While the Department of Housing and Urban Development has intimitated that it will seek way to help America’s housing stock “go green,” it is yet to provide concrete results in that direction.

HUD Secretary Shaun Donovan established a new department, known as the Office of Sustainability,” to research how HUD could lower the combined costs of housing.  HUD’s new rubric incorporates both direct housing costs as well as transporation costs.  It notes that the two now consume as much as 60 percent of household income.

This is a good idea.  For years, people have chosen to “drive ’til you qualify.” They have moved out to the suburbs and commuted to their jobs in the city.  It led to sprawl, and it masks the real costs of housing. Those Beazer “homes from the 130s” were located at the end of long commutes. In this framework, low-income households don’t really lower their housing costs so much as they shift housing costs over to transportation costs.

Section 8 does not tap into drive to you qualify, but it does work on some of the same prinicples. In the last entry of BankTalk, I speculated on the current problem: there is no incentive in place to encourage landlords to pay the costs of lowering the utility bills of their Section 8 tenants. It costs a lot of money to put in insulation. It costs a lot of (more…)

My comments on how the location of affordable housing can help to determine the diversity of the student populations in local schools elicited some interesting responses.  I say interesting because there less about “agree” or “disagree” or more about how policy is working or not working.

I would like to identify the author of one set of comments, but for now I will just acknowledge that she is a Realtor from the Bay Area (we’ll call her “Bay Area Realtor”).  She makes some great policy points:

• Statewide efforts at inclusionary zoning have been in place for years, but they do not seem to be working or at least they are not realizing outcomes that would prevent writers like myself or Fordham from finding fault about California or Massachusetts.
• A community might be concerned about a lack of available housing for lower-income populations, but if they do not have any available land, then there is little that can be done. The author points out that Piedmont has been built out for decades.
• The age of housing influences its affordability.  New housing imposes higher upfront costs, older housing brings higher ongoing costs.  New housing must meet the standards of new building codes.  There are requirements in California to build to higher seismic codes, to pay more for new public infrastructure.  On the other hand, maintenance costs on older properties are often higher.  This is a wrinkle that plays out not just on a house-by-house basis, but also on entire communities.  Some places have lots of new housing, and others (like Piedmont or Shaker Heights, Ohio) have a greater share of older housing.

I think the last point tells us that housing affordability is not merely about rent. It doesn’t help to put a poor household in a low-rent home if they are then facing high utility bills every month.

The place where policy could address that contradiction is through the Housing Choice Voucher Program (Section 8).

County Policy

Section 8 provides rental housing for low-income households through partnerships with private landlords. It uses (more…)

News out today shows that our schools are more income-segregated than ever before.  This national trend is only a broader reflection of the same forces that have fostered Wake County, North Carolina’s recent decision to favor “neighborhood schools.”

North Carolina is one of the states with the lowest share of elite schools.  By the measure that drove this study, there were less than 3 percent of students on free-or-reduced lunch in only six schools in North Carolina.  Perhaps that is factored by our states ongoing battle to reverse its high share of poor families, but it also reflects well on decision-making that has avoided narrow zoning to separate elites from the rest of the community.

The location of affordable housing is driven by land-use planning.  My review of some of the schools where elite private-public schools (PPS) have been created suggests that they are most often in white suburbs with very high incomes. Those districts exist even when a larger MSA is well-off.  Certainly, Boston and San Francisco harbor plenty of wealth.  That is why it is so bad that so many of their schools act as filters of opportunity.

The study did not release specific data for any MSA in North Carolina. I’ll offer a more narrow example for Alameda County, California. The largest city in Alameda County is Oakland. Oakland is poor and heavily minority. Its schools are well-known for their efforts to deal with the challenges of poverty.  While Oakland struggles, the community of Piedmont has developed its own “private” school system.  Fewer than 3 percent of its young people live in poverty, compared to more than 28 percent in Oakland.  Median household income in Piedmont is $134,000.  In Oakland, it is just a shade over $40,000.

Without a systematic effort to shape the housing stock in Piedmont, that outcome could not occur.  Only nine percent of households in Piedmont rent, and most rents are greater than $1,500 per month.  There are only 69 multifamily units in the entire city!

Is Wake County near that situation? Certainly there is no Piedmont within its borders.  Yet, it seems all too likely that the County has enough Piedmont-style school zones to bring about some of those same results. I counted 25 census tracts in Wake (in 2000, summary file 3) where less than 3 percent of the residents aged 5 to 17 lived in poverty. In those tracts, there were only 241 school-age children in 2000, compared to more than 10,500 living above the poverty line.  Back in 2000, Wake had about 111,000 school-age students.  Roughly 9.7 percent of them lived in a census tract with fewer than 3 percent of school-age children in poverty. Race is worth mentioning, too: those low-poverty districts have, on average, less than one-third of their share of African-American residents compared to the County as a whole.

Granted, school districts are much larger than census tracts.  Still, elementary schools can sometimes draw from a handful of census tracts.  Some of those tracts overlap. The possibility seems very real that Wake would quickly fall into a new regime where there were a handful of elite schools for the very wealthy.

Affordable Housing is a Determinant of Income Segregation

The Thomas Fordham Institute has published a report entitled America’s Private Public Schools that tracks where public decision-making has led to public schools with few or no poor students. Their indictment is compounded by the perspective of its authors.  Fordham is a conservative research group. Their concern is coincidental to the outcries of groups like the NAACP or Wake parents with a compassionate interest in diversity. Their prescription for this problem is more charter schools, rather than reform through traditional public school systems.

Fordham concluded that New Jersey was the worst offender for income-segregation. That is interesting, as New Jersey was the site for the seminal affordable housing case.  In Southern Burlington County N.A.A.C.P. v. Mount Laurel Township, the NAACP argued that zoning rules conspired to keep affordable housing outside of the municipal boundaries of Mt. Laurel township, thereby excluding low-and-moderate (LMI) residents from obtaining housing in that community. The decision created a new standard for  implementing the goals of affordable housing. Eight years (more…)

Yesterday’s Bank Talk entry examined how NetSpend once served as a retail storefront for internet gambling sites.  Online gambling requires some kind of access to the payments system.  The rulers that be in our financial world are thrust into a new role of deciding how to best respond to the age old issue of addiction to gambling.

The means through which gamblers can utilize the banking system for their gambling is evolving.  US regulatory agencies (Office of Thrift Supervision, Federal Deposit Insurance Corporation, Treasury, Federal Reserve) have remained quiet on this topic.  In the fall of 2009, Treasury and the Federal Reserve issued a joint statement, in response to outside concern. They took the dramatic step of announcing that they would delay any action on this issue until 2010.

Congress appears to be the likely location for any new reforms.

How online gambling is changing

My research tells me that banks are still an agent for deposits on gambling accounts.  US banks have largely left this market.  They have been replaced by willing European banks.  The Financial Services Authority (FSA), a UK bank regulator, appears to oversee some of the new institutions that are working with those gambling firms.

Gambling sites such as PokerStars.Com or FullTiltPoker.Com need a way for their customers to bring money to the game. Until the US established the Unlawful Internet Gambling Enforcement Act (UIGEA), consumers could use NetSpend to put money on debit cards at US banks, with the benefit of FDIC insurance.

(more…)

The NetSpend card never fails to amaze me, and today is no different.  Today, I discovered that NetSpend was once the destination for the deposits utilized by gamblers at online sites like Full Tilt Poker.

This changed when the Internet Gambling Enforcement Act made it illegal for banks to transfer money to an online gambling site in 2007.  Since then, a number of alternative modes have been proposed.  The EcoCard, for example, is a deposit card regulated by the Financial Services Authority.  The FSA oversees banking in the United Kingdom.

Full Tilt Poker is an online gambling site.  It may be located in the United States.  It could also be located in Jamaica, or Liberia, or Bermuda.  Antigua has clashed with the US over international online gambling.  I see that Full Tilt may be an Irish company with a Canadian licensure.

Net Spend offered a $5 promotion for each new account. Maximum deposit per day was $600, although the account holder could have petitioned to have those limits increased.

This matters if only because it serves to tell more about the nature of NetSpend and its banking partner, MetaBank. These firms were using FDIC-insured accounts for some very risky purposes.  The two groups still partner together on cards with lines of credit.  NetSpend Preferred is the NetSpend card with a line of credit attached to its deposit account. Those credit lines were in place for the gambling market. That means that gamblers could have borrowed money from MetaBank in order to meet their gambling obligations.

It also tells us something about our regulators.  The Office of Thrift Supervision, the regulator for MetaBank, did not stop this from happening. The FDIC didn’t step in, either.  It took an act of Congress!

NetSpend is a marketing firm that finds customers for MetaBank.  NetSpend’s marketing relationships still include all kinds of unusual actors, from payday lenders to pawn shops and more.

There is an InterAgency Ruling on how regulatory bodies should govern high cost credit.  It was aimed at payday lending and automobile title lending.  The emerging prepaid debit/credit platform should be the next spot for its application.

Safe and Sound!