Local Government should create an alternative home finance system

For decades the housing market has been at the mercy of big banks. Currently much of the country is languishing in the mess created by big banks. Many people can't afford the house they own, but can't sell it because the far away financial institutions that created the problems in the housing market still control the mortgage markets. The only people that can afford to buy a house are speculators with cash, because few people can qualify for a mortgage. Big chunks of our cities are slipping into a future of transitory populations and cheap rental housing.

The conventional mortgage market is not going to help solve this problem. Buried deep in the heart of the complex mortgage markets the Wall Street smart guys created are a bunch of entities that own mortgages that are paying 6 to 8% interest. They have no interest in refinancing a mortgage that pays 6 to 8% and replacing it with a mortgage that pays 4 to 5%. So they make qualifying for a mortgage impossible.

Local agencies in the hardest hit areas need to make the conventional mortgage market irrelevant by creating an alternative refinancing mechanism. The Cal-Vet home loan program provides a model. For over half a century the Cal-Vet home loan program has been selling bonds, using the money from the bonds to make home loans to veterans, then using the interest payments on the mortgages to pay the costs of the program and pay off the bondholders.

In that 60 years or so that the Cal-Vet program has been quietly chugging along putting people in homes it has never cost taxpayers a dime, to my knowledge, nor has it ever caused a financial bubble or burst in the housing market.

The private mortgage market, on the other hand, left US taxpayers with a $700 to $800 billion dollar bill following the Savings and Loan meltdown in the 1980's, not to mention imposing a lot of financial pain on millions of homeowners.  Then 20 years later we find ourselves in the current housing collapse where the ultimate bill to homeowners and taxpayers will be in the many trillions of dollars, and millions of people have been financially devastated.

Every city should have the power to take whatever steps are necessary to set up a city refinance agency that can sell bonds then use the bond funds to make loans to people who want to own their own home. Set up strict underwriting criteria, insulate the administration of the program from political meddling, insulate the salary structure from efforts to bump up administrative salaries to match the private sector. Making home loans doesn't require innovation, or out of the box thinking, or any of those other corporate buzz words. It should be a color by the numbers, follow the instructions process. You don't need to pay anyone hundreds of thousands of dollars a year, you just need to hire people who take pride in their work, want to make a decent living, and are rewarded by doing a public service.

A city that set up such a program could become a magnet for young, ambitious, bright people who want the opportunity to own a home and build a life. Local business that invested in housing bonds would be building their future at the same time they are guaranteeing a tax-free return on investment funds. It could revitalize the city.

Things Republicans could do to make me take them seriously - labor relations

Republicans need to develop a view of labor relations that learns from the past, rather than seeking to return to the past.

Unions are just another special interest group out for whats best for them.  But unions are a less than ideal solution to a very real problem - before unions market forces often led companies to treat their employees as little better than slaves.  Unions evolved out of working folks banding together to protect themselves from abusive management practices.

Because governments approach has always been reactive, our current labor relations laws are based on an adversarial relationship between management and labor.  This seems to me to be nuts.  It is sort of like building a football team by making the linemen and the ball handling players fight it out to see who gets steak and who gets gruel.

Republican don't seem to acknowledge the function Unions serve, so they propose solutions that history has already demonstrated allows market forces to push companies toward paying their employees as little as possible for as much work as possible, and then the ensuing race to the bottom destroys the consumer base that companies need in order to sell their products.  Republican solutions are to abolish or hobble unions, but offer no ideas for protecting workers from abuse by newly empowered management.

What if instead of trying to abolish or hobble private sector unions we made them irrelevant?  What if government used Corporate tax policy to counteract the market tendency to reward the companies that pay their employees the least.  A company with a pretty flat pay scale, that shared the wealth up and down the payroll, could qualify for a lower corporate tax rate than a company that pays its management enormous salaries and its workers minimum wage.

Public Sector unions offer a special problem.  When public sector unions bargain they don't bargain with people who will ultimately foot the bill, they bargain with other public employees.  The public employees bargaining on behalf of taxpayers often have conflicting loyalties - they may need the public sector unions support to maintain their political position.  Recent history is replete with public sector contracts that granted far more in long term compensation than the public entity can afford.

So what if instead of trying to abolish public sector unions we made them irrelevant.  We tie public sector compensation to the average private sector compensation.  By law politicians would be limited in their ability to buy votes by either paying public employees to little or to much.