusual, program participants do not have to meet any requirements to be eligible, such as holding a job or passing drug tests. The only requirement for assistance is that a person be chronically homelessness.</p> <p>Journalist Emmett Rensin explains the program's approach in a February 10, 2014 article for&nbsp;<a href="https://www.mic.com/articles/81507/the-most-unlikely-state-in-america-is-on-track-to-eradicate-homelessness-by-2015">Mic</a>:&nbsp;</p> <p class="rteindent1">In 2005, one state defied "political feasibility" and began handing out free apartments to the homeless. These were neither temporary accommodations or shelters for the night. They were not welfare-to-work, or only if you're married, or just-take-this-drug-test: just free apartments, no strings attached. Nine years later, they've reduced long-term homelessness by 74%&nbsp;and are on track to eradicate it completely by 2015.&nbsp;Which bastion of leftist menace is responsible for such a radical experiment in welfare expansion? Is it Massachusetts? California? The Independent Republic of Portland? &nbsp;No. It's Utah....&nbsp;According to Housing Works, the state agency responsible for the plan, the "ten-year action plan" is a deeply progressive, multi-tier aid scheme that is being employed to provide varying levels of assistance, according to varying levels of need..,&nbsp;As reported by their website: &nbsp;"Homeless program interventions are aimed at different segments of the homeless&nbsp;population: those who have the potential to become homeless (prevention); those who are&nbsp;experiencing crisis-induced, short-term homelessness (treatment); those who experience persistent, long-term homelessness (mitigation). Though interventions vary in the type and duration of supports, the end goal remains consistent: to stably house individuals and families to end their homelessness as quickly as possible."</p> <p>Rensin reports that the "big-ticket free apartment program" mostly applies to the long-term homeless. Under Utah's system, people who are in homeless shelters are supposed to be rapidly rehoused and receive supportive services if they need them.&nbsp; But others qualify for assistance too, including people who still have a place to live but are struggling to keep it, and people who are reentering the community after being in medical facilities or in prison.<br> &nbsp;<br> Some advocates for the homeless have wondered whether there's a catch to Utah's program. They suspect that some of the program's supporters were more motivated by financial considerations than by concern for those in need. However, the financial benefits of this approach are hardly a negative. As Joseph Charlton writes in a December 22, 2013. article for <a href="http://www.independent.co.uk/voices/comment/housing-first-good-news-for-the-homeless-this-christmas-9020934.html">The Independent:</a></p> <p class="rteindent1">The reasoning behind the scheme was, of course, based on projected state-saving&nbsp;rather than outright benevolence. Utahan number crunchers calculated the annual cost of hospital and jail time for the average homeless person was costing the state $16,670 &nbsp;a year while an apartment and social worker would cost just $11,000.<br> &nbsp;<br> The numbers as well as the social benefits have been making sense ever since. Utah saves around $5000 on each rough sleeper moved indoors, and eight years on, the rate of state homelessness has dropped by a staggering 78 per cent.</p> <p>The program's remarkable results have prompted other states, most notably Wyoming, to look into similar programs. As freelance writer Robin Marty explained in a December 26, 2013 article for <a href="http://www.truth-out.org/news/item/20857-how-do-you-end-homelessness-if-youre-this-state-you-offer-people-homes">Truthout</a>:&nbsp;</p> <p class="rteindent1">Now, Wyoming is thinking they will give the plan a try, too. For them, the need is drastic. "Wyoming has been going the opposite direction than Utah has: its homeless population has increased by 213 percent in the past three years," writes Kerry Drake at Wyofile. "In 2012, the state managed to provide shelter for only 26 percent of the homeless, which was the lowest rate in the country. The next state on the list, at 35 percent, was California, where the climate is obviously much more conducive to sleeping outside than ours."<br> &nbsp;<br> The state is in the process of remodeling apartments in [the city of] Casper to prepare for the first batch of selected applicants, and after that will allow roughly a dozen to launch the pilot program. For Utah, it will take about a decade to reduce the number of chronic homeless to zero. If Wyoming follows the same trajectory, it would be in the same place around 2025.</p> <p>Utah's success may point the way to further progress in the fight against homelessness. It suggests that instead of requiring preconditions before homeless people can get housing (such as drug testing or job training), state governments would have more success if they made a long-term investment in providing decent housing immediately with no strings attached.<br> &nbsp;</p> <h4>For Discussion:&nbsp;</h4> <ol> <li>Do students have any questions about the reading? How might they be answered?</li> <li>According to the reading, how has Utah gone about reducing homelessness?</li> <li>Utah's housing program is "no-stings-attached," meaning that participants only have to meet one requirement: being homeless. What might be some benefits to such a policy? How might it affect the program's success rate?</li> <li>According to the reading, some of the program's supporters might be most interested in its potential financial benefits. Do you think that this is a problem? Why or why not?</li> <li>Do you think that homelessness is a problem that can be solved? What do you think are some of the reasons why this problem has persisted for so long?</li> </ol> <p><em>-- Research assistance provided by Yessenia Gutierrez.</em><br> &nbsp;<br> &nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>fionta</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2014-07-26T08:16:22-04:00" title="Saturday, July 26, 2014 - 08:16">July 26, 2014</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Sat, 26 Jul 2014 12:16:22 +0000 fionta 527 at https://www.morningsidecenter.org 'THE ROOF IS CAVING IN': Americans Still Losing Jobs & Homes https://www.morningsidecenter.org/teachable-moment/lessons/roof-caving-americans-still-losing-jobs-homes <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>&#039;THE ROOF IS CAVING IN&#039;: Americans Still Losing Jobs &amp; Homes</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p class="byline"><b>To the Teacher:</b></p> <p>As of September 2009 the official unemployment rate for the country was 9.7% and likely to rise. But if you include in those statistics people working in part-time jobs who want full-time work and those who have given up looking for a job, the unemployment rate has already surpassed 20% in a number of states.</p> <p>The first student reading below describes this situation and includes one writer's plea for a job stimulus. The second reading deals with a closely related subject—foreclosures. Many people are facing foreclosure because they've lost their jobs. This reading also describes the president's loan modification program, which has so far helped about 9% of those eligible.</p> <p>Following the readings are discussion questions and suggestions for inquiry, writing, and citizenship.</p> <p>See the high school section of TeachableMoment&nbsp;for "Boom, Bust &amp; Bailout," the most recent set of background readings on why the boom, bust &amp; bailout.<br> &nbsp;</p> <hr> <h3 style="font-weight: bold; ">Student Reading 1</h3> <h2>The Jobs Crisis</h2> <p>"The recession is over." Newsweek said so on the cover of its August 3, 2009, issue. The business magazine Forbes agrees. So do economists.</p> <p>"Tell me about it," say Joe and Kirsten Parente, Richard Smith, Jack Peterson, and the 6.7 million other Americans who have lost their jobs since the recession began in late 2007. Tell it to the 1.5 million jobless people will lose their unemployment insurance benefits before the end of the year if something is not done to extend them. If the recession is over, "all we have to celebrate are indications that things are getting worse more slowly." (Paul Krugman,<em> New York Times</em>, 8/10/09)</p> <p>Joe Parente, a pipefitter, lost his job because he had a back injury that made even light lifting impossible. He needed disability benefits but failed to get them. Regulations required an MRI costing $800 to $900 he couldn't afford, and he didn't qualify for Medicaid either. His wife Kristen worked as a waitress until January, when she, too, was laid off. She didn't qualify for unemployment benefits.</p> <p>For six weeks the Delaware couple and their three children, their resources diminishing daily, waited for help from the Temporary Assistance for Needy Families program. Meanwhile, the five of them moved in with Kirsten's mother and four siblings. To get by, Kirsten borrowed money from an elderly man whose house she cleaned. But tensions between Kirsten and her mother led to another move.</p> <p>At last they received some cash and food stamp assistance. But to get this aid, Joe and Kirsten have to apply for 40 jobs a week - without any help to pay for gas, tolls, or babysitting. Kirsten drove 35 miles a day to attend "job readiness classes." Required to volunteer at a community agency, she chose the Association of Community Organizations for Reform Now (Acorn), a grassroots organization for low-income people. She did so well that Acorn hired her for a paying job, and she recently helped to turn out thousands of people for a Washington march to demand universal health insurance. (Barbara Ehrenreich, "A Homespun Safety Net," <em>New York Times</em>, 7/12/09)</p> <p>Countless Americans—and they are countless, because official statistics do not include them—work part-time when they want and need to work full-time. Other countless Americans become so discouraged after losing jobs and months of failed efforts to find another that they quit looking.</p> <p>"After Richard Smith, 58, was laid off from jobs at two carmakers, he moved to Charlotte, N.C., and found only part-time work. He makes $9.50 an hour repairing clubs at a Golf Galaxy Store," reports the <em>New York Times</em>.</p> <p>After Jack Peterson, 35, was laid off his job at an auto parts store last year, he spent every day for months looking for a new one. He could not find one and gave up looking a few weeks ago.</p> <p>According to the official national unemployment rate, 9.4% of Americans are out of work. But that figure excludes Smith and Peterson and many others like them. The official definition includes only those "who do not have a job, have actively looked for work in the prior four weeks, and are currently available for work."</p> <p>Include all the Smiths and Petersons and more than one of every five people are out of work in Oregon, Michigan, Rhode Island, California, Tennessee, Nevada, and several other states. State call centers and websites have been overwhelmed, and hundreds of thousands of needy people wait months for unemployment checks. (<em>New York Times</em>, 7/24/09)</p> <p>"The stimulus bill is helping somewhat," writes Times reporter David Leonhardt. "It has extended jobless benefits and prevented layoffs by state and local governments. A lot more stimulus is on the way, too...But the stimulus isn't helping as much as it could, because too much of the money is going to states that need it the least. In most of the Great Plains and Mountain West, the broad jobless rate was still below 12 percent this spring. In North Dakota, it was 7.8 percent. Yet these are some of the places receiving a disproportionate share of stimulus..."<br> (David Leonhardt, "Part-Time Workers Mask Unemployment Woes," <em>New York Times</em>, 7/15/09)</p> <p>In "The Human Equation," <em>New York Times</em> columnist Bob Herbert wrote, "The crisis staring America in its face and threatening to bring it to its knees is unemployment. Joblessness. Why it is taking so long—seemingly forever—for our government officials to recognize the scope of this crisis and confront it directly is beyond me...The roof is caving in on struggling American families that have already seen the value of their homes and retirement accounts put to the torch.</p> <p>"At the present rate, upwards of seven million homes can be expected to fall into foreclosure this year and next. Welfare rolls are rising...hundreds of thousands of unemployed workers will begin losing their jobless benefits, just about the only thing keeping them above water, by the end of summer...</p> <p>"I'd like to see the president go on television and, in a dramatic demonstration of real leadership, announce a plan geared toward increasing employment that is both big and visionary—something on the scale of the Manhattan Project, or the interstate highway program or the Apollo spaceflight initiative.</p> <p>"My choice would be a 'Rebuild America' campaign that would put men and women to work repairing, maintaining, designing and rebuilding the nation's infrastructure in the broadest sense—everything from roads and schools and the electrical power grid to innovative environmental initiatives and a sparkling new mass transportation network, including high speed rail systems....</p> <p>"There was a time when American could think on such a scale and get it done...It would be tragic if the 21st century turns out to be the time when that extraordinary can-do spirit disappears and we're left with nothing more meaningful and exciting than lusting after tax cuts..." (<em>New York Times</em>, 7/11/09)<br> &nbsp;</p> <p style="font-weight: bold">For discussion</p> <p>1. What questions do students have about the reading? How might they be answered?</p> <p>2.&nbsp; Why don't official unemployment statistics provide an adequate account of the number of people out of work?</p> <p>3. What do you know about the economic stimulus program? If you wanted to learn more, how might you find out? What appears to be a weakness in the program? What difference does that make to an unemployed person, say, in California?</p> <p>4. How would Bob Herbert put many people back to work? To what extent, if any, is the stimulus program doing any of these things? If you don't know, how might you find out? What was the Manhattan Project? The Apollo initiative?<br> &nbsp;</p> <hr> <h3 style="font-weight: bold; ">Student Reading 2:&nbsp;</h3> <h2>Millions facing foreclosure</h2> <p>"Employers continue to shed jobs, and that makes it difficult for even people with good credit who were doing fine to keep up with their mortgage payments," says Celia Chen, an economist at Moody's, a major credit-rating organization. Losing a job is a key factor in losing a home to foreclosure. (<a href="http://www.realestate.yahoo.com">www.realestate.yahoo.com</a>, 7/20)</p> <p>Roy Renault, 39, is a homebuilder who lost his construction job and then his own home in June as result of the economic meltdown. He, his wife Tammy, and their five boys had been living in a three-bedroom home he had helped to build. Now they're living in a cluster of tents in the Timberline Campground in Lebanon, Tennessee.</p> <p>Renault said: "You get to a point where it's: Do you pay your house payment and not have lights and water and everyone sits with no clean clothes and dirty dishes and everything? Or do you keep the lights and water on and forgo the house payment for the time being? And that's the way it went, until pretty much we wound up having to leave our home."</p> <p>No one knows how many people have lost their homes and been forced to live in a campground. But their numbers are growing. (<a href="http://www.tennessean.com">www.tennessean.com</a>, 7/12/09)</p> <p>Besides losing jobs, millions of people who struggle to avoid foreclosure by making regular mortgage payments are now "underwater"—that is, they owe more, often much more, on their homes than the homes can be sold for. Many people bought their homes during the housing boom in the early years of this century at top prices. As sales of houses in an overstuffed housing market began their sharp decline in 2007, prices also fell.</p> <p>Amanda Auge lost her job. And her Southern California home has lost more than half its value—dropping from $395,000 to $180,000. She says that for her and her daughter Jasmine, "Foreclosure seems like a foregone conclusion." This month she paid $600 of her usual $3,000 mortgage payment because "We want to show good faith and pay down our loan." But what she's paying down won't be enough for very long.</p> <p>A 2007 Harvard study found that "at least 62% of bankruptcy debtors can trace at least part of their financial hardship to medical debt." (<a href="http://www.pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf">http://www.pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf</a>)</p> <p>A Mortgage Bankers Association survey found that six million loans were either overdue or in foreclosure during April, May and June, the highest number the group has ever recorded. This number does not include those who have already suffered foreclosure. President Obama's $75 billion program to help people facing foreclosure has so far provided help for 235,247 people, or 9%, of those eligible for mortgage "loan modification," according to the Treasury Department.</p> <p>Under Obama's program the bank agrees to a "loan modification," reducing the loan's interest rate or the amount of principal owed. Homeowners pay less money back to banks. If they pay on time for three consecutive months, their lower rate stays the same for at least five years. Since banks receive less money from borrowers, they rarely agree to principal reductions, even though they get $1,000 from the government for every loan they modify, followed by $1,000 a year for each of the next three years.</p> <p>Bank of America has received $45 billion in taxpayer bailout money and last year paid hundreds of employees bonuses of $1 million, but has modified only 4% of eligible mortgages. Figures like these have contributed to popular outrage at the government for providing enormous bailouts for banks deemed "too big to fail," while letting people who are too small to count to fall through the cracks.</p> <p>Big banks like Bank of America, Wells Fargo and JPMorgan Chase dominate the mortgage servicing industry. But for them, and smaller lenders, loan modification is new, takes a lot of paperwork, and may also be unprofitable. "After all, if a loan is modified, the bank has to take a write-down on the portion of the loan it is swallowing. If lots of loans are modified, that means a lot of write-downs." (Joe Nocera, "A Trip to the Woodshed for Biggest U.S. Mortgage Servicers," <em>New York Times</em>, 7/11/09)</p> <p>But according to a<em> New York Times</em> report, the main reason mortgage companies are "reluctant to give strapped homeowners a break" is that these companies collect lucrative fees on delinquent loans. "Even when borrowers stop paying, mortgage companies...collect fees out of the proceeds when homes are ultimately sold in foreclosure...fees for insurance, appraisals, title searches and legal services." (Peter Goodman, "Late-Fee Profits May Trump Plan to Modify Loans," <em>New York Times</em>, 7/30/09)</p> <p>According to the Chicago Tribune, "the biggest lenders indicate they are likely to move more aggressively to clear a backlog of troubled mortgages." And that means trouble for people like Amanda Auge and 15.4 million other homeowners who are underwater. (<a href="http://www.chicagotribune.com">www.chicagotribune.com</a>, 7/6/09)</p> <p>On July 28, 2009, the U.S. government required representatives from the biggest mortgage lenders to come to Washington for a meeting. A letter to them demanded that they begin "adding more staff than previously planned, expanding call centers beyond their current size, providing an escalation path for borrowers dissatisfied with the service they have received, bolstering training of representatives, developing extra online tools, and sending out additional mailings to borrowers who may be eligible for the program." (Joe Nocera, <em>New York Times</em>, 7/11/09) But the results of this meeting remain to be seen.</p> <p>"When will things get better?" asked Senator Jack Reed of Rhode Island. "On Main Street, the recovery will begin when foreclosures stop." What do mortgage servicers need to get that process moving? According to Joe Nocera, it will take "a good swift kick in the rear."<br> &nbsp;</p> <p style="font-weight: bold">For discussion</p> <p><strong>1.</strong> What questions do students have about the reading? How might they be answered?</p> <p><strong>2.</strong> What connection can there be between losing a job and losing a home to foreclosure?</p> <p><strong>3. </strong>What is the president's loan modification program? How well is it working? What problems do banks have with the program? How do mortgage service companies profit from foreclosures?</p> <p><strong>4.</strong> Why does Senator Reed think "the recovery will begin when foreclosures stop"?<br> &nbsp;</p> <hr> <h4>For inquiry</h4> <p>The class might want to shape an inquiry into questions students have raised in discussing the readings.</p> <p>Or students might explore the following questions about their own community or neighborhood. Individuals or small groups might seek answers and report their findings to the class.</p> <ul> <li>How many people in your community or neighborhood are unemployed? What is the official unemployment rate?</li> <li>How many people are working part-time who want to work full-time?</li> <li>How many people are unemployed but have given up looking for a job?</li> <li>How many homes have been foreclosed? How many are facing foreclosure?</li> <li>What is being done to help people who are jobless and suffering from or facing foreclosure?</li> <li>What town or city records might provide information for answers to these questions?<br> &nbsp;</li> </ul> <hr> <h4>For further discussion, writing, and citizenship</h4> <p>The words "unemployment" and "foreclosure" are abstract. Those suffering from either or both are not.</p> <p>Discuss the following with students: What ground rules might they establish as they ask their families and friends about the human effects of unemployment and foreclosure? To what extent might they be willing to discuss this sensitive subject in small groups and then write about what they know? In the high school section of TeachableMoment&nbsp;see "Teaching on Controversial Issues" and "Teaching Social Responsibility." The latter includes suggestions for active student learning on projects that promote citizenship.<br> &nbsp;</p> <hr> <p><em>This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: <a href="mailto:lmcclure@morningsidecenter.org">lmcclure@morningsidecenter.org</a></em><br> &nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>fionta</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2009-09-02T14:00:00-04:00" title="Wednesday, September 2, 2009 - 14:00">September 2, 2009</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Wed, 02 Sep 2009 18:00:00 +0000 fionta 883 at https://www.morningsidecenter.org BOOM, BUST & BANK BAILOUT https://www.morningsidecenter.org/teachable-moment/lessons/boom-bust-bank-bailout <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>BOOM, BUST &amp; BANK BAILOUT</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong>To the Teacher:</strong></p> <div>&nbsp;</div> <div>Americans everywhere are feeling the effects of the housing bust that followed the housing boom, though many more personally and keenly than others. Economists and financial experts have differing analyses of what happened and why, though there is general agreement that easy credit, subprime mortgages and their securitization, lax or even no government regulation, and unfair, at times fraudulent, lending practices played significant roles.</div> <div>&nbsp;</div> <div>Below are some suggestions for student inquiries into this issue and introductory snapshots of Americans who are experiencing the effects of the housing bust. Following that are two student readings on (1) what fueled the housing boom, the warnings that were ignored, the financial collapse that followed, and the government bailout of banks that caused the crisis, and (2) the impact on those facing foreclosure, the financial industry's political clout with lawmakers, which has kept many of those facing foreclosure from getting help they need, and recent investigations that uncovered predatory lending practices. Discussion questions follow the reading. See the introduction for suggestions for further inquiry.</div> <div>&nbsp;</div> <div>See the high school section of TeachableMoment for earlier sets of materials on the financial and economic crises.</div> <div>&nbsp;</div> <div> <hr> <h4><strong>For discussion and later inquiries</strong></h4> </div> <ul> <li>Ask students what they know about the housing boom and bust.<br> &nbsp;</li> <li>What questions do they have? How might these questions be answered?<br> &nbsp;</li> <li>These questions may be answered in the readings; others may be useful later for student inquiries. Make a note of what students are misinformed about; this too might be useful for future inquiries.</li> </ul> <div>&nbsp;</div> <div> <hr> <h4><strong>Introduction:&nbsp;</strong></h4> </div> <h3>The human face of foreclosure</h3> <div>&nbsp;</div> <div><strong>"Bad economy puts more people on streets"</strong></div> <div>"The tears begin and her voice trembles as Ruth Martinez remembers the first few days of her new world...Her husband had lost his job, and the stress drove them apart. Then Martinez was evicted. Suddenly, her car was her home. And she was afraid to ask for help...</div> <div>&nbsp;</div> <div>"Rudy Salinas finds them in cars, under bridges, in abandoned homes, and even in protected trenches artfully dug by the military veterans who put survival skills learned in Iraq and Afghanistan to use in America's inner cities...</div> <div>&nbsp;</div> <div>"In my eight years of doing this I have never come across as many people who've told us they have never been homeless before," said Salinas, the director of community outreach for People Assisting the Homeless in Los Angeles. (<a href="http://www.cnn.com">www.cnn.com</a>, 5/8/09)</div> <div>&nbsp;</div> <div><strong>"It's a little scary"</strong></div> <div>&nbsp;</div> <div>"On Bainbridge Street in the predominantly black Bedford-Stuyvesant section of Brooklyn...a visitor can identify homes in jeopardy by the cracked stoops, broken windowsills and tilting chimneys. Alexia Billiart, 33, who is black, and her husband, who is white, moved a year ago...into a handsome row house in Bedford-Stuyvesant.</div> <div>&nbsp;</div> <div>"Across the street, two foreclosed homes have fallen vacant, and a nearby apartment building stands broken and padlocked...'We figured we'd move here and participate in the rebirth of this block,' said Ms. Billiart, who works for a financial planning firm. 'It seems to be going backward; it's a little scary.'" ("Minorities Hit Hardest as New York Foreclosures Rise," <em>New York Times</em>, 5/16/09)</div> <div>&nbsp;</div> <div><strong>"Children of foreclosure falling behind in school"</strong></div> <div>&nbsp;</div> <div>"Some of the people hit hardest by this bad economy are the youngest...These are the children whose families have had to move, sometimes more than once. The youngsters are pulled out of school, often leaving their friends behind without even saying goodbye.</div> <div>&nbsp;</div> <div>"Nine-year-old Kenia, who is in the fourth grade at Fairview Elementary School in Modesto, California, said that is what happened to her. She is new to the school, having moved to the area just a few months ago. She said it is really hard and she misses her friends." (<a href="http://www.cnn.com">www.cnn.</a><a href="www.cnn.com">com</a>, 2/27/09)</div> <div>&nbsp;</div> <div><strong>"Renters, too, can face the hit of foreclosure"</strong></div> <div>&nbsp;</div> <div>"Losing a home to foreclosure can be devastating. Typically, homeowners come to mind when we think of foreclosure. But the fact is, many foreclosed properties are places that renters call home, too. Recently, a father of five from Clackamas County called a Legal Aid office. His landlord owns all the houses on the street, and every one is in foreclosure-many of them are sitting vacant.</div> <div>&nbsp;</div> <div>"The father wants to continue paying rent, but the landlord's bank won't accept his payment and is pushing him to move out. 'What should I do?' he asked the Legal Aid office. Unfortunately, there's no good answer under Oregon law." (<a href="http://www.oregonlive.com">www.oregonlive.com</a>, 5/5/09)<br> &nbsp;</div> <div> <hr> <h3><strong>Student Reading 1:</strong></h3> </div> <h2>"Bad banking decisions" and who made them</h2> <div><strong>The housing boom</strong></div> <div>&nbsp;</div> <div>"What should I do?" is a question on the lips of millions of Americans on the brink of foreclosure or homeless because of foreclosure. They are victims of a housing boom that began early in the new century and then collapsed.</div> <div>&nbsp;</div> <div>Low interest rates and easy-to-pay mortgages stimulated a demand for houses, especially among people who had never owned one. Many had financial problems that stood in the way: limited incomes, debt, poor credit histories, inability to make a down payment.</div> <div>&nbsp;</div> <div>But none of these problems prevented them from getting a "subprime" mortgage, or low, adjustable rate mortgage. An adjustable rate mortgage might require people to pay no more than interest on the mortgage for two years. Then the "adjustable" part would kick in — sharply rising payments. Too many buyers did not understand what they were getting into. Some mortgage brokers helped them not understand. Some were crooks.</div> <div>&nbsp;</div> <div>Rumpelstiltskin spun straw into gold. Financial wizards at major banks and investment houses spun subprime mortgages into packages called "securities." They sold these securities to investors around the world. Essentially they were selling investors the promise of the new homebuyers' future mortgage payments-but they often misrepresented the risky nature of those mortgages.</div> <div>&nbsp;</div> <div>For awhile, everyone was making money on this explosion of subprime mortgages. Most of the lenders of hundreds of billions of dollars for sub-prime mortgages were giant banks—JPMorgan Chase, Citigroup, Bank of America, Wells Fargo.</div> <div>&nbsp;</div> <div>A study by the Center for Public Integrity called "Who's Behind the Meltdown" documents how lawmakers "essentially ignored repeated warnings that high-cost loans represented a systemic risk to the American economy." (<a href="http://www.publicintegrity.org">www.publicintegrity.org</a>, 5/6/09) Treasury Secretary Timothy Geithner, who was head of the New York Federal Reserve during the housing bubble and was in a position to warn of its consequences, now says, "The financial crisis was caused in large part by significant gaps in the oversight of the markets." (5/13/09)</div> <div>&nbsp;</div> <div>A major reason for the lack of oversight was that beginning in the 1980s, banks spent nearly $370 billion lobbying Congress successfully to weaken oversight and regulation of their behavior. (<a href="http://www.pbs.org/moyers/journal">www.pbs.org/moyers/journal</a>, 5/8/09)</div> <div>&nbsp;</div> <div>For a while, large numbers of house buyers kept pumping up prices. Financial wizards and ordinary homebuyers shared the delusion that prices would keep rising indefinitely. Even homebuyers who couldn't really afford their mortgage found that they could sell their home after awhile for significantly more than they had paid for it—so they kept on buying, and bankers kept on selling, risky mortgages.</div> <div>&nbsp;</div> <div>Alan Greenspan, who was Federal Reserve chairman at the time, later admitted in congressional testimony that he was "shocked" at how "mistaken" he had been in believing that "the self-interests of ...banks and others" would ensure their "protecting their own shareholders and their...firms." He and Congress should have required oversight and regulation to prevent "systemic risk to the American economy."</div> <div>&nbsp;</div> <div><strong>The Bust</strong></div> <div>&nbsp;</div> <div>Beginning in 2007, the first signs of serious trouble appeared. In an overstuffed housing market, prices fell. Homeowners with sub-prime mortgages could not make rising payments, could not borrow money on declining home values, and could not sell their homes. Home foreclosures mounted.</div> <div>&nbsp;</div> <div>Banks began to founder under the weight of mortgage-backed securities whose value was sinking and which they could not sell. By the fall of 2008, the Bush administration's Treasury Secretary Henry Paulsen announced that financial collapse was imminent. The banks of America were "too big to fail." A Troubled Asset Relief Program (TARP) was essential to keep them from drowning under the weight of the sinking value of sub-prime securities nobody would buy. Billions in taxpayer money was essential to bail them out.</div> <div>&nbsp;</div> <div><strong>TARP bailout money</strong></div> <div>&nbsp;</div> <div>Citigroup: $45 billion</div> <div>Bank of America: $45 billion</div> <div>Wells Fargo: $25 billion</div> <div>&nbsp;</div> <div>Additional billions went to such other big financial institutions as Goldman Sachs, Morgan Stanley, MetLife, and GMAC. And then, recently, tens of billions more to Citigroup, Bank of America and Wells Fargo after regulators finished examining their books.</div> <div>&nbsp;</div> <div>"The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves. These banks were deliberate enablers that bankrolled the type of lending that's now threatening the financial system," said Bill Buzenberg, Executive Director of the Center for Public Integrity</div> <div>&nbsp;</div> <div>The banks made nearly 7.2 million subprime loans from 2005 through 2007, a period marking the peak and collapse of the subprime boom, the Center's analysis reported. "The banks...made huge profits while their executives collected handsome bonuses until the bottom fell out of the real estate market." During the peak, "At least 21 of the top 25 subprime lenders were financed by banks that received bailout money-through direct ownership, credit agreements, or huge purchases of loans for securitization."</div> <div>&nbsp;</div> <div><strong>No bailout for homeowners</strong></div> <div>&nbsp;</div> <div>The worst sufferers are not the mega-banks. They are families being pushed out of their homes or in imminent danger of losing them through foreclosures. They are millions of other Americans who had nothing to do with the housing boom, but lost jobs, health insurance and pensions in the severe recession that came when the boom went bust.</div> <div>&nbsp;</div> <div>"Why is it in this country, in America, that we can find hundreds of billions of taxpayers' dollars from hard-working people all over the United States to come to the rescue of bad banking decisions, rotten investments, mortgages that were fraudulent on their face, but can't summon the political will to do something about 8 million families in America who are going to face foreclosure? That is where we are."-Senator Richard Durbin (IL, D) (<a href="http://www.pbs.org/moyers/journal">www.pbs.org/moyers/journal</a>, 5/8/09)</div> <div>&nbsp;</div> <div><strong>For discussion</strong></div> <div>&nbsp;</div> <div><strong>1. </strong> What questions do students have about the reading? How might they be answered?</div> <div>&nbsp;</div> <div><strong>2.</strong> What fueled the housing boom? Why were banks willing to lend to buyers who might not be able to pay their debts after a couple of years?</div> <div>&nbsp;</div> <div><strong>3.</strong> What happened to the regulations banks had been required to observe earlier and why?</div> <div>&nbsp;</div> <div><strong>4. </strong>Why has the government pumped billions into bank bailouts to prevent them from collapsing?</div> <div>&nbsp;</div> <div><strong>5.</strong> The mega-banks were not "victims of an unforeseen financial collapse....These&nbsp;</div> <div>banks were deliberate enablers" of the kind of lending "now threatening the financial system," according to the Center for Public Integrity. Do you agree? Why or why not?</div> <div>&nbsp;</div> <div><strong>6. </strong>What does Senator Durbin think about the bailout? Do you agree? Why or why not?</div> <div>&nbsp;</div> <div> <hr> <h3><strong>Student Reading 2:&nbsp;</strong></h3> <h2>The Senate, mega-banks, rising foreclosures&nbsp;</h2> </div> <div><strong>Banking power and "the sanctity of contracts"</strong></div> <div>&nbsp;</div> <div>"The banks-hard to believe in a time when we're facing a banking crisis...that many of the banks created-are still the most powerful lobby on Capitol Hill. And they frankly own the place."-Senator Durbin, an Illinois Democrat, in a radio interview, 4/27/09.</div> <div>&nbsp;</div> <div>The senator was upset and angry because the Senate was about to vote down his plan to help homeowners facing foreclosure if their mortgage institution would not. The plan would have allowed bankruptcy judges to qualify the homeowners for a mortgage at a lower interest rate or even at a lower principal that would reduce it to fair market value. This kind of help is available today for wealthy people who want to buy vacation homes, farms or ranches, according to Durbin.</div> <div>&nbsp;</div> <div>"The people who brought this crisis to us are the ones that are dictating policy," Senator Durbin charged in an interview with Bill Moyers on PBS. "The banking industry...fought me all the way...Some won't even sit at the table. The American Bankers Association walked away." So did other bankers and credit unions. "Meanwhile they were working feverishly in the halls of the Senate, going office to office, trying to convince people to vote against Durbin's bill...They're pretty convincing. They're pretty powerful."</div> <div>&nbsp;</div> <div>Moyers asked, "What did the lobbyists say when you said to them, 'Look, rich people...can get their mortgages renegotiated, but ordinary people can't.'"</div> <div>&nbsp;</div> <div>"Well," he responded, "they argue about the "sanctity of the contract...and I have to tell you that it is a little hard to swallow when we're dealing with a banking industry that has entered into so many bad contracts, creating these rotten portfolios of mortgage securities"-banks that have since turned to taxpayers to "bail them out with hundreds of billions of dollars."</div> <div>&nbsp;</div> <div>"And I have to say that the group I was trying to help, the people facing mortgage foreclosure, don't have that kind of political clout. ...I really was trying to speak for some of those people against some pretty powerful political forces."</div> <div>&nbsp;</div> <div><strong>Who opposed the Durbin bill—and why?</strong></div> <div>&nbsp;</div> <div>Durbin had offered the same plan to the Senate a year ago, when there were two million homes in foreclosure. There are now an estimated eight million foreclosures.</div> <div>&nbsp;</div> <div>This time around, the Senate voted down Durbin's plan by 51-45. The majority included 12 of Durbin's fellow Democrats.</div> <div>&nbsp;</div> <div>The Senate did approve a bill for federal help to prevent some mortgage foreclosures. It also gives renters a 90-day notice before eviction. But foreclosures continue to rise, contributing to deteriorating neighborhoods in America's towns and cities like one in Bedford-Stuyvesant where the Billiards live.</div> <div>&nbsp;</div> <div>Durbin told Bill Moyers that there were several reasons why senators voted against his bill. Some, he said, agree with the banks. Others don't have much of a mortgage crisis in their states. And some "don't want to give this last break to somebody facing foreclosure, thinking some of these people got into this mess on their own and they shouldn't be rescued."</div> <div>&nbsp;</div> <div>And, as Durbin suggested, the other reason is the power that lobbyists from the banking industry wield over Congress. Banks contribute significant sums to senators' political campaigns. For example, Senator Evan Bayh of Indiana was one of the Democratic senators voting against Dick Durbin's bill to help homeowners. Senator Bayh has received from Goldman Sachs $123,000 to support his reelection campaign. (<a href="http://www.opensecrets.org">www.opensecrets.org</a>)</div> <div>&nbsp;</div> <div>Senator Durbin told Moyers, "If you want to get to the heart of this, it's the way we finance our campaigns for the United States Senate and the House of Representatives. It's time for us to move to public financing, for the good of the country."</div> <div>&nbsp;</div> <div><strong>Investigations and continuing foreclosures</strong></div> <div>&nbsp;</div> <div>On May 11, Massachusetts Attorney General Martha Coakley criticized predatory lending by Wall Street firms in a continuing investigation of "the deceptive marketing of unfair loans and the companies that facilitated the sale of those loans." One of those companies, Goldman Sachs, agreed to pay as much as $60 million to end the Massachusetts investigation into whether it helped promote unfair home loans in the state. According to the New York Times, the agreement "requires Goldman to reduce the principal on first mortgages by up to 30 percent and on second mortgages by up to 50 percent." ("Goldman Pays to End State Inquiry Into Loans," <em>New York Times</em> 5/12/09)</div> <div>&nbsp;</div> <div>Eleven other lenders, including four financial firms that received bank bailouts, have made payments "to settle claims of widespread lending abuses," according to the study by the Center for Public Integrity.</div> <div>&nbsp;</div> <div>"Homeownership rates have fallen more steeply for most minorities than for whites," according to a study by the nonpartisan Pew Hispanic Center. "Through both boom and bust, Hispanics and blacks have been far more likely than whites to receive higher-priced loans and carry higher debt relative to their incomes." (<a href="http://www.pewhispanic.org">www.pewhispanic.org</a>, 5/12/09)</div> <div>&nbsp;</div> <div><em>The New York Times</em> reports that in recent months, banks have "regained financial footing as well as a bit of their old swagger" and are "racing to pay back billions of taxpayer dollars." They "are eager to extricate themselves from heightened government oversight, including restrictions on their employees' compensation." ("U.S. Weighs How to Let Banks Give Money Back," <em>New York Times</em>, 5/20/09)</div> <div>&nbsp;</div> <div>Meanwhile an estimated 290,000 - 341,000 new foreclosure were filed in March alone. The Times reports that Obama's plan to "keep struggling Americans in their homes now relies on lenders to voluntarily rework bad loans...Even if lenders do agree to modify loans, many Americans will still be in trouble. That's because nearly 14 million homeowners are 'under water'—they owe more on their mortgages than their homes are worth." (Gretchen Morgenson, "A Reality Check on Mortgage Modification, New York Times, 4/25/09)</div> <div>&nbsp;</div> <div><strong>For discussion</strong></div> <div>&nbsp;</div> <div><strong>1.</strong> What questions do students have about the reading? How might they be answered?</div> <div>&nbsp;</div> <div><strong>2. </strong>Speaking of the banks and their influence on the Senate, Senator Durbin said, "they own the place"? Why?</div> <div>&nbsp;</div> <div><strong>3.</strong> What legislation did Senator Durbin want the Senate to pass to help people whose homes were being foreclosed?</div> <div>&nbsp;</div> <div><strong>4.</strong> Why did the Senate turn down his proposal?</div> <div>&nbsp;</div> <div><strong>5. </strong>What connection might there be between political campaign financing and the failure of Durbin's legislation? Do senators like Evan Bayh have a conflict of interest? Why or why not?</div> <div>&nbsp;</div> <div><strong>6. </strong>What evidence is there that bank fraud fueled the housing boom and bust?</div> <div>&nbsp;</div> <div><strong>7.</strong> Why do you think homeownership rates fell more sharply for blacks and Latinos than for whites? And why do you think Latinos and blacks "have been far more likely than whites to receive higher-priced loans"? If you don't know, how do you think you might find out?</div> <div>&nbsp;</div> <div><strong>8. </strong>Why do many of the big banks want to give their bailout money back?</div> <div>&nbsp;</div> <div><strong>9. </strong>What does it mean to be "under water" on a mortgage? How is it possible to owe more on one's home than it is worth?</div> <div>&nbsp;</div> <div> <hr> <p><em>This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: <a href="mailto:lmcclure@morningsidecenter.org">lmcclure@morningsidecenter.org</a>.</em></p> </div> <p>&nbsp;</p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>fionta</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2009-06-03T14:00:00-04:00" title="Wednesday, June 3, 2009 - 14:00">June 3, 2009</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Wed, 03 Jun 2009 18:00:00 +0000 fionta 896 at https://www.morningsidecenter.org AIG: Should Taxpayers Bail Out an 'Irresponsible' Company? https://www.morningsidecenter.org/teachable-moment/lessons/aig-should-taxpayers-bail-out-irresponsible-company <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--title--teachable-moment-lesson.html.twig x field--node--title.html.twig * field--node--teachable-moment-lesson.html.twig * field--title.html.twig * field--string.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <span>AIG: Should Taxpayers Bail Out an &#039;Irresponsible&#039; Company?</span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--title.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--body--teachable-moment-lesson.html.twig * field--node--body.html.twig * field--node--teachable-moment-lesson.html.twig * field--body.html.twig * field--text-with-summary.html.twig x field.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong>To the Teacher</strong></p> <p>AIG is among a host of American enterprises that succumbed to the irresistible opportunity to make easy money through arcane financial instruments that even the company's former CEO, Maurice Greenberg, said "bewildered" him. American taxpayers are now paying the price. Following a brief introductory overview, the student reading below focuses on the housing boom and bust, then why AIG foundered and why taxpayers are propping it up. Discussion questions and a suggested fish bowl discussion follow.</p> <p>&nbsp;</p> <hr> <h4><strong>Introduction:</strong></h4> <h3>The rise and fall of AIG</h3> <p>In 1919, Cornelius Vander Starr, a Californian, opened an insurance agency in Shanghai. Joined by a partner, the pair expanded their business in China and to the Philippines and Indonesia by hiring local people as agents and managers.</p> <p>Using that strategy, the company became the American International Group (AIG) with offices worldwide and 116,000 employees. It added a diversity of other enterprises to its insurance business over the years—real estate development, aircraft leasing, shipping terminal operation, a ski resort in Stowe, Vermont, a soccer team in England.</p> <p>Yet suddenly, in September 2008, AIG was on the verge of collapse. To prevent it, the U.S. government came to its aid with an $85 billion line of credit. But three times since then, the US has added billions more, most recently on March 2, 2009, as the company, sinking under the weight of countless billions in "toxic assets," announced the biggest quarterly loss in any company's history, $61.7 billion.</p> <p>American taxpayers now own about 80% of a once hugely profitable private enterprise, into which cash disappears down a black hole. Why? What are these "toxic assets"? Should the US use taxpayer money to bail out a private company?<br> &nbsp;</p> <hr> <h3><strong>Student Reading:</strong></h3> <h2>An "irresponsible" company</h2> <p>Lending money for mortgages was once a conservative business. Potential homebuyers had to reveal their credit history and make a substantial down payment before receiving loans for mortgages.</p> <p>The Federal Reserve slashed interest rates. Buyers could more easily finance an expensive purchase like a car or even a house. For little or no money down, a homebuyer could get an adjustable rate mortgage that might require only payment of interest for two years. Sharply rising payments followed. But as the flood of new homeowners drove prices up steadily, the home buyer could borrow more on it, or even sell for a profit.</p> <p>Banks, mortgage broker agencies, and Wall Street investment firms took advantage of the boom to sell mortgage-backed securities. These were bundles of mortgages they transformed into stock securities and sold to individuals and institutions worldwide. The business of lending money to people became a reckless, unregulated gold rush. In 2004, for example, the Securities and Exchange Commission, whose job is to oversee and regulate Wall Street, exempted big investment banks from a debt limit regulation. This allowed them to invest billions held in reserve against losses and invest the money in mortgage-backed securities and other newly-created, complex financial instruments.</p> <p>Joe Nocera writes in the New York Times that an AIG unit in London "was filled with go-go financial wizards who devised new and clever ways of taking advantage of Wall Street's insatiable appetite for mortgage-backed securities,"and sold credit-default swaps, a kind of insurance for the securities.</p> <p>"In effect," writes Nocera, "AIG was saying if, by some remote chance (ha!) those mortgage-backed securities suffered losses, the company would be on the hook for the losses." But because the company had a AAA credit rating, the mortgage-backed securities they insured with credit-default swaps got AAA ratings, too.</p> <p>"Why would Wall Street and the banks go for this? Because it shifted the risk of default from themselves to AIG, and the AAA rating made the securities much easier to market." AIG got substantial fees, but it saw them "as risk-free money" and "surely would never have to actually pay up. Like everyone else on Wall Street, AIG operated on the belief that the underlying assets—housing—could only go up in price."</p> <p>They were wrong. Unlike other forms of insurance, say for a fire, that require the insuring company to set aside enough money if it has to compensate an owner for one, AIG didn't have to set aside anything. It didn't. Credit-default swaps were not regulated.</p> <p>In 2006, new housing construction and prices faltered. By 2007, in an overstuffed housing market, both declined. By 2008 it was clear that the boom had become a deflating bubble. AIG, or, rather, the American taxpayer, was eventually stuck with hundreds of billions in credit default swaps.</p> <p>The company had also taken on other mysterious risks, like "collateral triggers." They guaranteed that "if certain events took place, like a ratings downgrade for either AIG or the securities it was insuring, it would have to put up collateral against those securities, Again, the reason it agreed to the collateral triggers was pure greed: it could get higher fees by including them. And again, it assumed that the triggers would never actually kick in...Those collateral riggers have since cost AIG many, many billions of dollars. Or, rather, they've cost American taxpayers billions." (Joe Nocera, "Propping Up A House of Cards," <em>New York Times</em>, 2/28/09)</p> <p>US government leaders decided that AIG was "too big to fail," that the consequences of failure were too damaging to permit.</p> <p><strong>What are these "toxic assets?</strong></p> <p>As the housing market collapsed, mortgage-backed securities became toxic, credit-default swaps became toxic, collateral triggers became toxic. Investment banking firms—Bear Stearns, Lehman Brothers, Merrill Lynch—were left holding mortgage-backed securities whose worth kept sinking. AIG was stuck with hundreds of billions in debts for credit default swaps and collateral triggers and nothing in reserve to pay them.</p> <p><strong>Should taxpayers bail out a private company?</strong></p> <p>Holders of the insurance represented by credit-default swaps and collateral triggers are American and European banks. If AIG failed to honor these debts, the collapse of many of those banks could follow. "AIG has more than 375 million [insurance] policies with a face value of $19 trillion. If policyholders lost faith in AIG and rushed to cash in their policies all at once, the entire insurance industry could falter." (Andrew Ross Sorkin, <em>New York Times</em>, 3/3/09)</p> <p>The New York Times editorialized (3/3/09): "The AIG bailouts fail the basic test of transparency. Who ends up with the money? Major financial institutions are not innocent victims...They are sophisticated investors, and they should have known the risks being taken-and who profited mightily from the relationship before it all came crashing down.. Whomever the recipients are, they should be investigated for their roles in the crash and, to the extent possible, be made to pay for the bailouts."</p> <p>"Who ends up with the money?' is a question the Senate Banking Committee failed to get an answer to at its hearing on March 5, 2009. But lawmakers and the public were so angry about the $165 million AIG paid its executives in bonuses that they forced the company to release the names of dozens of institutions that have benefited from federal bailout money. They included some well-known names—Goldman Sachs, Deutsche Bank, Merrill Lynch, Bank of America, and JPMorgan.</p> <p>"The institutions that received the Fed payments were owed money by AIG because they had bought its credit derivatives," the New York Times report. These derivatives included credit-default swaps intended to protect buyers of mortgage backed securities and other shaky loans."But AIG was suddenly unable to honor its promises last fall, leaving its trading partners exposed to potentially sizable losses." ("AIG Lists Firms To Which It Paid Taxpayer Money," <em>New York Times</em>, 3/16/09)</p> <p>"AIG exploited a huge gap in the regulatory system" and was "irresponsible," said Federal Reserve Chairman Ben Bernanke in testimony before the Senate Budget Committee on March 3, 2009. He expressed his anger again on "60 Minutes" on March 15: "Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong...we had a situation where the failure of that company would have brought down the financial system."<br> &nbsp;</p> <hr> <h4>For discussion</h4> <p><strong>1. </strong>What questions do students have about the reading? How might they be answered?</p> <p><strong>2. </strong>Are students clear about certain key terms? For instance: mortgage, interest rate, mortgage-backed securities, debt limits for financial institutions, credit-default swaps, credit rating, collateral, collateral triggers?</p> <p>&nbsp;</p> <hr> <h4>For a fish bowl discussion</h4> <p>A fish bowl discussion provides an opportunity for everyone in a class to examine an important issue. It promotes listening, invites participation, and focuses attention. For details, see "<a href="http://www.morningsidecenter.org/teachable-moment/lessons/engaging-your-class-through-groupwork">Engaging Your Class Through Groupwork</a>."</p> <p>Suggested questions for fish bowl or for a conventional classroom session:</p> <p><strong>1.</strong> Why did America experience a housing boom?</p> <p><strong>2. </strong>Why did the boom seem to produce a win-win situation for homebuyers and home sellers?</p> <p><strong>3. </strong>What happened to the housing boom and why?</p> <p><strong>4.</strong> What happened to AIG and why?</p> <p><strong>5. </strong>Who's paying the bill and why?</p> <p><strong>6.</strong> How would you assign blame for the housing market collapse and the economic and financial crises that followed? Why?</p> <p><strong>7.</strong> Should there be a federal investigation of AIG as the Times editorializes? Why or why not?</p> <p><strong>8.</strong> Who or what was responsible for "a huge gap in the regulatory system," the system that was supposed to prevent disasters like the one Americans are suffering today? If you don't know, how might you find out?<br> &nbsp;</p> <hr> <p><em>This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: <a href="mailto:lmcclure@morningsidecenter.org">lmcclure@morningsidecenter.org</a></em></p> </div> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/field/field.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--uid--teachable-moment-lesson.html.twig x field--node--uid.html.twig * field--node--teachable-moment-lesson.html.twig * field--uid.html.twig * field--entity-reference.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'username' --> <!-- BEGIN OUTPUT from 'core/modules/user/templates/username.html.twig' --> <span>fionta</span> <!-- END OUTPUT from 'core/modules/user/templates/username.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--uid.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'field' --> <!-- FILE NAME SUGGESTIONS: * field--node--created--teachable-moment-lesson.html.twig x field--node--created.html.twig * field--node--teachable-moment-lesson.html.twig * field--created.html.twig * field.html.twig --> <!-- BEGIN OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <span> <!-- THEME DEBUG --> <!-- THEME HOOK: 'time' --> <!-- BEGIN OUTPUT from 'core/modules/system/templates/time.html.twig' --> <time datetime="2009-03-11T14:00:00-04:00" title="Wednesday, March 11, 2009 - 14:00">March 11, 2009</time> <!-- END OUTPUT from 'core/modules/system/templates/time.html.twig' --> </span> <!-- END OUTPUT from 'core/modules/node/templates/field--node--created.html.twig' --> <!-- THEME DEBUG --> <!-- THEME HOOK: 'links__node' --> <!-- FILE NAME SUGGESTIONS: * links--node.html.twig x links.html.twig --> <!-- BEGIN OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> <!-- END OUTPUT from 'themes/contrib/bootstrap/templates/system/links.html.twig' --> Wed, 11 Mar 2009 18:00:00 +0000 fionta 906 at https://www.morningsidecenter.org