Homelessness: The Low Income Housing Scandal

Poverty in America

Frontline (2017)

Film Review

Poverty in America is about the massive corruption scandal behind homelessness and the dearth of affordable housing for low income Americans.

Despite the nearly ten years that have passed since the 2008 economic crisis, 2.5 million Americans are made homeless through home eviction every year. The limited stock of affordable housing has no way of absorbing this many new renters. This, in turn, drives up rents at a time when real wages are decreasing. In many cities, families are forced to pay over 50% of their income in rent – a precarious situation leaving them one family emergency away from the streets.

This documentary focuses on two grossly inadequate federal programs dedicated to increasing access to affordable housing. The first is the Section 8 voucher program enacted in 1968. Under this program, the Department of Housing and Urban Development (HUD) awards vouchers to low income renters that pay the different between the rent a landlord charges and the rent a tenant can afford based on income.

There are currently 2 million Americans on the waiting list for Section 8 vouchers and only 25 percent will ever receive vouchers. The filmmakers follow three women who have waited six years or longer to qualify for Section 8 vouchers. None of them can find a landlord willing to accept their voucher within the 90 day limit they are given.

The second federal program Frontline explores is one in which the IRS allocates tax credits to states to grant to developers – who, in turn, sell the credits to investors. An entire tax credit industry has grown up around this scheme. Owing to inadequate IRS monitoring (only seven companies have been audited in 29 years), the scheme has been plagued by bribery and kickback scandals.

In Florida, for example, developers routinely cheat the program by over inflating the cost of development projects and either pocketing the difference of siphoning it off to shell companies (including one in Costa Rico specifically created for this purpose).

Despite heroic efforts of a handful of Department of Justice attorneys and Senator (R) Charles Grassley from Iowa, there seems to be little interest on the part of federal or state authorities to end this corruption. The IRS and HUD declined to be interviewed for this program.

How Banks Use Credit Cards to Rip Us Off

The Secret of History of the Credit Card

PBS (2004)

Film Review

The Secret History of the Credit Card is an old Frontline documentary featuring Senator Elizabeth Warren when she was still a Harvard law professor and ex-New York governor Elliott Spitzer when he was still state attorney general. It traces the “secret” repeal (and circumvention) of state usury laws that allowed banks to charge as much as 30% on credit card loans. This, in turn, made credit card banks the most profitable companies in the US. In 2003, several of them earned higher profits than MacDonald’s or Microsoft.

In 1981, when Citibank made its infamous deal with South Dakota, high interest rates were causing a massive loss for credit card companies. Although they paid 12% on average to borrow funds from other banks, state usury laws capped the interest they could charge customers at 9%. In return for South Dakota’s pledge to repeal their usury laws, Citibank agreed to move their entire credit card operation to Sioux Falls South Dakota.

The documentary goes on to explore the various marketing ploys the credit card industry employs to con consumers into increasing the credit card debt on which they pay 18-30% interest.

In 2003, approximately 90 million US credit card customers were “revolvers” (paying 18-30% interest on monthly balances), and 51 million were “deadbeats” (the industry term for credit card users who get “free” credit by paying their full balance every month).

The filmmakers are also highly critical of the Office of the Comptroller of the Currency (OCC), the Treasury division charged with regulating banks. They provide several examples of attempts by the OCC to undermine the ability of state prosecutors to protect consumers against credit card companies’ flagrant lawbreaking.

In 2004 when this documentary was made, the Better Business Bureau received more complaints about credit card companies than any other industry.

For copyright reasons, the video can’t be embedded. It can be viewed free at http://topdocumentaryfilms.com/secret-history-of-the-credit-card/

Also see Credit Card Nation – a great book on the credit card rip-off.