At the wonderful ANHD Conference held at NYU on Friday, March 22nd, I attended the workshop on Real Affordability and the challenges of meeting the needs of those who struggle to pay rent in this city. At the very end, Assad Mahmood from Deutsche Bank interrupted Ismene Speliotis from MHANY (a panel member), chastening her for “lecturing” about capitalism. He went on to posit that the problem with community development corporations is that we are not innovative enough and continue to rely on the same old approaches to dealing with issues of poverty and the lack of affordable housing. He made some reference to micro-lending in Bangladesh and other places, but the session was at an end so there was no time to discuss this any further.
I am hoping to continue the discussion here. But I have to preface my remarks with a proviso – I am upset and I do feel as though Assad was attacking my sister. So if my remarks seem a bit strident, I apologize for any number of reasons, including the fact that I like Assad and believe he is a thinking, well-meaning person.
The first thought that came to mind when we were accused of lacking innovation was how over the past decade or more we have spent far too much time addressing real problems caused by “innovations” injected into our political economy by the Wall Street and the banking sectors (if one can make such a distinction). Starting with the predatory lending scourge of more than a decade ago, which led to the sub-prime lending crisis that nearly plunged our economy into a depression, the community development sector has been working furiously to address abuses that were encouraged by lax regulation and fed by financial innovations like collateralized debt obligations, credit default swaps, and the like, abuses that continue with usurious payday loans and other abuses accommodated by facilities provided by our major financial institutions. And while CDCs, to cite just one example, spent exorbitant amounts of staff time trying to modify mortgages, following guidelines established by the Obama Administration, the administration’s own Treasury Department all but ignored its own mandates and focused singularly on protecting banks and making them even “too bigger to fail,” regardless of how many families were destroyed in the process.
So I could not help but think of how bankers complaining about the lack of CDC innovation is somewhat analogous to a person who walks a pack of dogs on the sidewalk, allows them to do their business there, refuses to take responsibility for cleaning up the mess, and then blames the building superintendent for not being innovative enough in the maintenance and operation of his building. It goes without saying that it is difficult to be innovative when you are cleaning up messes created by others.
At an earlier point in the panel discussion, Vicki Been from NYU’s Furman Center made an interesting point. Responding to the issue of permanent affordability, she stated, “there are no free rides.” In general I agree with that, but I also have to think that if they were honest about this, Lloyd Blankfein and Jamie Dimon might just disagree.