Stuy Town and You

The thing that is roiling politics right now, and may have gotten a Republican elected senator in overwhelmingly Democratic Massachusetts is the obvious asymmetry in how bankers and the super-rich are treated compared to the rest of us. 

Last week the Tishman Speyer real estate empire simply walked away from a 5.4 billion dollar investment in the Stuyvesant Town development.  http://www.nytimes.com/2010/01/26/nyregion/26stuy.html?em.  Of course, Tishman Speyer only had 112 million into the deal; other investors carried the rest of the debt, including some pension funds.

Stuyvesant Town was built in the mid-40s by Metropolitan Life to provide low-cost housing for workers and returning WWII vets.  Rents were low, and working people could afford to live in New York.  During the latest real estate boom, Met Life sold the property for 5.4 billion to Tishman.  Turns out that Tishman couldn't turn a profit on the deal -- so it simply walked away, screwing the investors and the many tenants who were evicted so Tishman could charge higher rents.  They weren't making money so they just walked.

Meanwhile, thousands upon thousands of people have lost their homes the past few years after they (sometimes foolishly) got mortgages they could not afford after the balloon payments started, or more tragically, people lost their homes who had paid off their homes then took out second mortgages they could not pay.  Most of these folks tried desperately to keep their homes. Despite the Obama mortgage "reforms," most banks refused to work with people by modifying loans. 

Even greater in number than those who lost their homes are those who are still paying their mortgages even though it makes no economic sense to do so.  They do this through a sense of moral obligation.  They do so because they have are responsible neighbors and citizens, even though some have suggested that they simply act like the corporations and the banks that hector them to "do the responsible thing" and walk awa from their obligation.  http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?scp=2&sq=mortgage&st=cse

This is why people are so angry right now.  People can see that the Masters of the Universe are playing by different rules than they are, and suffering no consequences.  While workers have had stagnant wages over the last decade, higher health care costs, or even had health care taken away, banks have enjoyed TARP bailouts, paid its executives ginormous bonuses and increased the ratio between CEO pay and worker pay.  Obama tapped into this anger before he got into office and then, many feel, turned over economic policy to Wall Street.  If he wants to stay in office he'd be wise to figure out a way to help working Americans in real, not symbolic terms.