The Department of Housing and Urban Development

Welcome to Civil Discourse. This podcast will use government documents to illuminate the workings of the American Government and offer contexts around the effects of government agencies in your everyday life. Now your hosts, Nia Rodgers, Public Affairs Librarian and Dr. John Aughenbaugh, Political Science Professor. N. Rodgers: Hey, Augie? J. Aughenbaugh: Good morning, Nia. How are you? N. Rodgers: I'm good. How are you? J. Aughenbaugh: I'm good. In part near the reason why I'm good is we get to discuss, as part of our continuing series on federal government executive branch departments. The acronym of this department. N. Rodgers: Is also a movie. J. Aughenbaugh: Yes. That's where I was going it was. N. Rodgers: Look at us it's like twins separated at birth. J. Aughenbaugh: I feel sorry for you. For listeners, if you can't guess what department we are referencing, I will just go ahead and tell you the name of the movie is HUD starring one of my favorite actors, Paul Newman. N. Rodgers: I was going to say it wasn't that Paul Newman. J. Aughenbaugh: Yes. N. Rodgers: So handsome and such a fabulous career. J. Aughenbaugh: By the way, a complete digression. A memoir in part, written by Paul Newman, has just been released about his life. It's got a great title, The Extraordinary Life Of An Ordinary Man. I just love that title. N. Rodgers: Well, and he found great love early on, Joanne Woodward and they were together for their whole adult lives. J. Aughenbaugh: That was his second marriage. N. Rodgers: I didn't know that. J. Aughenbaugh: Yeah, that was his second marriage. N. Rodgers: Cool Hand Luke and Butch Cassidy and the Sundance Kid and The Color Of Money. J. Aughenbaugh: My all-time favorite movie. N. Rodgers: The Accused. J. Aughenbaugh: No that's what maybe Foster. N. Rodgers: My bad. J. Aughenbaugh: The Verdict. N. Rodgers: The Verdict. Thank you. I knew it was a law thing. J. Aughenbaugh: Which was directed by Cindy Lament a great director, but we digress. N. Rodgers: Yes, we could do an entire episode on Paul Newman, but we won't because that's not part of our department series. This is the Department of Housing and Urban Development, HUD. J. Aughenbaugh: Correct. N. Rodgers: When do we get HUD? J. Aughenbaugh: In a time period that you and I have discussed at length, either tangentially or a rather specific focus. It was graded officially, September 9th 1965. It was part of President Johnson's what program Nia? N. Rodgers: The Great Society. J. Aughenbaugh: Yes, The Great Society. N. Rodgers: I wonder what Johnson would do with our society right now. Let's not go there, but it's actually not technically, I mean 1965 is when you get HUD, but a whole bunch of this stuff that HUD is made up of is older than that. J. Aughenbaugh: Yeah. HUD is much like Homeland Security. In that the bulk of Homeland Security. N. Rodgers: Is other agencies? J. Aughenbaugh: Yeah. Was composed of already existing agencies. N. Rodgers: They got moved into well, you guys all do the same thing here. Let's stick you over here. J. Aughenbaugh: Yeah, so for HUD, basically, HUD consolidated five existing independent federal housing and community development agencies. Those were the federal housing administration which again, listeners, you're probably not going to be surprised to learn that the FHA was actually created during the new deal in 1934 in response to the great depression. N. Rodgers: It still exists. J. Aughenbaugh: It still does exist. In fact, my first home loan was. N. Rodgers: An FHA loan? The whole point of the FHA is first-time buyers, It's not just to get people into houses because the theory is that the American dream is home ownership. J. Aughenbaugh: Yeah, that's part of the American dream. Again, from congress's perspective, if you own a home, less likely to do crazy stuff because you got a mortgage, that you have to pay. N. Rodgers: Well, and you're more rooted in the community you're more rooted probably in your school system. J. Aughenbaugh: Yes. N. Rodgers: Because you're likely to have children and if you have children then they're in all the public. I think you're less likely to just pick up and move from one place to another. J. Aughenbaugh: That's right. Let's encourage Americans to, N. Rodgers: Put down roots. J. Aughenbaugh: There you go. That was the axiom level I was looking for, put down those roots. N. Rodgers: Yeah, that's what they told us when we were kids. Put down roots. My parents didn't listen to that. We moved all over the place, but I think that's unusual. I think most people did try to put down roots. Your mom still lives in her house. J. Aughenbaugh: They bought the house two weeks before I was born. N. Rodgers: There you go. She did put down roots. J. Aughenbaugh: The other four were the public housing administration, which was also created in 1937. N. Rodgers: Can I just comment about that? I guess, I know this is going to sound bananas, so just work with me here for a second. I don t think that I realized that we had public housing in 1937, that we had public housing that early. But it makes sense because people are moving to the city because of industrialization. Of course, there would need to be public housing in addition to private housing. By public housing, we mean housing for lower rent, for lower-income folk. I guess I just didn't even think about the fact that that would even be a thing. For some reason, I guess I thought that was part of the modern administrative state, not the 1937, not 1930s, which I guess in your world is the modern administration. J. Aughenbaugh: But that's part of the creation. Again, Nia, you and I've talked about this. The great depression was so all-encompassing that the Roosevelt administration was cooking spaghetti for the first time. There were trying to figure out, N. Rodgers: Through it against the wall and see what sticks. J. Aughenbaugh: Because they didn't know. The United States had next to know safety net for Americans that were poor, that were struggling, etc. We were doing this on the fly. The conditions in the great depression were so horrific that one week they were trying public housing the next week, two years before they created social security and they didn't know social security was going to work. N. Rodgers: I would argue that if we had a worldwide depression now, we might be in the same situation. Because it's so difficult to predict what's going to happen when something like that happens. I also didn't realize that Fannie Mae is as old as it is. J. Aughenbaugh: Yeah. Fannie Mae is the shorthand for the Federal National Mortgage Association. N. Rodgers: F-N-M-A which is Fannie Mae. I never put together that it was an acronym for something. J. Aughenbaugh: Yeah, and again, that was created in 1934. Again, it was in response to the great depression because they wanted to create a secondary market for home mortgages. What if banks, many of which were foreclosed in the early years of the great depression, no longer could support home mortgages? The federal government stepped in to create another pool or pot of money that Americans could tap into to save their homes. N. Rodgers: Not necessarily first-time buyers. J. Aughenbaugh: That's right. N. Rodgers: Because FHA is first time, but I see. They needed something for people who already had their homes, and were in danger of losing them. J. Aughenbaugh: The fourth one was the urban renewal administration. This has been probably the most controversial of the units of HUD. We'll talk about that a little bit later on. Then the fifth one is the community facilities administration. This is your garden variety. Nobody knows about this federal agency, but their basic purpose is great community development programs. N. Rodgers: They do grants. They give money. J. Aughenbaugh: Yeah. City planning grants, student and employee housing aid for hospitals and colleges, and mass transit. Before the department of transportation was created. N. Rodgers: You had to have somebody who would help with roads and rail and buses and trolleys and streetcars N. Rodgers: That's why later we're going to get transportation because that gets so big. J. Aughenbaugh: That's right. Yes. N. Rodgers: Somebody says, Dang, we need to break that off and make it its own thing. What's marvelous is that as we have done these departments, we have seen something you mentioned early on that as the country changes and as there's demographic changes, but also as there's physical location changes from rural to city, then there's all these things that have to get developed and that's how we end up with labor, and that's how we end up with commerce, and that's how we end up with Health and Human Services. That's how we end up with all these. Now, later on transportation, but now HUD, that's how we end up is, you know what we need we need a department that'll do the following things. While at some point, we're going to have the Department of Inter-alien species management or something, when we finally have and when we're finally visited by ETs. J. Aughenbaugh: Yes. Right? N. Rodgers: It will somebody will say we need a department for that. J. Aughenbaugh: Somebody in the federal government will go testify at a hearing in front of Congress, or members of Congress will ask questions that again, we tend to be very critical of members of Congress but members of Congress in many ways are just like garden variety Americans. What do you mean? We need a docking station for extra terrestrial, spacecraft. N. Rodgers: Right. J. Aughenbaugh: Well, if we're going to invite them to go ahead and perhaps relocate to the United States of blah, blah, blah. We need docking stations for the their [inaudible] right after. N. Rodgers: We have invited him by the way. J. Aughenbaugh: Yes. N. Rodgers: We sent out a satellite in the 70s, 80s, voyager. It's like, hey, show up at Earth. What is it they used to say in the Australian commercials? We'll put another shrimp on the barbie. J. Aughenbaugh: Barbie. That's right. N. Rodgers: Anyway. A lot of this is under FDR because FDR is dealing with the depression and he's also trying to make the new deal, right? He's also trying to create this system where the middle and lower income folks in the United States have some way to achieve and move into a more stable financial situation through housing, through social security, through those kinds of programs. Because he's basically trying to keep falling out of the system. J. Aughenbaugh: Yeah, because prior to the Great Depression, most safety net programs in the United States and Nia, you and I've talked about this. Most safety net programs were either at the state level, but not very many, or through non-profits. N. Rodgers: I was going to say churches most. J. Aughenbaugh: But they just didn't have the capacity. Even if they had the will, they just didn't have the capacity to deal with the sheer volume of need. N. Rodgers: In the depression. I see. J. Aughenbaugh: But once you start making that commitment and you start saving people. That's the idea of a safety net. Once you start saving them, not surprisingly, many in government or like we could do better. We can make sure that this doesn't happen in the future. Again, I mean, if you think about, for instance, the Federal Housing Administration FHA, the basic idea was you got to give Americans hope. They hear about the American dream, The Great Depression hits, do you pretty much want an entire generation of Americans to conclude that they'll never own their own home. N. Rodgers: Right no. Because if it's so woven into the fabric of what you think being an American is and being a prosperous American. J. Aughenbaugh: Yes. N. Rodgers: Then what you're saying is no prosperity for you. J. Aughenbaugh: Back then, homes were still considered one of the primary investments that one generation could give to the next. N. Rodgers: Which is why redlining is such a terrible idea. J. Aughenbaugh: That's right. N. Rodgers: Because it limits that for communities of color, they struggle to pass on. J. Aughenbaugh: Or religious minorities, Right? I mean, remember, redlining was not only used to go ahead and discriminate against people of color. It was also used to discriminate against Jews, Catholics. We don't want those people. N. Rodgers: Living in our neighborhoods. J. Aughenbaugh: In our neighborhoods. N. Rodgers: Those were worthless, which allowed people to build less wealth to pass onto their children. J. Aughenbaugh: That's right. But I mean, FDR, this was key in the development of HUD. I mean, we've already talked about it. You have the National Housing Act in 1934. You have the Housing Act of 1937. Which is where you get housing authority for low-income housing. Then you get amendments in 1938. That's where you get the creation of Fannie Mae. You get an executive order in 1942. By the early 1940s, FDR stopped going to Congress in the finest presidential tradition. N. Rodgers: He just started writing executives. J. Aughenbaugh: Executive orders. N. Rodgers: This number is. J. Aughenbaugh: Nine, 070. N. Rodgers: That would be 9,000, executive orders. J. Aughenbaugh: Just in Roosevelt's. By 1942 you're now talking about his third term. N. Rodgers: Right, so 12 years. Nine thousand executive orders. That's a person who cannot deal with congruent like who just can't get Congress on board. You can't get the courts onboard and we know he can't get the courts on board because he had talked about padding the court. He's like, you know what I'll do? I'll just pull up my pen and write this executive order. J. Aughenbaugh: What I have students asked me Nia. The recent presidents, Obama, Trump, Biden. They seem to use executive orders quite a bit. I'm like actually following in a well-established presidential tradition or practice. N. Rodgers: If you're talking about 9,012 years. You're talking, I can't do the math in my head, but like 800 a year. Well, I'm not sure we've had a president in memory. He's gone quite that far. J. Aughenbaugh: Remember too. We had our colleague, Bill Newman speak with us on this podcast. The name of that particular episode was down with broccoli because that was the hypothetical EU. Now most executive orders are non-controversial and they have very little substance attached. N. Rodgers: They're mostly benign. J. Aughenbaugh: Right. N. Rodgers: But then occasionally,. J. Aughenbaugh: But you're basically using an executive order. Just listen to what that executive order created. The National Housing Agency, the Federal Housing Administration, the Federal Home Loan Bank Board, the home owners Loan Corporation, United States housing authority, defense housing for basically fighting the war. The Farm Security Administration, the defense Homes Corporation, the federal loan administration, and the division of Defense Housing coordination. All were consolidated without one executive order. N. Rodgers: That's a pretty handy really. J. Aughenbaugh: That's good work for one executive order. N. Rodgers: Who do you work for? I'm not sure. J. Aughenbaugh: But we were just consolidated in Executive Order 9070. Again executive orders were in hard-copy. They weren't available listeners electronically. N. Rodgers: Didn't quite have the Internet yet? J. Aughenbaugh: Yes. N. Rodgers: They became three units that we would recognize the names of. J. Aughenbaugh: Yes. N. Rodgers: All of that got consolidated into three units. The Federal Housing Administration, the Federal Home Loan bank administration, and the US Housing Authority and those still exist now. J. Aughenbaugh: Yes, they do. N. Rodgers: FDR took everything that was housing related. Now, it should be noted that what I suspect happened in many departments was like, for instance, defense, we need housing well, but that should be under a housing authority, not under the defense authority so it got moved and consolidated. J. Aughenbaugh: The idea of the Department of Defense and even those who have had prominent leadership positions in the department of defense have said publicly, we're good at preparing to fight wars. N. Rodgers: We're not so great. J. Aughenbaugh: At housing. N. Rodgers: Some other things and also standards, you don't want different standards for different housing which you would have if they were under different agencies? J. Aughenbaugh: Yes. N. Rodgers: But he was only the first president to leap into this housing question. J. Aughenbaugh: Correct. Afterwards, Truman went ahead and expanded with the Home Finance Agency, and then you have the Housing Act of 1949. Truman raise the ante. The federal government was going to eradicate slums and promote community development and redevelopment programs. N. Rodgers: We're going to get to slums in the controversy section because one of the ones that we mentioned before and we glanced across was the urban renewal of administration, which by the way, it was created to direct slum clearance projects in almost 800 communities. We're going to get to that in a little bit and how controversial because quick to find slum, that's a complicated. J. Aughenbaugh: In many residents of "slums" no matter how they were defined, do not have as much political juice in capital, and therefore their voices oftentimes got ignored if there were raised at all. N. Rodgers: We'll get to that in a little bit. Then we have Eisenhower. J. Aughenbaugh: We have Eisenhower, so we get a couple more pieces. By the way, the sheer number Nia of laws passed in our country with the word housing in it. N. Rodgers: The Housing Act of housing. J. Aughenbaugh: Eisenhower went ahead and said that there was over 500 different pieces of legislation, just in the 20th century that had the word housing in it. If you want an indicator of how important housing has been. N. Rodgers: What an excellent point. J. Aughenbaugh: Because Congress, again. N. Rodgers: They are responsive to the people. Theoretically, they are responsive to the people, but we could have a discussion about that. J. Aughenbaugh: A tool of Congress for any number of reasons. But housing has been extremely important in the history of the United States and Congress has stepped up. N. Rodgers: That's not just a top-down, that's also a bottom-up. People have wanted Housing Acts and the President has wanted them. Has a couple. J. Aughenbaugh: He has a couple, and by the way, the first proposal for a cabinet level department on Housing and Urban Development actually arose in the Eisenhower administration. In 1957, there was a report that was authored by New York Governor Nelson Rockefeller and this was a report there was commissioned by the Eisenhower administration so in 1957 is when we get the first, if you will, public call for at that time, a department of urban affairs. N. Rodgers: But it was not established then. J. Aughenbaugh: It was not established then. N. Rodgers: It was a few years later. J. Aughenbaugh: Yeah, because it all happened with LBJ. N. Rodgers: But I like that. Eisenhower in '59, he has the elderly housing, the Housing Act of 1959 allows funds for elderly housing. A little sad that it took 20 some years to get around to, oh, we should take care of old people. But it's also part of the federal housing is that there are 55 plus or 65 plus, or so what we think of now as assisted living, and the funds were allowed for from the Housing Act of 1959. J. Aughenbaugh: It was a recognition. N. Rodgers: That we're going to have old people. J. Aughenbaugh: The American population, particularly after the war. Because let's face it, life expectancy took a hit in the United States when we participated in the war. That's one of the downsides when nations participated in wars, but, we had roughly 15 years, we had the Korean War. But nevertheless, American life expectancy was beginning to rise. N. Rodgers: By 1959 you have more old people and they're going to live longer and so now you have to adjust for that. J. Aughenbaugh: But the big one was LBJ, he had the Housing Act of 1964. Then you got the law that created HUD in 65. N. Rodgers: Wait, can we mention in 64 allows rehabilitation loans for homeowners? J. Aughenbaugh: Yes. N. Rodgers: That's if your house is old and decrepit and falling apart, you can get a loan from the government to fix it. Because up until then repairs were on you. You couldn't get a loan if you didn't have the money and you couldn't get a loan for that too bad. You couldn't repair your house and so he's like, we ought to let people repair their homes for loans. These loans, by the way, we should probably mention, are all at very low-interest rates. J. Aughenbaugh: Yes. N. Rodgers: When you get a loan through FHA or when you get a loan through HUD or whatever, they are not at the market interest rate. J. Aughenbaugh: No, because the government steps in and covers the difference. N. Rodgers: They are subsidized loans in order to get people into homes or to fix their homes. I liked the WJ as a secretary, he elevates its importance. J. Aughenbaugh: Then you get the real big one here. 1968, the Fair Housing Act. This is the one that was designed to address something new you mentioned a few moments ago, the infamous red lining. This is the law that banned discrimination in housing and they basically use the same phrase in the Fair Housing Act of '68 that you see in the 1964s Civil Rights Act so your banning discrimination not only on race, but ethnicity, national origin, gender, religion, and age. N. Rodgers: Okay. J. Aughenbaugh: Yes, okay. N. Rodgers: That's excellent. J. Aughenbaugh: Yes. N. Rodgers: Well, LBJ. He's standing over you and scare you, he also did a lot of things that we would consider to be amazingly equalizing. J. Aughenbaugh: Yes. N. Rodgers: He tried to help with inequalities in the nation. J. Aughenbaugh: Yes. Nixon, again, he made contributions in this regard. This is another one of our themes of this series. N. Rodgers: That Nixon will surprise you? J. Aughenbaugh: Say what you will about Nixon, but, one year in office, in fact, less than one year in the office, in an amendment to a congressional appropriation bill. The Brooke Amendment that Nixon signed, they set up a limit. Low-income families only pay no more than 25 percent of their income for rent. N. Rodgers: If you're in Section 8 housing, if you're getting help from the government to help cover the cost of housing, you pay 25 percent of your income? J. Aughenbaugh: Yes. N. Rodgers: The government pays the rest up to market value of whatever. J. Aughenbaugh: That's right. N. Rodgers: Okay. That's amazing. Because I'm sure that before that, they would say, you could make 50 percent of your income. J. Aughenbaugh: Nia that was huge. Moreover, one of the last things he did before he resigned, the Housing and Community Development Act of 1974, all community development grants became block grants. There are two types of grants; categorical grants or block grants. Categorical grants are not liked by state and local governments because they can only be used for very specific things with strings attached. Block grants give state, local governments much more discretion on how the money is spent. N. Rodgers: We're just giving you a chunk of money. The outcome needs to be within these parameters. J. Aughenbaugh: That's right. As long as you get the results that we want as the federal government for this project- N. Rodgers: We're not going to delve into how you did it. J. Aughenbaugh: Yeah, that's right. This has always been one of the key points of contention in regards to receiving grants from the federal government. State, local governments usually want the block grant. N. Rodgers: Because each community is different. What would work to engage in urban homesteading in Richmond would be very different than what would work to urban homesteading in Raleigh, in Washington, in New York. Those would all work very different. J. Aughenbaugh: Well, think about differences in states. If you're a state like Florida and you get a lot of senior citizens that relocate to the State of Florida. The infamous, if you will, what are they called? N. Rodgers: Snowbirds. J. Aughenbaugh: Snowbirds. You're going to want more flexibility to spend HUD money for assisted living facilities for senior citizens than perhaps a city like New York or Chicago that is attracting many young immigrant families. N. Rodgers: You, need to be able to use the money in different ways. J. Aughenbaugh: Carter, basically continues. You get Urban Development Grants. We continue funding for the elderly and the disabled Americans. Under Reagan, HUD wasn't really much of a priority. N. Rodgers: Well, he was busy ending the Cold War. J. Aughenbaugh: Okay. N. Rodgers: Theoretically. J. Aughenbaugh: Bush 41. Again. N. Rodgers: Although Reagan, Can we just note, starts bringing up the discussion of homelessness. J. Aughenbaugh: Yes. N. Rodgers: The Stewart B. McKinney Homeless Assistance Act helped the communities to deal with homelessness. At this point, we're starting to recognize in 1987 that we have a homeless problem in the United States and that there needs to be someone who's in charge of dealing with that, either financially or regulatory. J. Aughenbaugh: Coordinating programs, in planning. This is another example of something we've discussed throughout this podcast, Nia. Americans political memory is extremely short-term. If you read the media, particularly if you read media, for instance, in large urban areas and they discuss homelessness, many of the stories are, this is a significant problem today, guys. N. Rodgers: We've had homeless people since. J. Aughenbaugh: Forever. N. Rodgers: Since the United States. J. Aughenbaugh: But in regards to the federal government recognizing it as a problem, first recognition was nearly 40 years ago. With the Reagan administration. N. Rodgers: Exactly. Also, Reagan does something what I think of as a little controversial, which is that in '88, the Housing and Community Development Act provides for the sale of public housing to residential management corporations. It's very much trickle-down economics. It's very much, well if we let private companies manage, public housing, we'll get- J. Aughenbaugh: We'll get a better product and will be done cheaper. N. Rodgers: I would argue that neither of those things turned out to be true. Public housing, as managed by private corporations meant that corporations could- J. Aughenbaugh: Well, it's like, private corporations running prisons and jails. N. Rodgers: It's not actually a good situation. J. Aughenbaugh: There's a lot of things that the government does that could be done more economically, more efficiently. But there are some things the government does that we're not going to be able to make a profit out of. We're not going to be able to do it cheaper. We just got to write it off. N. Rodgers: We have to embrace that it's an expensive thing that there's no way to economize. J. Aughenbaugh: That the government has to provide. N. Rodgers: What we see with public housing is, it becomes rundown and it becomes not livable in some instances. In part because if a corporation doesn't have to do something, they won't. Because it hurts their profit margin to do anything. It always costs money to do whatever you want. I want you to paint all the walls. No, we can't do that. That's going to cost $100,000 or whatever. J. Aughenbaugh: If you have to go ahead as a private corporation and be responsive to civil rights listed in law or the constitution, again you've heard me say this ad nauseum. The provision of civil rights whether in law or the constitution requires work, process, time, and money. You just can't go ahead and say- N. Rodgers: No shortcuts. J. Aughenbaugh: I'm just going to make an intuitive decision. Sorry. The Constitution doesn't allow you. N. Rodgers: Does not recognize your intuition. J. Aughenbaugh: You have to follow a process because you might be taking away somebody's life liberty, or in this case property. N. Rodgers: Then we get senior Bush. J. Aughenbaugh: Yes, Bush 41. Probably the note worthy piece of legislation there was the Hope Vi, which is the name of the program. But it was a program designed to revitalize public housing. What flows from that is the Housing and Community Development Act of 1992. You get a lot of money set aside in regards to lower income in under served housing areas. Rather explicitly committing Fannie Mae to funding that. This is going to become part of the issue as we move into the end of the 20th century and into the 21st century, and in particular you see this with the Clinton administration. The Clinton administration and Congress in 1996, wanted to raise the number of Americans who owned homes. J. Aughenbaugh: In 1996, 66.3 million Americans owned homes and the Clinton administration wanted to raise that number, even though that was the largest number in our country's history. N. Rodgers: Because he also believed that prosperity came from home ownership. J. Aughenbaugh: That's right. The numbers increased, and the role of Fannie Mae and Freddie Mac and if you will, subsidizing home ownership increased. There's a narrative here and you know where this story is going, Nia? N. Rodgers: Yes. J. Aughenbaugh: Because what happened was, in the first decade of this millennium, the housing market in the United States, there was a bubble. N. Rodgers: In 2000, home ownership rate reached a new record high of 67.7 percent, so two-thirds of eligible folks owned a home, 71.6 million American families owned a home. Biggest ever. J. Aughenbaugh: Biggest ever. N. Rodgers: What's that sound I hear in the distance? It's the rumble of thunder. J. Aughenbaugh: Yes. N. Rodgers: Or the sound of bubbles popping. J. Aughenbaugh: Yes. N. Rodgers: You could describe it either way. J. Aughenbaugh: Either way. Because what this created in the first decade of this millennium was an overheated housing market. What economists refer to as a bubble. N. Rodgers: What did they call them? NINJA loans. No income, no job loans. You just had to be breathing and somebody would give you a loan for a house. J. Aughenbaugh: Many of these loans were backed by Fannie Mae and Freddie Mac, which meant that if the person who took out the loan could not repay it, who was on the hook for covering the rest of the mortgage? N. Rodgers: The federal government. J. Aughenbaugh: The federal government. N. Rodgers: It became a property owner. J. Aughenbaugh: Yes, a huge property owner. At least the American version of the Great Recession of 2007-2009 was founded on the home ownership, if you will, industry. N. Rodgers: Because what happens is you get a mortgage from Bank of Nia. Then I sell your mortgage as part of a package to a bunch of investors. They look at you and they say, "that guy has got a good job, he's been there for 20 years, he's going to pay." That's a prime loan. But sometimes I sell packages to investors and they are of what we call subprime, people who are not steadily employed or people who are underemployed for the amount of money they borrowed or whatever reason puts you into the subprime mortgage, and those were the ones that banks invested in and then couldn't get the money from people because we had a mild recession, people lost their jobs. Well, I say mild because for some people it was extreme, but for most people it was relatively mild. However, there was a lot of job loss and when people couldn't pay those mortgages, now the subprime mortgages are hanging out there, investors are losing their money, banks are losing their money and everybody's panicking. J. Aughenbaugh: Yes. N. Rodgers: Paulson and Bernanke are eating tums like they own stock in the company. J. Aughenbaugh: Yes. You had two things that happened here with the housing market. One, with many of those subprime loans, the federal government stepped in to basically bail out all those investors who had no business buying those mortgages of people who had high credit risk. N. Rodgers: High chance of default. J. Aughenbaugh: But the other thing was many of the loans, whether they were subprime or otherwise, Nia, were backed by the federal government. N. Rodgers: The banks thought, will never be a problem because the government will pay. J. Aughenbaugh: That's where the federal government, in some ways, actually encouraged bad behavior. N. Rodgers: What could I possibly lose because the government will pay. J. Aughenbaugh: Bad behavior by the banks, but also bad behavior of many Americans who were told, sure, you can afford a mortgage for a house of $350,000. N. Rodgers: On an income of $22,000 a year. It was a whole entire collusion problem and housing failure. J. Aughenbaugh: Yes. It was bad. N. Rodgers: In part, it was from a good place, which is we want people to own homes so that they can build wealth. That's a good desire, but some people just cannot afford to buy a home for whatever reason. It's beyond their means. J. Aughenbaugh: Or they can't buy a home right now. N. Rodgers: There is also an economic argument to be made for the fact that some people need to rent for the market to work. J. Aughenbaugh: Yes. N. Rodgers: For it to work with competition, some people need to rent so that housing prices aren't so low that you can't ever make any money selling your house. It's all carry on knock-on effects. J. Aughenbaugh: Yes. We also know this too. For the labor market to work. N. Rodgers: Some people have to be unemployed. J. Aughenbaugh: One, you need some people to be unemployed, but we also know for the labor markets to also work, we need to have a stock of rental properties so that people can change jobs and move quickly. N. Rodgers: Excellent point. J. Aughenbaugh: Because a whole bunch of Americans are locked into home mortgage loans. N. Rodgers: They can't go anywhere. J. Aughenbaugh: They can't go anywhere. They're less likely to go ahead and say, hey, this is a really cool job opportunity, but I'm going to have to move across the country, but if they're locked into a 30-year mortgage where they just renovated the kitchen or the basement, they're are less likely to go ahead and do that, which means employers have less people to pick from. N. Rodgers: Or alternatively, what they need on the other end is a rental property they can rent for six months while they sell the house in wherever they were. J. Aughenbaugh: Yes. N. Rodgers: That used to happen to my parents all the time. My father would go ahead to whatever new city it was and rent and my mother would stay behind and sell the house we were in. J. Aughenbaugh: Yes. N. Rodgers: Then once we got there, they would buy another house. They did that thing. J. Aughenbaugh: You need to have that flexibility in the housing market. What happened in the first decade of this millennium? That flexibility, that slack just dried up completely. But let's talk about some criticisms Nia of HUD. J. Aughenbaugh: Again, I think, listeners, you probably picked up, Nia and I are generally very supportive of many programs that ended up being the foundation of HUD. But there have been some criticisms. N. Rodgers: I think we should be also make an actual bold out their statements saying not bold, but we also support homeownership. We're not suggesting that people should not own homes. In fact, homeownership, as we have said multiple times, is a great way to build asset. We would like to see that fairly and equitably spread across the American population. It is not always done that way and that's part of the criticisms here. J. Aughenbaugh: Yes. N. Rodgers: Can I start with the first one? J. Aughenbaugh: Yeah, Sure. Go ahead. N. Rodgers: Section 8 housing. Section 8 refers to a section in the, help me. J. Aughenbaugh: In the federal code as it relates to HUD and various, if you will, programs related to housing. N. Rodgers: The section 8 is the shortening of that. I mean, that's what people call it colloquially. It's basically for low-income folk to get into housing. J. Aughenbaugh: Yes. N. Rodgers: But the part of the problem with that program is that there can be a long time that you fall out of housing before you can get a section 8 voucher. People end up CouchSurfing, sleeping in hotels, sleeping in their car, sleeping in tents, trying to get into Section 8 housing. Section 8 housing, what we mean is both government and private that accept a section eight voucher which as we mentioned before, pays a certain amount of the money that's due, and then the renter pays a certain amount of the money that it's due. If your rent is $1,000, you pay 250 and the government pays 750. J. Aughenbaugh: That's right. N. Rodgers: Some housing won't accept Section 8 voucher because they think they're only going to get the three-quarters. They don t think they're going to get the 25 percent. J. Aughenbaugh: The individual responsibility, they're not going to get that money from the individual. N. Rodgers: They worry that they're not going to get the full rent. They don't accept Section 8. You'll find if you call in lots of apartment complexes even here in Richmond, and you say, do you accept Section 8? They just immediately say no. J. Aughenbaugh: Yeah, it's as well as certain doctors won't participate in either Medicaid or Medicare. N. Rodgers: Yeah. It's super frustrating because- J. Aughenbaugh: The demand by the way, for Section eight, vouchers has always outstripped supply. It always happens. N. Rodgers: There's always more people who want housing than- J. Aughenbaugh: Yeah, and that's one of the criticisms. The federal government has created as program and historically they've never funded it to match the need or demand. Then it leads to, Nia, as you pointed out, all kinds of behaviors that cause other problems. If you can't get the Section 8 voucher, for instance, and you have a job in San Francisco, you're not going to be able to afford an apartment. N. Rodgers: No. Not if you're low income, there's no rent. J. Aughenbaugh: Therefore you got a tough choice. Do I give up the job that I like, that I may have always wanted or am I homeless? I mean, what a choice? N. Rodgers: Or do I live so far away that I'm three hour commute in every day and three hour commute back like. It sounds ridiculous to listeners who are used to commuting 20 minutes. But there are people in California and around DC who commute an hour and a half each way. That's not an unusual thing. In some places like San Francisco, you're talking about a commute that's two hours at least to find what I think of as reasonably priced house. But then again, I have a skew on reasonably priced housing but I would like to sometimes HUD screws up the amount that they will pay. Don't they set an amount that they'll pay for it in a voucher? If you lived in San Francisco and they said, Well, your voucher can only be $1,500, that's not market reasonable in San Francisco, $1,500 wouldn't get to a box on the side of the road. J. Aughenbaugh: This is a part of a broader criticism of the federal government. The federal government slow to respond to local conditions. Let's just say for instance, you live in a community where all of a sudden, the price of housing, both in terms of home ownership and running, goes up dramatically in a short period of time. The Section 8 program, again, it comes from the federal government, may not be responsive for a year or a year-and-a-half or two years. The value of the voucher is non-responsive to the change in the local conditions. Your share as the individual might go up dramatically. What does that do in regards to your family financial situation while you wait for the federal government to respond to the change in the local conditions? N. Rodgers: We've noticed that not just with this program, but also with EBT and WIC, don't always respond as quickly to inflation as they should. If your EBT doesn't go up, but prices go up, you just don't have as much food. That's not a cool thing either. Like the government is not so great at. J. Aughenbaugh: Well, I mean, at the time we are recording this podcast episode, listeners, the previous week, the federal government announced that senior citizens who are on social security are going to receive one of their largest cost of living increases in the history of social security next year. N. Rodgers: Next year. J. Aughenbaugh: But inflation-. N. Rodgers: Is happening now. J. Aughenbaugh: - is happening now and it's been an issue in the United States for well over a year. N. Rodgers: Exactly. We'll get to next year, Mike. Okay. Well, if we're still alive, that'd be great. Thanks. J. Aughenbaugh: Again, our longstanding listeners know this, Mia and I have plenty of family members who are on Social Security. They have been waiting for the cost of living increase, so they can go ahead and pay for their share of prescription drugs, doctors visits, etc. N. Rodgers: In our families, we're very fortunate that the kids can help. J. Aughenbaugh: Yes. N. Rodgers: But that is not always the case. If you're a low-income family, you're probably not going to be able to help your parents until that Cola kicks. It's a little frustrating. I want to also mention something that you put in your notes that I think is an extremely good point, and that is that section 8 vouchers tend to concentrate low-income families in certain neighborhoods. It's the neighborhoods of where landlords will rent to Section 8 housing. It tends to be that those areas are concentrated, and as you were saying earlier, because they're concentrated, they have less power. They can be dismissed in some ways more easily because they are in one spot in the city. We just ignore that spot in the city or are we give lip service to that spot, but we don't do anything about the actual problems there. J. Aughenbaugh: That connects to another criticism of the federal government's housing programs, which is they have given either federal agencies or through the receipt of grant money, state and local governments the authority, Nia, to revitalize slumps. What we're talking about is the government's power of eminent domain. N. Rodgers: We can tear this thing down. J. Aughenbaugh: For the collective. But in the process, whose homes tend to be whether they are rental properties or homes actually owned by families? N. Rodgers: Those people get shunted off to different places so they lose community. It's happening in Richmond because we're doing that in a couple of our, I wouldn't call them slums because I guess I define slum differently, but they are low-income housing areas, they're going to be raised and then stuff is going to be rebuilt there. But in the meantime, those people are losing their community because they've lived there for a long time, kids raised there and now they're getting sent all over the city to different section 8 vouchers and spaces. It destroys the fabric of the community. Then what you get after that is gentrification. Because now you have a nice new building and people want to move into the neighborhood and build a store or do whatever, and now you've priced people out of that- J. Aughenbaugh: That's right. N. Rodgers: - that area. J. Aughenbaugh: You mean, by the way, this is one of those criticisms that you actually get agreement by both liberals and conservatives. Because for liberals, these are people without voice or basically being treated poorly by the government. For conservatives, it's this idea of property. You're talking about families who have lived in these communities near for decades, in some cases, multiple generations. They can't afford to live there anymore. They are having their property taken away because you have a local government that is saying, we want to revitalize this area of our city. J. Aughenbaugh: They can do it because according to the Fifth Amendment of the US Constitution, the takings clause. The government can take your property for public use as long as the government gives you just compensation. N. Rodgers: Well, and market value of your property right now is low because it's a low-income area. J. Aughenbaugh: That's right. N. Rodgers: Market property of your value in 10 years when that's all built up and gentrified. J. Aughenbaugh: Yes, that's right. N. Rodgers: Would be five times that but they don't have to pay you that. They only have to pay you what it's worth now. It's a bit of a system. I don't like that part of it. I like the general idea that we should be helping people and we should be helping people who want to own a home get into one in a reasonable and financially, physically safe manner. But Section 8, I have big problems with because I think it harms the people who use it. I think it harms landlords. I think at harms cities. I don't have a better solution. I'm one of those people who's complaining without a solution, so take that issue well. J. Aughenbaugh: But again, you and I both know this, the first step of correcting a problem is recognizing that there is a problem. N. Rodgers: Right. Section 8 is a problem. But before we pop out for the end of this episode, I do want to ask you, am I correct that, Mitt Romney wasn't his dad? J. Aughenbaugh: Yes. N. Rodgers: Mitt Romney, wasn't his dad, he was like governor of something and then he was heard? J. Aughenbaugh: Yeah. Mitt Romney, the current senator, one of the senators from Utah, former presidential candidate for the Republican Party. Politics is the family business for a lot of the Romneys. Mitt's father was I believe a former governor of what? Michigan. N. Rodgers: Right. J. Aughenbaugh: He was also appointed by Nixon to run Butler. Yes. N. Rodgers: We have another. J. Aughenbaugh: Legacy. N. Rodgers: Dynasty. I like how you put in here a political dynasty because that's how we think of the Kennedys. That's how we think of Rockefellers. J. Aughenbaugh: Rose? N. Rodgers: The Bushes now they've had a political dynasty. J. Aughenbaugh: Yes. President Carter appointed. N. Rodgers: That's why I want you to say it. I love his name. J. Aughenbaugh: Moon Landrieu, which was part of the Landrieu political family dynasty in the fine state of Louisiana. N. Rodgers: Yeah. His daughter was governor during Katrina. J. Aughenbaugh: I believe a former senator at one point or one of the family members was. What's interesting and I verify this because I actually went through and looked at on the HUD website. One-third of the 18 HUD secretaries had been persons of color. It's probably been the most diverse pool of cabinet secretaries for one cabinet of all of the cabinet departments. N. Rodgers: That's interesting, I wonder why. J. Aughenbaugh: I really do believe that you will see this with the cabinet departments that focus on social welfare. N. Rodgers: That they're folks of color? I know that there's been a lot of females. J. Aughenbaugh: Yes. N. Rodgers: Haven't they're relatively speaking, compared to other? J. Aughenbaugh: Yeah, Carla Hills, who was appointed by Ford. Patricia Harris, also appointed by Carter. In terms of secretaries of Carla, Bush 43, Mel Martinez and all films of, Jackson. For Clinton, his first one was Henry Cisneros. N. Rodgers: I remember Cisneros. J. Aughenbaugh: Yes. His political career came to a crashing halt because of extramarital affair scandal. N. Rodgers: Because of the scandal. J. Aughenbaugh: Yes. You want to talk about family legacies? Andrew Cuomo. N. Rodgers: Right. J. Aughenbaugh: Name ring a bell? N. Rodgers: Of all the Cuomos Mario and Andrew, yes. J. Aughenbaugh: Andrew was the son of Mario, the former governor of New York. Andrew, I believe, became also governor of New York and he had to resign. N. Rodgers: Well, no, he wasn't married but he had harassment concerns. J. Aughenbaugh: Yes. N. Rodgers: His brother had to resign from CNN. J. Aughenbaugh: Because he was giving private secret advice and counsel while he was reporting on the story for CNN. N. Rodgers: We chuckled, but political dynasties do that. You have good members of that dynasty and you have bad members of that dynasty. Not bad, but you have less corrupt and more corrupt. I don't know how you'd say it. Whatever. J. Aughenbaugh: But the thing about political dynasties is that because they'd been in office and in power for so long, they begin to at times consider behavior which for many of us would be viewed as inappropriate or unacceptable. They view it as appropriate and acceptable. N. Rodgers: I think they come to believe that maybe the law does not fully apply to quite of them. J. Aughenbaugh: Yes. N. Rodgers: I think that that's not unusual thing. J. Aughenbaugh: That's always an issue when you have a dynasty or a legacy in a democratic nation. N. Rodgers: Right. Is that people become used to certain privileges. Let's put it that way. But what I I think that should be taken away from this whole HUD department is that HUD really does try to do good work. There has been graft, there has been fraud and corruption. Because there is graft, fraud and corruption in every single agency. J. Aughenbaugh: Yes. N. Rodgers: But you can't find one where there hasn't been some scandal. But when you think about what the point of making sure that people are housed in some way is an enormously important thing, I think that most people believed that some housing is a human right. If you're unhoused, we should as a society attempt to find a way to house you unless you just don't want to be housed, in which case we shouldn't force you. But we should make sure that you have that opportunity to be out from the elements to be cared for in some way. J. Aughenbaugh: Near to your point, Maslow's hierarchy of needs. N. Rodgers: Right. J. Aughenbaugh: One of the most basic. N. Rodgers: Is shelter. J. Aughenbaugh: Is shelter. How can you go ahead and accomplish anything in your life if every day you don't know. N. Rodgers: Where you're going to sleep? J. Aughenbaugh: Yes. N. Rodgers: Especially terrifying for parents. J. Aughenbaugh: Yes. N. Rodgers: The one thing that you should be able to provide for your kid is a safe place to sleep. J. Aughenbaugh: As somebody who has been homeless, I can go ahead attest those weren't my best days and they weren't my best years. Not knowing where I was going to sleep and it consumed so much of my days. N. Rodgers: Intellectually, it consumes all your energy trying to figure out where you're going to go. J. Aughenbaugh: Yeah, where I was going to go. It was impossible to go ahead and do well in school because I was exhausted just trying to survive. I think a lot of people don't understand that when you're homeless, no matter how you got there, it's no way to live. N. Rodgers: Blaming people and saying it's their fault doesn't solve the problem. We need to solve the problem. J. Aughenbaugh: Problem, yes. N. Rodgers: We're here for you, baby? J. Aughenbaugh: Yes. N. Rodgers: Aughie, you and I will get together and talk again about another agency. J. Aughenbaugh: Or department. That's right. N. Rodgers: Oh, department, not agency. J. Aughenbaugh: I'm loving this series. N. Rodgers: Me too. I like how we're showing the building of the American way of life through the departments and how they're created. J. Aughenbaugh: When I hear people say the government is non-responsive, all I want to go ahead and do is, well, you want to take a look at the cabinet departments because they frequently responded to a specific public policy problem. Whether or not we've done a good job responding to. N. Rodgers: Is a whole separate issue. But we've tried to respond. J. Aughenbaugh: We've tried. Maybe not always successfully but so many of these departments, as you pointed out, as the country grew and changed and evolved, we got the government who's thrown that spaghetti against the wall trying to see if it's going to stick. N. Rodgers: We didn't even know we needed this thing, but now that we know, we're going to go get this thing. J. Aughenbaugh: Yes. N. Rodgers: Cool. We'll talk again soon. J. Aughenbaugh: See you Nia. N. Rodgers: Thanks. J. Aughenbaugh: Bye. N. Rodgers: Bye. You've been listening to civil discourse brought to you by VCU Libraries. Opinions expressed are solely the speaker's own and do not reflect the views or opinions of VCU or VCU Libraries. Special thanks to the Workshop for technical assistance. Music by Isaak Hopson. Find more information at guides.library.vcu.edu/discourse. As always, no documents were harmed in the making of this podcast.