To help tackle the nation’s housing crisis while countering Wall Street’s greed, three members of Congress in California on Saturday introduced new legislation to target rent manipulation in the United States by private equity firms and investment giants that have devoured huge numbers of singles. The family home and condominiums in the years after the 2008 financial crash.
“Wall Street should not be the owner of any family.”
Co-authored by Democrats Ro Khanna, Katie Porter and Mark Takano, the Stop Wall Street Homeowners Act aims to “deter future institutional investment” in the single-family housing (SFR) market by ending taxpayer subsidies to profit seekers. A way to help struggling families struggling with housing costs amid rising inflation.
A statement from lawmakers makes clear that if it is enacted into law, it would impose a “tax on current and future acquisitions of SFRs” by large institutional investors. The legislation also prohibits the federal lenders Fannie Mae, Freddie Mac, and Jenny Mae from buying and securitizing mortgages held by Wall Street firms that take advantage of their size and ability to purchase large numbers of debt-ridden single-family homes for conversion and rental. For exorbitant profit – a tactic in and of itself that drives rental prices ever higher.
Private equity firms and Wall Street rarely deviated from the single-family housing market prior to the 2008 crash, but the market exploded when large corporations were given access to trillions of dollars in low- or zero-interest dollars over the past decade and as regulators. In the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) subsidies are provided through federal programs such as Fannie and Freddy. In 2015, Senator Elizabeth Warren (D-Mass.) was among those who blew the whistle by telling HUD it had no business to collude with Wall Street in this way.
“These Wall Street investors made money by crashing the economy, they were bailed out, and now they’re feeding into rock bottom again, and they’re getting these loans so low that they’re going to get them a second time — and it’s up to us to stop it!” Warren told a crowd of Fans during a rally in Washington, D.C. in 2015.
In comments posted online on Saturday, Khanna said there may have been a time after the 2008 financial crash where it made sense for private entities to step in to buy housing units as a way to stabilize the housing market, but that’s in the decade since. It turns out that Wall Street investors have taken advantage of government policies and a lack of oversight to get rid of the millions of renters who find themselves at the mercy of a housing crisis that they did nothing to create and have no way to combat it.
Khanna said that with 25 percent of single-family homes in the United States being purchased by for-profit investors, these companies are “damaging the American dream of home ownership” and the economy in general.
“We need to stop financing housing,” Khanna said. “Americans are not serfs. We are not suppose to pay Wall Street to live in a house. What we need is more American families to own their own homes.”
“When I was on the front lines of the foreclosure crisis, I saw firsthand how corporate private interests exploit families to line their pockets,” Congresswoman Porter said in a statement. “Stop Wall Street Landlords Act promotes affordable home ownership, so our children can live in the same communities they grew up in. I’m proud to work with Rep. Khanna and Takano for Wall Street Accountability.”
“Wall Street shouldn’t be the owner of any family,” Takano said.
“As the nation’s housing crisis continues, the middle class in America is deeply feeling the constraints of our country’s low housing stock and increasing prices,” Takano added. “At the same time, wealthy investors are raising these costs by monopolizing single-family home ownership. The Stop Wall Street Owners Act is taking the urgent steps needed to keep corporate investors out of the single-family housing market.”
According to Khanna, “Low and middle-income families in my area and across the country are being evicted due to profiteering and unfair practices by large landlords. This legislation will help level the playing field and put an end to rent fraud in America.”
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