Public Banking

We can help ourselves or wait for Washington

A tidal wave of home foreclosures has battered the United States since the onset of the Second Great Depression. There is more damage to come.

The industry trade group Realty Trac reports that foreclosures in 2009 "shattered all records... jumping 21 percent from 2008 and 120 percent from 2007."

Realty Trac reports that 6,285 Pennsylvania properties were foreclosed in October of 2010 - one in every 875 Pennsylvania housing units. That is a 9 percent increase from the previous month and 13 percent above the level reported in October 2009.

Mark Zandi, chief economist at Moody's Analytics, estimates that when the December figures are in, there will be 1.8 million foreclosed homes in the United States in 2010 and that the number will reach 2.1 million in 2011.

In Bucks County, 307 homes were foreclosed in only December of 2010 - a month when the foreclosure mill slows down. But it will be back to business now.

One consequence of home foreclosures is of course homelessness. And while not every family that loses a home winds up on the streets, sleeping in their cars or in tent cities and abandoned buildings (Some can move in with family or friends), many do.

Estimates of the number of homeless vary. The U.S. Department of Housing and Urban Development (HUD) authorizes a "point in time count ," a once and done snap shot taken by social service providers, police departments and other agencies, and estimates that 1.5 million Americans are living on the streets today.

But many are skeptical and believe that like estimates of the unemployed by the federal Bureau of Labor Statistics, the official count of the homeless at best underestimates the scale of the problem, or at worst is meant to disguise it.

Researchers like Jay Levy, author of "Homeless Narratives," put the number at between 2.5 and 3.5 million. It is a number unheard of in modern times, in any of the developed nations of the world. And it will grow in the year ahead.

Dietrich Bonheoffer, the German theologian murdered by the Nazis at the close of World War II once observed, "You can see the sin of respectable people in their flight from responsibility."

Bonheoffer was remarking on the way in which millions of decent, god fearing German Christians closed their eyes and walked away from the evil of the Holocaust that ultimately claimed the lives of 6 million Jews.

But the evil that men do does not always come in the outsized scale of the horror of the Nazis. Sometimes it creeps up on a society, incrementally, bit by bit, at the rate of 2 million foreclosures a year.

But it is no less an evil. Or, if evil sounds too much like a pretext for some do-good, bleeding heart, liberal, tax and spend proposal to help the homeless, try approaching it as a problem for middle class home owners.

The annualized number of foreclosed homes in Bucks County will top 4,000 in 2011, to be added to the thousands of the preceding two years.

There are a lot of unoccupied homes in Bucks County. Who shovels the snow from the sidewalks, or will mow the lawns, or repair a broken shutter or falling down porch?

What do these unoccupied houses do for the already depressed value of the other homes in the neighborhood - in your neighborhood?

And are these homes actually unoccupied, or have they been invaded by the homeless, or become bases of operation for petty crooks and punks, or more sophisticated gangs, criminals and drug dealers, as is being widely reported from Long Island to Arizona to Los Angeles?

Got your attention?

The federal government proposes to do to little either to halt the tidal wave of foreclosures, assist the homeless or save your neighborhood from this growing blight. But there is something that can be done.

The Federal Reserve can pump billions - trillions - into the purchase of municipal bonds, at the same no interest, low interest terms it gave Wall Street. And agencies like the Bucks County Housing Authority can issue those bonds, buy up every foreclosed property in the county at fair market value - residential and commercial both - put crews of the unemployed to work to maintain them, and work with other county agencies to do the job Washington will not, and put people back in those homes and businesses back in the commercial properties.

And if the Fed will not, then a public Bank of Pennsylvania or Bank of Bucks County can be the market for those bonds, just as the public Bank of North Dakota is a market for municipal bonds in that state.

This is one example of what public banks can do for the economy and the American people, and why activity is now under way in more than a dozen states to see how the lessons learned and the success achieved in North Dakota can be shared across the United States.

Or we can wait for Washington.