Oakland, California's city government appears to be as dysfunctional as a group of politicians can be, meaning they're ability to govern is akin to the battlefield brainpower of George Armstrong Custer. In considering what the reporter never specifically describes as anything other than Richmond, California's "out of the box anti-foreclosure proposal," one councilman's declaration that he needed more time to consider "the intricacies" of the proposal prompted another council woman to assert that such a declaration was "disingenuous." That's a fancy word for "lying." That, in turn, prompted a heated denial by the accused and an accusation by the Council president that the accuser was a trickster who was trying to promote the proposal by circumventing the committee process. Apparently, parliamentary rules were, once again, getting in the way of ideological goals, and as we all know, the ends justify the means.
At no point in the article (which described itself as "analysis") is it mentioned that the "proposal" is the use of eminent domain by Richmond to seize underwater mortgage loans from investors. We've been warning about not only the questionable constitutionality of the proposal (and others like it), but the detrimental effects the adoption of such a plan might have on homeowners and prospective homeowners in Richmond who ever want to be able to obtain a residential mortgage loan in the future. According to the article, our warnings are valid.
Kevin Stein, an associate director of the California Reinvestment Coalition, which has worked closely with the Richmond City Council on its plan to help struggling mortgage holders said, “We’re here because too many people are losing their homes.” He added, as soon as Richmond broached the subject earlier this year, banks and their surrogates moved to punish the city’s treasury by effectively redlining the community. The pressure dissuaded Wall Street from purchasing some of Richmond’s municipal bonds.
What did you expect, Kevin? Did you think that bankers and mortgage loan investors were going to roll over with their paws in the air and accept their beating without fighting back? If you think Wall Street's reluctance to buy Richmond's bonds is pronounced now, just wait until Oakland passes an eminent domain plan and starts seizing mortgage loans. Not only will the city be buried by an avalanche of well-funded litigation, but trying to get a mortgage loan in the city will be a difficult and, if available, very expensive task. Just ask Richmond about "litigation risk."
It's been suggested that these pols are merely playing political theater, catering to a voter base that is somewhere left of the late, great Mao, and that they actually know that the plan will never fly. I'm not convinced that is true. I think many of these folks have consumed the Kool-Aid and will do much damage before, like San Bernardino's city council, the voters throw the bums out. Before they do so, however, much mischief may occur.