I had lunch today with a smart young Intercollegiate Studies Institute staffer. As we talked about the mortgage credit crisis, he challenged me to go beyond identifying the problem and the threat it poses to "family values" and not just family home values.
I started thinking aloud. The talk has thus far all been about helping distressed homeowners...and using government money to do it. That, I take it, is the point of departure for any Democratic discussion of the subject. But why not adapt something churches, faith-based organizations, and other non-profits have been doing (with varying degrees of success) for years? I have in mind the Community Development Corporation, the mainstay of faith-based and non-profit urban neighborhood redevelopment efforts. Why can’t we take this model, tested in urban neighborhoods, into the suburbs where declining home values and job losses have threatened the capacity of families to stay in their homes? Successful CDCs find a pool of capital to purchase and rehabilitate distressed properties, rebuilding a neighborhood to the point that it becomes attractive to private investors and purchasers. They try to establish long-term relationships with the people they help, and often ask that they provide "sweat equity" (if nothing else) as their stake in a new house.
So here’s my thought for a suburban CDC: a big church or group of churches creates a CDC to raise capital from its members and from local foundations. It uses the capital to help community members restructure mortgages that imperil their homeownership. In exchange, those who are thus assisted give a certain number of hours of service to the CDC. (I’m sure that church members who were once or are still in the financial industry would also be willing to provide assistance.) Those who are assisted still have to repay a loan, but the terms are set by people who wish to save a neighborhood and its inhabitants, rather than by those who have a responsibility to shareholders--wherever they are--to make a profit. Since the CDC would have lower overhead and employment costs than a for-profit lender or a government agency, the terms of the loans it makes or facilitates could be more generous. Those who are assisted do not become dependent upon government but rather are integrated into a community.
If this can work in neighborhoods where "social capital" is relatively scarce, it ought to be very promising in neighborhoods where one might reasonably expect to find more people with stakes in the area, contacts in the community, and job (and other coping) skills. Rather than government handouts, we have communal self-help, orchestrated by churches, faith-based organizations, and other non-profits.
What doyou think?
Great idea! What Republican politician would be willing to take it up? Certainly no Democrat would.
Seems like a perfectly sensible proposal to me. Why would any political figure need to take it up at all? From my perch at HUD, I don't see any need for a legal reform in order to get it going. The CDCs exist already. Just do it!
Why can't people learn to budget their money, live w/n their means. I wouldn't support any of this crap, including some "non-profit" corp until the people accepting help showed me they had cancelled their cable, cell phones, eating out, etc.
These little CDCs don't work in urban communities. They only work in the minds of academics. Really they're almost as big of a scam as the government. But the idea is quite fitting for the GOP, since their motto is proudly growing government at a slower rate.
Clint,
What evidence do you have that these CDC's "don't work"?
And what I'm proposing is not government assistance, but communal self-help.
Exhibit A, B, C. I could go on or I could tell lots of personal stories. Tricksters run these "organizations." If you're a bad guy who wants to look good, you run a CDC called...oh say "Americans for Justice Inc." You're non-profit, which is a good thing b/c there won't be any profit after you take your salary, benefits, and biannual ritzy trip to a CDC "Conference." You raise a bunch of money, dole it out to friends and family on staff, and tell the community how much good you're doing. The best way to get the community on your side is to cozy up with the politicians, so you give political contributions big time. Politicians want to do phony photo-ops w/your group for their own popularity too, so its a win-win for the bad guys. The politicians, who the CDC is in bed with, are the ones who are suppossedly regulating the CDC, (see corporate law.) Unsurprisingly regulation is extremely lax and CDC's get away with lots of abuses.
Joe, it's too easy. Now I know you'll say these are just bad apples. And I'll admit that there are a few good apples. But on the whole the non-profit corporate shell is a big scandal. What proof do you have that it works? Furthermore your claim that government isn't involved is naive. Governments charter corporations and necessarily must regulate non-profits. And you know as well as I do that a lot of cash flows from governements to CDCs and from CDC managers to political campaigns.
Communal self-help? A little oxy-moronic, but with this clever catch-phrase lots of people are tricked. I personally would be a bigger fan of Marxist rugged-individualism.
I am tapped out on any more faith-based initiatives from the conservatives. Plus your little CDC's rely too much on community organizers, and your party taught me to ridicule them.