By Angela Vullo
January 7, 2020–Amid the many economic problems flying in the face of the bogus claim that the U.S. economy is thriving, is the severe shortage of affordable housing for a huge portion of the U.S. population. This particular issue has recently drawn the attention of the Washington Post, the Los Angeles Times, and other major media, who have provided some useful reviews of the problem.
It’s time for this crisis to be addressed seriously, in the context of the overall infrastructure, real manufacturing, and productivity disasters. It will become clear that the only hope of solving it requires returning to the outlook of Franklin Roosevelt in dealing with the Great Depression.

The “Conundrum of affordable housing”
The Washington Post’s contribution came on January 2 in an article entitled the “Conundrum of Affordable Housing.” The piece was authored by a group of professional economists: Jared Bernstein, chief economist to former vice president Joseph Biden and a senior fellow at the Center on Budget and Policy Priorities; Jim Parrott, a nonresident fellow at the Urban Institute and owner of Falling Creek Advisors; and Mark Zandi, chief economist at Moody’s Analytics.
Here I have extracted the main points:
- “The percent of houses that are vacant has fallen to a more than 35-year low. There is a shortfall of an estimated 1.6 million new houses.”
- “This gap is increasing by about 300,000 units each year.”
- “Soaring construction costs have been driven in part by a rise in local government fees and stiffer local zoning restrictions.”
- “The cost of home building materials has risen sharply, driven in significant part by the trade war and higher tariffs on imported steel, aluminum and other building materials.”
- “Prices for the lowest-priced houses have grown consistently twice as fast as prices for the highest-priced houses and now exceed what many families of modest means can pay.”
- “Recent census data show that while the median cost of rent and utilities is up 13 percent over the past nearly 20 years, median income is up less than 1 percent (both inflation-adjusted).”
- “Fewer families are able to buy a house, and more renters are spending so much of their income just to keep a roof over their heads, housing is increasingly more of a drain than a source of wealth building.”
Unmentioned is the cost of land, which of course varies greatly depending upon location, but can be ridiculously inflated in urban/suburban areas.
Among proposed solutions, Bernstein calls for measures to:
- “Reduce the cost of building houses more Americans can afford.”
- “Reduce the cost of development, including the Low-Income Housing Tax Credit and the New Market Tax Credit.”
- “Use the Housing Trust Fund which provides money to state housing authorities for the development of affordable rental units.”
Congress Weighs in
In November 2019 America’s housing crisis also took the national stage. Not only did the affordable housing issue come up in the Democratic presidential debate, but two bills were introduced into the U.S. Congress, one by Rep. Ilhan Omar, a Democrat from the Minneapolis area of Minnesota, and the other by presidential candidate Senator Bernie Sanders.

On November 20, Congresswoman Omar introduced the Homes for All Act (H.R. 5244), which calls for spending $2 trillion over 10 years to build 10 million homes, paid for through the federal budget.
On November 14, Senator Sanders issued his housing bill as part of his Green New Deal; Sanders’ bill appears similar in scope and intent as the Omar bill, with a focus on zoning and rent control, paid for by an increase in taxes and the wealth tax.
Various proposals are circulating by other presidential candidates, including Senator Elizabeth Warren, who calls for spending $500 billion over ten years to build 3.2 million homes, to be paid for by her wealth tax.
The Homes for All Act
Let’s take a closer look at the intention of the Omar bill. The official summary reads: “To establish new units of public housing and private market affordable housing, to provide grants to combat gentrification and neighborhood destabilization, and for other purposes.”
Here are some of its key points–
- “As more than 18 million households – 1 in 6 – are paying more than half of their income on housing, the bill calls for 9,500,000 publicly owned dwelling units over 10 years.”
- “$80 billion for public housing agencies every year through 2031 (for a total of $800 billion)”
- “Another $20 billion each year ($200 billion over 10 years) would go toward the federal Housing Trust Fund, an Obama-era program to provide affordable housing for the very poorest families in the nation.”
- “Calls for `Supportive Services’, access to free, voluntary programs that address the needs of people experiencing chronic homelessness and in housing instability.”
- “Services should include assistance with accessing healthcare, employment, education, childcare, financial literacy, and other community-based, supportive services.”
- “Mandatory for government to actually pay all the costs associated with the maintenance and operation of public housing.”
- Accessibility for “proper integration of housing and public transit.”
The Homes for All Act has a similar intent as some of the other solutions being offered by the Progressive Caucus, such as Jobs for All, Medicare for All, College Tuition for All, etc. All of these programs are designed to improve the quality of life and living standards for the average citizen and should bring to mind the kind of programs that President Franklin Roosevelt carried out during the Great Depression as part of his New Deal and his 1944 Economic Bill of Rights. That proposal called for “the right of every family to a decent home.”
Echo of FDR
On June 13, 1933 President Franklin D. Roosevelt launched his first major action addressing the housing crisis which the nation faced in the Great Depression. On that day, Congress passed the Home Owners Loan Corporation Act; it set up the Home Owners Loan Corporation (HOLC), which had a mandate to “provide emergency relief with respect to home mortgage indebtedness, to refinance home mortgages, to extend relief to the owners occupied by them and who are unable to amortize their debt elsewhere….” The idea was to stem the tide of evictions and foreclosures which had thrown millions of Americans onto the streets, including into the famous “Hoovervilles.” As Nancy Spannaus elaborated in a post last June, FDR’s approach must be adopted once again.
The problem in California
On December 29, 2019, the Editorial Board of the Los Angeles Times laid out the California housing crisis in some detail.

Here are the main points from their editorial:
- “The problem has spiraled out of control in recent years, and by 2019, it was overwhelmingly clear that what was once a garden variety housing shortage had been allowed to grow into a housing crisis.”
- “Rents have risen faster than incomes, and 1 in 3 households statewide now spend more than half their income on rent.”
- “Despite massive infusions of public funding to try to solve the problem, counties across the state have reported double-digit increases in homelessness.”
- “The greatest job growth has been in coastal cities that have the highest housing costs, forcing workers to choose between paying more than they can afford for housing, commuting long distances or forgoing career opportunities because the cost of living is too high.”
- “Housing is at the root of the state’s problems.”
- “Gov. Gavin Newsom wanted the state to build 3.5 million homes by 2025 to end the housing shortage.”
- “He called for a `Marshall Plan’ for affordable housing, and made headlines with a threat to withhold transportation dollars from communities that failed to build enough homes to meet their needs.”
- “Newsom did deliver a big increase in funding this year — nearly $3 billion for housing and homelessness. But he watered down his proposal to withhold transportation dollars.”
- “Instead he agreed to a compromise bill that would allow a judge to impose steep fines— up to $600,000 a month — on cities that willfully refuse to plan and zone for enough market-rate and affordable housing.”
In the Governor’s attempt to deal with the housing crisis, he helped create another one by cutting funding for the high-speed rail line from Los Angeles from San Francisco. (The Trump Administration is also threatening more cuts.) And, as Omar noted, public transit and housing must work together.
Don’t Forget Wall Street!
No discussion of the housing crisis can be competent without including the role of Wall Street, especially the role of the bankers who blew up the housing market, causing the 2008 financial crash.
On November 10, 2019, 60 Minutes’ Leslie Stahl conducted an interview with top CEO and Chairman of JP Morgan Chase, Jaime Dimon. Dimon sits atop the country’s largest bank, with assets of more than $2 trillion and a quarter million employees.

During the interview, Dimon lays out his plans to buy up distressed areas of Detroit, Chicago, D.C., and several other cities that were hit hard by the 2008 crisis. The interview centers on Detroit, where JP Morgan Chase is the largest bank, with $20 billion in deposits. His plan for “helping” Detroit is precisely the type of gentrification that Rep Omar’s bill is designed to stop.
In a city where there are blocks full of abandoned houses, he wants to create a kind of “greenway park” to build up the city village by village His design centers around small setting up villages restaurants, shopping centers, recreation facilities, and the like which will allegedly create, or at least look like, prosperity. But will the average Detroit resident be able to afford to live there? Dimon claims he’s not just out to bring in (and make) money.
Jaime Dimon: “So it’s not the money, and this is a very important thing. It was about the help, the advice, the consulting, the ideas, the human capital.
And it was about the data that the bank collects and crunches every day, more information about business and consumers than the government collects.
We use big data and artificial intelligence in running our businesses around the world for risk and credit and marketing. So here, we actually have huge data, too, about how people spend their money.”
Lesley Stahl: Where their credit cards are showing up.

Jamie Dimon: “We can actually see where people spend money on credit and debit cards and checks and where they’re spending, like, at restaurants, et cetera. That one piece of data creates where you can open a store, where you can do something different.”
Dimon had the analysts build a database just for Detroit.
Leslie Stahl: “Detroit was in a lotta trouble before the financial crisis. But the financial crisis just did them in 100%. That—that was crushing. Do you feel in any way that you’re atoning for the sins of Wall Street, when you go and put your effort into Detroit? Is that in your head?”
Dimon: “I wouldn’t use the word `atone.’ I think we all owe back to society.”
And if you believe in his sincerity, I have a bridge for sale.
Same old Wall Street Shenanigans
Despite claims that Dimon and other Wall Street banks have changed their ways, the same Wall Street shenanigans continue today as they did in the run-up to 2008. The bigger-than-ever banks continue to buy derivatives, now to the tune of $275 trillion, and currently, JP Morgan Chase itself holds $2.4 trillion of stock derivative exposure. Word on the Street is that the big banks are now massively selling swaps (insurance) on the derivatives, betting that the market will continue to go up.

According to Wall Street On Parade, “the latest derivatives report from the Office of the Comptroller of the Currency (OCC), Citibank, the federally-insured, taxpayer-backstopped bank owned by Citigroup, has sold protection to other banks, hedge funds, insurance companies or corporations on a staggering $858 billion of Credit Default Swaps.” Editor Pam Martens elaborates in her January 3rd post:
Credit Default Swaps played a central role in the 2008 financial collapse on Wall Street, as did Citigroup. It is an indictment of every federal banking regulator in the United States, as well as Congress, that Citigroup has been allowed to return as a major player in this market while using its federally insured Citibank once again as a pawn in this game. …
The OCC report also shows that the federally insured banking unit of JPMorgan Chase is also a big player in the Credit Default Swap market, having bought $612.2 billion and sold $597 billion of Credit Default Swaps. …
According to insiders on Wall Street, the big positions in Credit Default Swaps at Citibank and JPMorgan Chase are being used to reignite the synthetic Collateralized Debt Obligation (synthetic CDO) market – which vastly added to the leverage that blew up Wall Street in 2008….
We are painfully aware of the outcome of that con game. In 2007-2008. When the overheated housing bubble blew, approximately 10 million Americans lost their homes, 2.6 million lost their jobs, and $10.2 trillion disappeared. Shockingly, nothing has been done by the U.S. Congress to rein in or punish these Wall Street bankers. Even the players of the board game “Monopoly” face more consequences for their corruption than the Wall Street banks. Remember the infamous card that says, “Go to jail. Go directly to jail. Do not pass go. Do not collect $200.”
A deadly combination
If you couple the potential for another Wall Street blowout and the current housing crisis, this is a deadly combination. Our government’s allegiance cannot be both to the Wall Street banks and to the American people. “A house divided against itself cannot stand.”
With the decimation of the country’s infrastructure over the last 50-60 years, there is no alternative to thinking big and bold. The only solution is the creation of a National Infrastructure Bank, as designed by Alexander Hamilton. We are proposing $4 trillion for investment into all the critical areas, power, transportation, water, housing, and more. We have no choice, if we want a healthy future.
As well-intended as some of the proposals we’ve reviewed for housing and infrastructure overall may be, without a comprehensive program, driven by maximum employment of our workforce into high paying union jobs, we cannot fulfill this urgent need. As Americans, we used to think this way. We used to believe that we could have it all.
Tags: affordable housing, Angela Vullo, Detroit, Housing crisis, Ilhan Omar, Jamie Dimon, Los Angeles, Los Angeles Times, Washington Post