Issue #151, Fall 2007

Editor’s Note

Promises in the Rose Garden

By Alice Chasan

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Edward Gramlich, who died in early September, spent years as the lone voice on the Federal Reserve board of governors warning about the dangers of predatory-lending practices and the lack of federal regulation in the subprime-mortgage market. Gramlich - an economist who championed affordable housing and the needs of low- and moderate-income Americans - saw the economic promise in homeownership but placed it in the context of a multifaceted national housing policy that would include an adequate stock of rental housing and strict oversight of the credit industry to prevent exploitative practices. His arguments got no traction with Fed chair Alan Greenspan or a GOP-controlled Congress. But he kept at it, completing an accessible, enlightening book on the subprime market that was published in June as the foreclosure crisis swept the land.

Weeks before his death, Gramlich held a conference call to discuss his book. I asked him then what he thought of elected officials' responses to the turmoil roiling through the housing market. Expressing disappointment that the Democrats now in control of Congress hadn't introduced legislation to address what he called the "hole in the supervisory safety net" for the lending industry, the former board chair of the Neighborhood Reinvestment Corporation also faulted the presidential hopefuls for failing to offer comprehensive housing policies. As for the Bush administration, Gramlich decried its refusal to devote either money or sustained attention to the acute foreclosure problem, let alone to the structural issues that have fueled it.

Ned Gramlich lived long enough to see his ideas garner some media attention, but sadly, much of the coverage had as much to do with his fatal illness as with the prescience of his ideas.

I thought about Ned Gramlich as I listened to George W. Bush promise "help and hope" to some homeowners in his announcement of Band-Aids to stanch the foreclosure hemorrhage. Sounding like a man reading from a phonetically written script in a foreign tongue, Bush was clearly venturing into alien territory as he sketched out limited preventive measures for struggling low- and moderate-income homeowners. His scant familiarity with the idiom of housing policy perhaps accounted for the complete omission of the thousands of people already forced out of their homes when their adjustable-rate mortgages reset.

Bush at best backed into the Rose Garden promises. He'd ignored the mortgage mess until its spillover into global markets forced him in mid-summer to address the matter. Even then, he said there'd be no "direct grants" to rescue homeowners. Just before Congress returned from its summer break and the presidential campaign racheted up, he offered "a little help" to Americans caught in the credit debacle.

Ruminating over Bush's pidgin policymaking and its stark contrast with Gramlich's fluency, I had a crazy idea. What if housing galvanized the same intense political energy and got as much media attention as, say, Sen. Larry Craig's sojourn in an airport restroom?

To have a sustained, serious national debate about housing policy that includes intelligent media analysis of what works and what doesn't would require a new set of priorities for our elected leaders. It would mean they'd embrace big ideas rather than quick fixes - comprehensive policies rather than emergency solutions. But wait - isn't that what the 2008 presidential hopefuls are promising to deliver? I don't know about you, but I'm still waiting for the policy package to arrive.

Will the candidates model the kind of problem-solving Gramlich argued for? Shelterforce is doing its part to show them the way. In this issue, Peter Dreier, Barbara Sard, and Greg Squires point the presidential candidates in the direction of some promising strategies for redressing income inequality and the structural roots of residential and school segregation.

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