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Jersey Trench Bosses & The Bubble Machine
February 3, 2005: From the sagging seat of state government in Trenton to the west, to corruption plagued Hudson County in the east; from drug ravaged Camden in the south, back north to Newark where the inner city death toll rises while downtown gets revitalized, things are seriously amiss in the Garden State. Last autumn X Governor Jim McGreevey resigned, citing his hitherto hidden gayness as the reason for his X-it. Quel beard! Myriad corruption scandals, most of them development related, were nipping at his heels. In November, New Jersey Senate President Richard Codey began serving out the remainder of Jimbo's term. Codey proved a surprising success. Seeming a competent administrator with some genuine interest in reform. His popularity with voters was rising and polls showed him able to defeat Republican challengers in the next gubernatorial election. Most amazing of all, Codey didn't seem to eat lizards for lunch or to be living in the pockets of the entrenched state party bosses who've helped perpetuate Trenton, Hudson County, Camden and Newark.

So-- will Richard Codey run for governor when his Jimbo time is up? Continuing to clean up Jersey's image and maybe even its practices? Nope. Codey will be bowing out. Making the primary road smooth for Senator Jon Corzine. Aka Corzine the Mighty. The half-a-billionaire* flavor fave of the entrenched state party bosses who've helped perpetuate Trenton, Hudson County, Camden and Newark. No need to worry though. Corzine will be running as a reformer. From his new home in Hudson County. Where his upcoming candidacy is already healing divisions among political factions. As they line up behind Corzine, bootylicious visions dance in their head. And Jim McGreevey? Despite the cushion of a $500,000 "transition" fund provided by the state until May, Jimbo is working hard-- not hardly working. Doing municipal real estate deals in the law offices of State Senator Raymond J. Lesniak. His long time supporter and one of those entrenched state party bosses who-- well, you know.

Another state trench boss is Donald Norcross, co-chairman of the Camden County Democratic Party. Though it boggles the mind why any pol from Camden County would have enough cred to be cloutful. Given the condition of the city of Camden. Last November, Camden knocked Detroit off the top slot as "the most dangerous city in the United States" in the "City Crime Ratings" published by the Morgan Quitno Corp, which uses FBI crime data to determine rankings. Why has Camden become Hit City? An example of Camden civitas follows:

Between 1996 and 2004, crack dealer Keith Jenkins and his droogs brought more than 2000 kilos of coke into Camden. The majority was converted into crack in stash houses scattered around the city. The product was sold in Camden and other South Jersey communities, as well as in Delaware and Maryland. The business sometimes pulled down over $800,000 a week. Jenkins laundered and increased his profits via Camden real estate deals. Under the business name of Panache Enterprises, LLC. Family members, several of whom were employed by the city of Camden and its school board, masked Jenkins' control of the company. Panache bought slums and had druggies do sub sub-standard renovations. Jenkins paid his "workers" with crack 3 times a day. Jenkins' girlfriend was a realtor. She helped him flip the dumps into the hands of unqualified buyers. At massively inflated prices. Some buyers were naive. Others were illiterate or mentally disabled. Some were made of straw. Jenkins made them all look qualified with phoney paper; including pay-stubs, credit verifications, employment histories and social security numbers. Most of Jenkins' homebuyers defaulted on their mortgages.

The majority of those mortgages were backed by the Mortgage Loan Insurance Program, a home-ownership assistance program operated by the Federal Housing Administration (FHA) a division of the U.S. Department of Housing and Urban Development (HUD). FHA insured loans typically require less stringent eligibility guidelines, lower down payments and closing costs. The Mortgage Loan Insurance Program protects HUD designated lenders from taking a hit on loan defaults-- in order to encourage more mortgage loans being made to low and moderate income buyers.

On January 13th a federal jury convicted Keith Jenkins of a host of charges related to his crack seeded, government backed mortgage frauds. His mother was the only family member involved who didn't turn witness against him. Jenkins could face life in prison. If only he could be joined in his cell by the various local political reps and agency officials who helped funnel HUD home ownership assistance into Camden and who for years, didn't seem to notice the outsize property values of dumps in a drug dealer's paradise. Ditto for any equally blind designated lenders. After all, it's not like this was the first time HUD has been suckered in Scamden: by now all eyes should be peeled. In the meantime, low and moderate income Joe & Joan Taxpayer get to pick up yet another unpaid Ownership Society bill. Which they can place in their portfolio next to their piece of Iraq.

More Jests From Jersey

1) Last September, HUD sent a letter to the Newark Housing Authority, asking the agency to explain its policy on hiring family members. At issue are the activities of Kelstar Rising, Inc., a nonprofit organization run by the daughter of the authority's executive director, Harold Lucas. Kelstar has been on the Housing Authority payroll, as has Mr. Lucas' wife, son, daughter-in-law and sister-in-law. Until 2003, Mr. Lucas served as attorney for Kelstar. According to the 09/17/04 NY Times, one of Kelstar's duties is to assist "with the housing authority's annual Summer beauty pageant". Hopefully, none of Harold Lucas' relatives compete in the pageant. Or Kelstar could find itself in a Judgement of Paris position.

2) In a January article appearing in an area paper, a low level Jersey City pol who serves the people for several hours a week described his other career as that of "real estate investor". Attention Inman News and other industry publications-- the housing bubble is now officially deflating! When Hudson County pols come aboard, bandwagons historically turn into drunken boats. Something Cap'n Corzine might want to remember.

Bubble Trouble

A report called "A House of Cards: Refinancing the American Dream" by Javier Silva was released in January by Demos, a New York based public policy organization. "House" argues that stagnant wage growth and rising costs have led families (particularly young families) to become overly dependent on credit and that in order to pay off the ensuing debt, people are dipping into their home equity at unprecedented levels. Owning far less of their homes than in past decades. The report also posits that a rise in mortgage fraud, driven largely by mortgage brokers and appraisers, has helped inflate home values. To the point where financially strapped homeowners who've refinanced will take a fatal hit "if and when the housing bubble bursts".

"House of Cards" makes a compelling case about how home equity has become an economic fix for American workers-- and by inference, for the American economy. But the emphasis on mortgage brokers and appraisers as the nexus of mortgage fraud is overstated. There are many other players. Including lenders. The growth of federally insured mortgage arrangements, fee rich sub prime lending, plus the speedy transmigration of mortgages into investment securities largely marketed by Government Supported Entities (GSEs) has helped make lenders less fearful of default. As result, some have become fraud friendly. Though "House" acknowledges lender issues, its reform recommendations are overly focused on regulating relatively low level players and forgiveness of mortgage debt. Rather than correcting the root problems caused by a sea change in real estate practices. Many of which stem from increased government/taxpayer support of the housing market. It's also important to remember that one of the rising costs that keep families scrabbling and relying on debt are taxes.

As an organization, Demos is an advocate for the power of government. Believing in its ability to broadly transform. On its website, Demos tut-tuts over a perceived rise in disrespect for government and shakes its finger at those who subject government to "denigration". Of course at QT the motto re government is denigrate, denigrate, denigrate. Based on the belief that too many trench bosses now clog its halls. And that what really has the power to transform is laughter-- aimed at those who try to make society their own little fiefdom and/or cash cow.

Besides, if Americans now view government with such jaundiced eyes and have lost belief in its power to transform societies, why are we in Iraq?

Carola Von Hoffmannstahl-Solomonoff

A House of Cards: Refinancing The American Dream by Javier Silva can be found at the Demos website. Plus, Demos is hosting a February 8th discussion in NYC on the Housing Bubble. Info about the event is also available at the site.

*Though the debate rages over Corzine's actual worth, general consensus puts it in this ballpark.

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Copyright (c) 2005 by Carola Von Hoffmannstahl-Solomonoff. This material may be freely distributed subject to the terms and conditions set forth in the Open Publication License. This license relieves the author of any liability or implication of warranty, grants others permission to use the Content in whole or in part, and insures that the original author will be properly credited when Content is used. It also grants others permission to modify and redistribute the Content if they clearly mark what changes have been made, when they were made, and who made them. Finally, the license insures that if someone else bases a work on this Content, that the resultant work will be made available under the Open Publication License as well.

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