“The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery,” reported the Washington Post April 2.
According to recent articles on the WND.com website and in the Investor’s Business Daily, the Justice Department has:
— Threatened banks with lawsuits if they don’t push loans in “minority communities” and demanded lenders open branches in working-class neighborhoods of cities hard-hit by foreclosures like Detroit and St. Louis.
— Forced big mortgage lenders like Wells Fargo and Bank of America to provide 30-year loans to what banks refer to as “high-risk” borrowers under threat of prosecution.
— Issued orders mandating lenders advertise in “minority media” and offer loans to people on public assistance.
— Resurrected a Clinton-era regulation that warns lenders they must be more flexible with minority home buyers with weak credit to make up for “past discrimination.”
Banks have their own reasons to resist the White House campaign, which will ensure those with the least resources get mired in debt.
From the late 1960s, under the pressure of declining rates of profit, the capitalists who own the banks, factories, mines and mills turned more and more to trading in debt and other financial papers instead of investing to expand production and hire more workers.
This shift included extending credit to low-paid workers in the form of credit cards, student loans, auto financing, “subprime” mortgages and home equity loans.
Successive Democratic and Republican administrations worked with the Federal Reserve Bank to eliminate regulatory obstacles to blowing up huge bubbles of debt, including in the housing market.
The lending profiteers lured workers and layers of the middle classes with little or no credit into buying homes. As usual, the scheme appeared to work until it didn’t, imploding at the end of 2006 as high-interest subprime loans and dropping house prices crushed the finances and home-owning illusions of millions. This in turn helped trigger a massive banking and financial crisis, as one of the first major symptoms of a worldwide economic crisis rooted in a slowdown of capitalist production and trade.
While banks have since tightened lending practices, the government today stands behind about 90 percent of all mortgages to “stimulate” the housing market.
Promoting the fraud of home ownership for working people doesn’t just serve the capitalists by propping up a balloon of debt as an avenue for speculative profits amid a slowdown in production. Getting workers to develop a false view that they too can be property owners that share common interests with other proprietors also serves as a cornerstone of capitalist social stability.
In his 2007 memoir The Age of Turbulence, former Federal Reserve Board Chairman Alan Greenspan answered criticisms of his support for subprime housing loans for working people. “It was worth the risk,” in order to boost home ownership, he said. “The protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.”
In his booklet The Housing Question, written in 1872-73, communist leader Frederick Engels described how the bosses use home ownership to tie workers to the capitalist system, entangling us in debt that conservatizes us and makes us less mobile.
“Give [workers] their own houses, chain them once again to the soil, and break their power of resistance [during] a big strike or a general industrial crisis,” Engels wrote.
There is no solution to the housing problems workers face under capitalism in which housing, and every other social necessity, is a commodity.
For working people, as 2008 showed once again, there is no “security” in home ownership. The only road forward is working-class solidarity and struggle along the road to wresting political power from the capitalist exploiters. Our class in power would expropriate the capitalist landlords who live off rent and ensure housing — attractive, clean and roomy — for all.
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