- This Week
Richmond to seize hundreds of mortgage loans from banks to revive its communities
09.03.13 - 3:26 pm | Joe Fitzgerald Rodriguez |
Guardian photo by Brittany M. Powell
It's akin to a form of high stakes gambling, Vlahoplus said, and everyone wants a piece.
Wells Fargo's lawsuit shows more than 230 investors have claims to the homes Richmond intends to help. The list spans eight pages of the complaint, showing the far-reaching list of financial partners with skin in the game — assets they'll protect at any cost.
In addition to Wells Fargo filing suit against Richmond, a cluster of Wall Street lobbyists clad in gray suits, acting on behalf of the investors whom Wells Fargo represents, flew into the economically depressed city for a face-to-face with McLaughlin.
"We met with them here at City Hall," McLaughlin recounted. "They utilized their bullying tactics and put out threats to get us to back off. When we questioned them on an alternative solution to the problem (of foreclosures), they had none."
They threatened to redline the city, McLaughlin said, a practice that basically means no investments or loans would be made in the city of Richmond.
And now it seems they've followed through with their threat.
Last week Wall Street rebuffed the refinancing of Richmond's municipal bonds despite their A- rating, an unusual move that led the city to pull the bonds from the market.
The bonds are used by cities to fund public works, and lack of bond financing could mean a tough road ahead on new schools and infrastructure projects.
Standard and Poor's released a report on eminent domain in Richmond from last week saying the tactic "may present inconsistencies in solving the root cause of the housing problem in the US, create unintended consequences for both borrowers and investors, and inadvertently limit mortgage lending activity."
McLaughlin said she would fight Wells Fargo and Wall Street tooth and nail.
Channeling her activist past, the Green Party mayor led a rally outside Wells Fargo's headquarters in downtown San Francisco on Aug. 15, flanked by 50 Richmond protesters bearing picket signs. After asking to speak with someone from Wells Fargo, she was met with locked doors and a runaround from a company representative.
— Mark Calvey (@SFBizMarkCalvey) August 15, 2013
Vlahoplus said the lawsuits and threats were merely a signal that the bankers were scared, and in his estimation, what they fear is diffuse control — because it's difficult for national companies to combat policy changes at the local level.
"(Financial industries) can control things in the White House with contributions to the right committee chair," he said. If Washington or even state level government tried to swoop in and buy up mortgages, it'd be easier to stop. But if every local municipality suddenly had the power to do this, it would be tough to combat each one.
"It's like Whac-a-Mole," he said.
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