May 4th 2016 | From the print edition

By Vincent Singer
Wille Zum Leben: The Will To Life In Housing Markets And Political Movements Amidst
A Trainwreck Economy
It would be nice if Schopenhauer wasnt dead,
The Polish philosopher would have a lot to say. People were too focused on financial institutions
when the housing market failure was in spotlight. Some even believe they have been punished, citing
Dodd-Frank, or the National Mortgage Settlement in 2012 [1]. This is misguided, and in the interest
of others who are at fault. Congress, the National Association of Realtors (NAR), the National
Association of Homebuilders (NAHB). Components of a political-economic system that relies on
influence and deception.
If skeptical, track the financial records and lobbying costs of companies with a stake in the housing
economy. It shows that both Washington and Wall Street are to blame. For they are home to
institutions that fueled the housing bubble, had an interest in having it grow, and neglected to make
it stop. All to the despair of people who believed in homeownership. Were told to believe it. And
were given a great deal to make it happen. A home. A thing to own. A place to have a bed,
stocked pantries, and a hot shower. Wealth.
On April 11th, 2016,
over four hundred people were arrested for nonviolent civil disobedience on the

U.S. Capitol in Washington D.C. The movement that organized the action was Democracy Spring.
Their mission is to remove big money from politics. Democracy Spring believes large companies,
fueled by lobbying and greedy economics, have hijacked U.S. democracy, and pushed their agendas
at the expense of the American public. The financial records and lobbying costs of culpable
companies should make this hijacking clear. The fact that Democracy Spring even happened should
be the proverbial sticker-on-the-forehead indication.
Financial firms are just a few heads of an economic hydra. The public must investigate the failure
thoroughly to know everyone who should be seen as criminals in the U.S. political-economy.

Congress, JPMorgan, Freddie Mac, NAR, and NAHB are nothing without the people that compose
them. Just like Democracy Spring. It was people who built the homes. It was people who gave out
subprime loans and bundled them as mortgage backed securities. It was people who sold
over-valued properties. It was people who neglected regulatory policies. It was people who invested
in lobbyists to ensure it all continue. Democracy Spring happened because there are people that
have a will to live in a system that represents them. Democracy Spring happened because there are
people that have a will to live in a rigged economy.
Bad Faith Business: By Morgan, Freddie, and Uncle Sam

For JPMorgan Chase & Co., mortgage backed securities are big business. According to a Brookings
Institution report, between 2000-2008, loans and leases accounted for over 45% of the growth in
assets among the Big Four banks, of which JPMorgan is the leader [2]. In 2004, reported net
income was 4.466 billion dollars [3]. By 2007, that number jumped to 15.365 billion [4]. Jamie
Dimon, CEO since 2004, receives an annual reported salary of $20 million [5].
In 2003, JPMorgans annual lobbying reached record levels, spending $6,786,575 on lobbying [6].
Interestingly, in 2004, the anti-predatory loan regulations put into place by the U.S. Department of
Housing and Urban Development were dropped [7]. In total, between 2003-2008, JPMorgan Chase
& Co. spent over $32 million working congress [8].

JPMorgan deceived investors on many of those securities. The company has been tied to
now-bankrupt subprime lending firm New Century Financial Corp and others [9]. In 2001, subprime
mortgage originations were 7.6% of all originations. By 2006, they became 23.5% [10]. In 2013,
JPMorgan reached a $13 billion settlement with the U.S. Justice Department over mortgage backed
securities fraud [11]. A month before that, JPMorgan finalized a four billion dollar settlement with
the Federal Housing Finance Agency to resolve securities fraud claims and repurchase mortgages
[12]. Jamie Dimon remains CEO, and has been named one of Forbes most influential people. Go,
Jamie, go.

The Federal Home Loan Mortgage Corporation, also known as Freddie Mac, is a
government-sponsored enterprise created in 1970 to expand the secondary market for mortgages. In
spite of net income losses of $3.094 billion in 2007, nothing compares to the $50.119 billion net loss
reported in 2008 [13]. That same year Freddie Mac reported that the total residential mortgage debt
outstanding on single and multifamily units was $12.1 trillion [14]. Despite this, Freddie Macs home
sale units were on an upward trend until 2006.

Freddie Mac also disclosed to stockholders that the Federal Reserve has implemented a program to
buy $500 billion in mortgage backed securities issued by the company [15]. Throughout this period
Freddie Mac maintained a substantial lobbying budget. Annual lobbying was $9,760,000 in 2002 [16].
By 2003, it was $15,880,000. In total, Freddie Mac has spent over $63 million in lobbying between
2003-2008 [17].

Meanwhile, U.S. residential mortgage delinquency rates on subprime/adjustable mortgages increased

from 12% in 2003 to 25% in 2008 [18]. From 2007 to 2011, 4.8 million homes were foreclosed [19].
According to a HUD report, On a single night in January 2008, there were 664,414 sheltered and
unsheltered homeless persons nationwide [20].
Freddie Mac has been implicated in the housing market failure, too. As a government-sponsored
enterprise, Freddie Mac was put under the conservatorship of Federal Housing Finance Agency in
September 2008 [21]. In the Financial Crisis Inquiry Commission, released by the Obama
administration in 2011, Freddie Mac was said to have a deeply flawed business model [22]. In 2005
and 2006, Freddie Mac increased their purchase of risky mortgages and, Used their political power
for decades to ward off effective regulation and oversight [23]. In 2007, Freddie Macs former
3

president Leland Brendsel reached a settlement with the U.S. government. Brendsel agreed to pay
$13 million for accounting fraud. There were over $1 billion in suits filed against him. Into
retirement, Brendsel had a pay package of over $50 million [24].
Also in the Financial Crisis Inquiry Commission, researchers cite, Government policy has
encouraged homeownership through a set of incentives, assistance programs, and mandates. These
policies were put in place and promoted by several administrations and Congresses...Yet the
government failed to ensure that the philosophy of opportunity was being matched by the practical
realities on the ground [25].
In an article written for the
Journal of Business Inquiry
in 2009, author Jeff Holt cites Stan
Liebowitz, professor of economics at the University of Texas Dallas, and professor Thomas Sowell,
a senior fellow at the Stanford Hoover Institution, Liebowitz emphasized the governments role in
weakening mortgage underwriting standards. The relaxed standards encouraged speculation, which
led to a rapid rise in mortgage defaults when home prices stopped rising. Sowell also emphasized the
governments role in creating the housing bubble. The housing markets that had the largest home
price increases were generally markets where the local government imposed land use restrictions that
limited the supply of land available for housing [26].
Build It, Sell It, and They Will Come: Residential Realtys Field Of Dreams

JPMorgan, Freddie Mac, and the Federal Government are only half the story. Founded in 1908, the
National Association of Realtors is headquartered in Washington D.C. The association has members
that are involved with every aspect of residential and commercial real estate. In 2000, NARs total
membership was 766,560 [27]. By 2006, that number jumped to 1,357,732 [28].
In the United States between 1989-1998, a ten year period, there were 33 million existing home sales
[29]. Throughout 2003-2008, a six year period, there were over 34 million. Residential investment
went from $645 billion in 2000, to $879 billion in 2005 [30]. According to a report released by
University of Pennsylvania Wharton, researchers believe the realty industry bears responsibility for
the subprime mortgage crisis that ushered in the housing market failure. Shannon Smith, president
of the National Fair Housing Alliance in 2007, said,
I think the greed factor works with agents as
well as loan originators [31].
Where where the agents when borrowers took on large toxic mortgage
loans? Selling them expensive houses.

NAR is also a significant lobbying force in the United States. Between 2003-2008, the National
Association of Realtors alone spent over $70 million lobbying congress [32]. More broadly, there has
been over $489 million spent by real estate interests between 2003-2008 [33].

A third stakeholder was the construction companies. According to a monthly review released by the
Bureau of Labor Statistics, Employment in the construction sector grew notably, by 2.3 million
jobs, or 31.6 percent, between 1996 and 2006. More than half of this growth, 1.3 million jobs,
occurred from 2002 to 2006 [34]. The report also cites that, Residential construction showed
faster employment growth during the bubble and steeper decline over the bust period than the
construction sector as a whole. From 2002 to 2006, employment in residential construction
increased by 26.6 percent, considerably faster than the 15.4-percent growth in the construction
sector as a whole. Of the 1.3 million jobs added in construction, more than half715,000were in
residential construction.

The construction industry had an interest in having this housing boom maintain course. Following a
similar rate of increase as residential construction, annual lobbying costs by home builders groups
grew between 2003-2008 [35].

Coincidentally, this increased lobbying mirrors a trend in residential investment [36].

The housing bubble had a distinct effect on employment and unemployment. From 2006 to 2009,
employment in construction fell by 1.9 million jobs, a decline of 19.4 percent [37]. In December
2007, national unemployment was 5.0 percent, by June 2009, that number increased to 9.5 percent
[38]. Matching a drop in residential investment, construction, and lobbying by homebuilder
organizations.
The Suburbs Of Tomorrow: Will To Lifes Future In The U.S. Housing Economy

Arthur Schopenhauer believes the will to life drives human action, above reason, moral, or logic. He
believes it makes people act solel in their self-interest. One can look to the people of Washington
D.C. and Wall Street to find truth in the claim. They are revolving doors of corruption, greed, and
collusion. The housing market between 2000-2008 is a mere glimpse. And things have gotten worse.
Look at the numbers. In 2014, the real estate industry spent more money lobbying than ever before
[39]. In January, 2016, Jamie Dimons salary jumped 35% to 27 million dollars a year [40]. In 2004,
Finance Insurance Real (FIR) industry donors spent $47.3 million funding campaigns [41]. By 2008,
that number shrinked to $2.4 million. Now in 2016, it is over $240 million. The will to life is strong
within these people. They have built a political-economic system that allows the housing bubble to
happen. All the while making millions, and never being held accountable. Those settlements are
pennies to the dollar. Their way of life is prevailing.
For people on the other end, many lost their will to life after 2008. Many felt worthless. Jobs
disappeared. Opportunities shrank. Homes taken away. Families left homeless. Shelter populations
rising. Many felt helpless, and even more felt hopeless. Look at a news channel, and see
hopelessness rampant today. The people of Democracy Spring understand something most have yet
to. They know the current political-economic system of governance must go. They understand that
the will to life that includes the welfare of all, is picking in America. Democracy Spring knows that
people see corruption. They saw it in 2012 with Occupy. People want something new. People want a
government free of corporate influence. People want an economy where manipulators and
con-artists are held accountable. Democracy Spring is the incarnation of those desires. Change starts
with the majority. The people with bills to pay. The people with work schedules. The renters. The
foreclosed on and forgotten. These people must speak truth to power, otherwise truth will fall on
deaf ears. These people must fight Washington and Wall Street so they hear the death-cry of popular
protest.

Endnotes
[1]
https://www.justice.gov/ust/national-mortgage-settlement
[2]
http://www.brookings.edu/~/media/research/files/papers/2015/05/26-big-four-banks-asset-share/big-four-final.pdf
[3]
https://www.jpmorganchase.com/corporate/investor-relations/annual-report-proxy.htm
[4] see 3
[5]
http://www.bloomberg.com/news/articles/2016-01-21/dimon-s-pay-jumps-to-27-million-with-most-tied-to-performance
[6]
https://www.opensecrets.org/lobby/clientsum.php?id=D000000103&year=2003
[7]
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
[8] see 6
[9]
http://www.wsj.com/articles/SB10001424052702304470504579161532779973534#:P557YUxRJkTM6A
[10]
https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
[11]
http://money.cnn.com/2013/11/19/investing/jpmorgan-mortgage-settlement/
[12] see 11
[13]
http://www.freddiemac.com/investors/er/pdf/10k_031109.pdf
[14] see 13
[15] see 13
[16]
https://www.opensecrets.org/lobby/clientsum.php?id=D000000163&year=2003
[17] see 16
[18]
https://www.richmondfed.org/~/media/richmondfedorg/banking/markets_trends_and_statistics/trends/pdf/delinquency_and_for
eclosure_rates.pdf
[19]
https://ncsu.edu/ffci/publications/2012/v17-n1-2012-spring/bennett.php
[20]
https://www.hudexchange.info/resources/documents/4thHomelessAssessmentReport.pdf
[21]
http://www.fhfa.gov/Conservatorship/pages/history-of-fannie-mae--freddie-conservatorships.aspx
[22]
https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
[23] see 22
[24]
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/06/AR2007110602249.html
[25] see 22
[26]
https://www.uvu.edu/woodbury/docs/summaryoftheprimarycauseofthehousingbubble.pdf
[27]
http://www.realtor.org/membership/historic-report
[28] see 27
[29] see 18
[30]
https://research.stlouisfed.org/fred2/series/PRFIC96
[31]
http://knowledge.wharton.upenn.edu/article/the-subprime-blame-game-where-were-the-realtors/
[32]
https://www.opensecrets.org/lobby/clientsum.php?id=D000000062&year=2015
[33]
https://www.opensecrets.org/lobby/indusclient.php?id=F10&year=2015
[34]
http://www.bls.gov/opub/mlr/2010/12/art1full.pdf
[35]
https://www.opensecrets.org/lobby/indusclient.php?id=C02&year=
[36] see 34
[37] see 34
[38] see 34
[39]
https://www.opensecrets.org/lobby/indusclient.php?id=F10
[40]
http://www.bloomberg.com/news/articles/2016-01-21/dimon-s-pay-jumps-to-27-million-with-most-tied-to-performance
[41]
https://www.opensecrets.org/outsidespending/summ.php?cycle=2004&disp=I&type=A