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Makeup of housing panel draws ire advocacy group says
by Zachary A. Goldfarb Affordable-housing advocates
raised concerns Thursday that the Obama administration is ex- cluding consumer and communi- ty groups from playing promi- nent roles in a government-spon- sored conference next week that will kick off efforts to overhaul national housing policy. After the administration an- nounced the 12 panelists for Tuesday’s conference, the non- profit National Community Rein- vestment Coalition said con- sumer and community groups had been “muscled out” by finan- cial companies, economists and academics without a sense of how housing policy plays out in communities. “Apparently being a communi-
ty organizer qualifies you to be president, but it’s not good enough to be part of HUD and Treasury’s think tank on hous- ing,” said NCRC chief executive John Taylor, whose group works with hundreds of community or- ganizations to promote access to financial services for low- and middle-income people. The criticism by affordable- housing advocates was notable because the Obama administra- tion has so far paid much more attention to their concerns than previous administrations have. Advocates, for instance, had credited the administration with listening to community groups that argued that the government must do more to embrace rental housing for those who cannot af- ford to buy a home.
Panels and players Almost everyone agrees that
the government’s role in provid- ing financing for home loans — now standing behind nine in 10 new loans — is too big and must be replaced by private capital. But an emerging flash point in the debate is how much the gov- ernment may compel private companies to spend on ensuring that low- and middle-income people have access to housing — either by renting or buying. Tuesday’s conference will fea- ture two panels on housing re-
Consumer voices ‘muscled out,’
Conference guests
A list of the participants in next week’s Obama administration conference on housing policy:
Barbara J. Desoer, president of Bank of America Home Loans
Ingrid Gould Ellen, professor of urban planning at New York University and co-director of the Furman Center for Real Estate and Urban Policy
Bill Gross, co-founder and co-chief Investment Officer of Pimco
Mike Heid, co-president of Wells Fargo Home Mortgage
S.A. Ibrahim, chief executive of private mortgage insurer Radian Group
MELISSA GOLDEN/BLOOMBERG NEWS
John Taylor of the National Community Reinvestment Coalition says there should be more community representation on the panel.
form — one led by Treasury Sec- retary Timothy F. Geithner and focused on financial markets, and another led by Housing and Urban Development Secretary Shaun Donovan and focused on broader housing policy goals. Six executives, five academics and a representative of a civil rights group will participate as panel- ists. After the panel discussions, breakout sessions will take up topics such as securitization and rental housing. “Across the spectrum, stake- holders agree that our current system of housing finance re- quires fundamental reform,” said Jeffrey A. Goldstein, undersecre- tary of the Treasury for domestic finance. “This conference is an opportunity for us to broaden our perspectives on a number of key issues in a transparent way to make certain that all of the best ideas are on the table.” The panelists include Bill Gross, Pimco’s chief investment officer, who has been a large buy- er of securities backed by home loans; Moody’s economist Mark Zandi, who has advised politi- cians on economic policy; and Lewis Ranieri, who helped pio- neer mortgage securitization. The heads of Bank of America
and Wells Fargo’s mortgage units will be panelists, as well as for- mer bank regulator Ellen Seid- man.
Seidman, who now runs a com-
munity-oriented bank in Chica- go, and Marc Morial, a former
“It’s really not much diversity or real
community
perspective.” — Janis Bowdler, National Council of La Raza
New Orleans mayor who is now president of the National Urban League, are likely to be among af- fordable-housing advocates’ big- gest allies at the conference. Still, “it’s really not much di-
versity or real community per- spective from folks that repre- sent the end user of mortgages,” said Janis Bowdler, deputy direc- tor of the wealth-building pro- gram at the National Council of La Raza. “I am concerned that the process will be heavily influ- enced and informed by major in- dustry players and economists.” But Andrew Williams, a Trea-
sury spokesman, said consumer advocates will have a voice. “A number of consumer advocates will participate in the conference to ensure that a broad range of stakeholders have input into the reform discussion,” he said.
White House’s approach
Some say that, regardless of who is being invited to speak, the topics the administration is ad- dressing are important ones. “While I think it’s important
Marc Morial, chief executive of the National Urban League
Alex Pollock, resident fellow at the American Enterprise Institute
Lewis Ranieri, chairman of Ranieri and Co.
Ellen Seidman, executive vice president at ShoreBank
Michael A. Stegman, director of policy and housing for the program on human and community development of the John D. and Catherine T. MacArthur Foundation
Susan Wachter, professor of financial management at the University of Pennsylvania’s Wharton School
Mark Zandi, chief economist of Moody’s Analytics
that the right people are at the ta- ble, the agenda really points to them trying to get the issues that the housing finance system has left behind — like multifamily housing and affordability,” said Linda Couch, deputy director of the National Low Income Hous- ing Coalition. The Obama administration has taken an incremental ap- proach to reforming housing. It faces a January deadline, im- posed by the new financial reg- ulatory reform law, to come up with a plan for overhauling hous- ing finance. But officials say they fear that
any specific proposal could rattle the fragile housing and mortgage markets, which are now support- ed to a great extent by govern- ment programs.
goldfarbz@washpost.com
hysterical language to warn that some proposal will destroy jobs, snuff out innovation and end free-market capitalism as we know it, you can generally assume that progress is being made.
A
So it is with the controversies swirling around Internet regulation. A few months back, when
Federal Communications Commission Chairman Julius Genachowski proposed classifying broadband as a “telecommunications service” for purposes of defining the scope of possible regulation, you’d think from the reaction of the industry and its defenders on Capitol Hill that he was proposing a Soviet- style takeover of the Internet. Never mind that broadband is,
by any common-sense definition, a telecommunication service that includes telephone and television offerings that the FCC has been regulating for decades, plus access to this thing called the Internet that was hardly contemplated by the authors of the Communications Act of 1934. And never mind that the chairman, a former venture capitalist with a deep entrepreneurial streak, explicitly rejected the kind of heavy- handed price and service regulation that industry critics nonetheless conjured up in a doomsday scenario envisioning a market drained of innovation and investment. Then this week it was the
ayatollahs of “net neutrality” who worked themselves up into a self-righteous lather over a compromise proposal from once- bitter foes Google and Verizon. Much of the criticism focused on a provision of the proposal that would let broadband operators set aside a portion of their networks for premium services to consumers or businesses
Needed, and soon: Geneva Conventions for the bandwidth wars STEVEN PEARLSTEIN
s a general rule, whenever you hear special-interest groups using near-
willing to pay extra — metaphorically, a toll lane on the information highway. In rejecting the Google-
Verizon compromise, net- neutrality zealots predicted that the open, democratic first-come, first-served Internet would give way to one auctioned off to the highest bidders, whose privileged content would flow quickly and reliably while everyone else’s would have to fight the stop-and-go traffic in the slow lanes. These critics seem to have skipped over the part of the Google-Verizon proposal that explicitly prohibits “paid prioritization” of Internet content, at least for wired connections. Also the part that would require that companies offering new premium services do so only if they can maintain the quality of service on the open, public Internet. They also seem to have
forgotten that various forms of tiered service have been part of the telecommunications landscape ever since the days of the old “party line,” and that phone companies for years operated “private networks” for big corporations that ran alongside their public networks. Even today, as part of most broadband offerings, higher- priced television service gets priority over Internet access, which is why phone calls and TV shows don’t get interrupted in the same way as a download from YouTube. The point here is that the
debate over Internet regulation has long since morphed from a
reasoned policy discussion to something akin to religious warfare. Crusaders for net neutrality are determined to stop abuses that don’t exist, while cable companies and phone companies are equally determined to preserve their God-given right to manage their networks in ways they now say they have no intention of doing, or offer services sometime in the future that they can’t yet identify. Precisely because this is a fight more about principles than about the real world, Genachowski is likely to be foiled in his effort to broker a consensus. At this point, it’s not even clear that the public interest can be found in a compromise among these warring special interests. The better course is to take the bull by the horns, push forward with a reasonable and effective policy, defend it vigorously in Congress and the courts, and let the chips fall where they may. Such a policy should start from the premise that some government regulation is necessary because broadband has become vital to nearly every household and business, no less so than electricity and phone service in the past. Unlike those services, which were once considered natural monopolies, broadband has developed into a natural oligopoly, with a handful of large competitors providing enough competition to justify light-touch regulation but not enough to justify no regulation at all.
The promise of the Internet — what we might call the public
10-YEAR TREASURY DOWN $2.50 PER $1,000, 2.74% YIELD
CURRENCIES $1 = 85.91 YEN; EURO = $1.283 DIGEST HOUSING
Federal regulator targets some developer fees The Federal Housing Finance
Agency on Thursday proposed that Fannie Mae and Freddie Mac should not be allowed to invest in mortgages that allow developers to collect fees years after homes are built. The FHFA, which reg- ulates the two government-con- trolled companies, said it plans to restrict them and the Federal Home Loan Bank system from in- vesting in mortgages with “pri- vate transfer fee covenants.” These are used by some real es-
tate developers to lower the pur- chase price for buyers, but they
REGULATORS FDIC reviewing life insurers’ practices
The Federal Deposit Insurance Corp. is reviewing whether life insurers misled customers about retained death benefits, and it urged companies to clearly dis- close that those funds aren’t guaranteed by the government. FDIC Chairman Sheila C. Bair said an initial review indicates that consumers may think mis- takenly that the accounts are in- sured by the FDIC, according to a letter to the National Association
LEGAL Oracle sues Google over Android system
Oracle said late Thursday that it has filed a patent and copy- right-infringement lawsuit against Google alleging that the search giant’s Android system for mobile phones infringes on Ora- cle’s patented Java technology. Google spokesman Andrew Pe- derson said the company can’t comment because it has not yet reviewed the lawsuit. Oracle acquired the Java com- puter programming language
EARNINGS
and related technology when it bought Sun Microsystems. That deal that closed in January. Oracle is seeking an injunction to stop Google from further building and distributing An- droid, plus higher monetary damages for willful and deliber- ate infringement. Google says about 200,000 Android-powered phones are being sold each day. — Associated Press
of Insurance Commissioners. It is illegal to misrepresent FDIC cov- erage, Bair said in the letter, dat- ed Aug. 5 and posted on the agen- cy’s Web site Thursday. Life insurers have drawn fire from state and federal officials since Bloomberg Markets maga- zine reported that more than 100 carriers profit by holding and in- vesting $28 billion owed to life- insurance beneficiaries. — Bloomberg News
let developers take a cut of the purchase price every time the property is sold. The fees are of- ten 1 percent but can run higher, and they often stay on the prop- erty for up to 99 years. The covenants, which have been banned by some states, also create a risk for the still fragile housing markets by depressing home prices and reducing mort- gage market liquidity, the FHFA said. The agency’s proposed guid- ance is nonbinding and could take effect by late October.
— Reuters
FRIDAY, AUGUST 13, 2010
Internet — is that it allows anyone who is on it to send any type of content to anyone else at any time. As it did with earlier generations of “common carriers,” the government should set minimum service standards for speed, reliability and equal access, including a “neutrality” requirement that traffic be managed on a first-come, first- served basis. Beyond the minimum standards, companies should be free to offer different tiers of service at different prices while managing their networks as they see fit, as long as prices and practices are clearly disclosed. Beyond that basic Internet
service, companies should be free to use any spare capacity in their lines and networks to offer additional private services, including priority lanes for themselves or other businesses to offer enhanced services such as movie downloads, health monitoring, home security and the like. To ensure that companies don’t concentrate their investment in more- lucrative private services while letting the public Internet stagnate and degrade, the government should set a reasonable cap on the percentage of any network dedicated to private services.
If the FCC were to promulgate such rules, of course, it would immediately be criticized by members of Congress for going too far, or not far enough, or simply for exceeding its authority. To accommodate that political reality, Genachowski should make the new rules effective Jan. 1, 2012, giving his congressional critics enough time to update the telecommunications statute and legislate their own Internet rules. If they don’t, they’ll be hard pressed to criticize the FCC for showing leadership where they could not.
pearlsteins@washpost.com
MARCIO JOSE SANCHEZ/ASSOCIATED PRESS 39%
Nordstrom’s profit rises
Nordstrom said Thursday its second-quarter profit jumped nearly 39 percent, to $146 million, as shoppers flocked to its special sale events, while revenue rose nearly 13 percent, to $2.5 billion. The company maintained its full-year outlook, but investors were looking for more optimistic guidance and sent shares down more than 4 percent in after-hours trading.
— Associated Press PostLeadership JENA MCGREGOR
6views.washingtonpost.com/leadership
What Mark Hurd and Charlie Rangel have in common It might seem as though the ousted chief of Silicon Valley giant
Hewlett-Packard and an embattled congressman from New York would have little in common. Mark Hurd was a 53-year-old operations wiz and one of the most
respected CEOs in America until he stunned Wall Street by resigning following expense-account irregularities and other code-of-conduct violations. Charlie Rangel is the 80-year-old 20-term representative from Harlem who is now facing ethics charges that include allegations that he inappropriately lived in rent-controlled apartments and did not pay necessary taxes on an island villa. One left his post without a public fight, albeit with more than $35 million in his pockets. The other is battling the charges, setting up a potentially historic public trial. But both leaders would like their reputations back, thank you very much. Hurd and Rangel each made headlines this week for acts of
defiance that surprised their peers. In Rangel’s case, it was the bizarre, rambling speech he made on the floor of the House on Tuesday, in which he vowed that he was “not going away” and complained that no one on his side of the aisle had spoken out on his behalf. Hurd has been more subtle. The Wall Street Journal reported this week that HP’s board was surprised Hurd didn’t go quietly. While his hefty severance payment is subject to a non-disparagement clause, and Hurd supporters like Oracle chief executive Larry Ellison have said they were not asked to champion his cause, Hurd reportedly hired the crisis-communications firm Sitrick. Rangel’s speech and Hurd’s anonymous supporters are reminders of one universal truth: No amount of peer pressure, and no amount of cash, can stop a leader from wanting to keep his legacy intact. As one commenter on the Wall Street Journal’s story wrote, even Shakespeare’s Iago knew the importance of reputation: “Good name in man and woman, dear my lord, Is the immediate jewel of their souls.”
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