Oakland Abandons Anti-Foreclosure Plan Fearing Wall Street Reprisals
On November 20, East Bay Express published an article titled Fearing Wall Street Reprisals, Oakland Council Abandons Anti-Foreclosure Plans.
Fearing Wall Street Reprisals, Oakland Council Abandons Anti-Foreclosure Plans
The Oakland City Council — fearing threats from Wall Street — abandoned plans to explore bold strategies for protecting homeowners at risk of foreclosure and instead passed a resolution “appreciating the City of Richmond’s leadership” in this area.
The council had been considering two resolutions, by Rebecca Kaplan and Desley Brooks, first introduced on November 5, that not only praised Richmond for its plans to buy and restructure troubled mortgages, using eminent domain to seize the mortgages if investors who own them refuse to sell, but also to launch an investigation of the possibility of Oakland pursuing a similar strategy.
But by last night, both motions had been stripped of plans to investigate similar strategies and simply commended Richmond for its actions, while calling on mortgage holders to cooperate with plans to help homeowners. Kaplan explained that since “Richmond got hit with threats [of lawsuits and lowered credit ratings] even before they took any action,” her reworded resolution “reduces the risk of reprisals to us.”
Later, in the public comment period, community activist Margaret Rossoff said that approach “leaves Richmond out there to take all the risks and lets Wall Street terrorize us.”
Margaretta Lin, special projects director in the Oakland Community and Economic Development Department, preceded discussion of the resolutions with a report on the array of programs Oakland already has in place to help homeowners at risk of foreclosure. Later in the meeting Mayor Jean Quan said the city has helped “hundreds” of people stay in their homes.
But Brooks and Kaplan expressed frustration that so many people have lost their homes anyway. “A lot of press is given to big national plans,” Kaplan commented, “but what we hear from people on the ground is that help is not getting to the communities.”
Representatives from the Oakland Metropolitan Chamber of Congress, the Jobs and Housing Coalition (an organization of developers), and the Oakland Association of Realtors warned that any hint that Oakland might be considering the use of eminent domain would harm the city’s credit rating, scare away investors, and open the city to liability.
Council President Pat Kernighan expressed opposition to Brooks’s resolution because its introductory paragraphs contained references to eminent domain. Councilmember Lynette Gibson McElheney, however, said she wanted to make sure the final resolution expressed opposition to the way financial institutions, with the help of the federal government, have been “gaming the system, gambling with people’s lives.”
McElheney proposed to amend Kaplan’s resolution by adding wording from Brooks’ calling on financial institutions to “stop threatening our communities with reprisals and litigation.” Kaplan accepted this as a friendly amendment and her resolution passed unanimously.
Meanwhile, in Richmond, the threatened reprisals that loomed so menacingly over the Oakland City Council meeting may turn out to be not so scary after all. Although Richmond was unable to sell bonds it issued immediately after announcing its mortgage principal reduction program, Richmond Finance Director James Goins reported on November 19 that a new bond issue is very likely to be successful. The new bonds will cost the city more — about $1 million over a 16-year period, but the city will still be able to reach its financial goals for the bond issue. Investors’ initial concerns about risks posed by the mortgage program, Goins pointed out, “is really noise,” not a genuine credit risk.
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