http://www.democracynow.org/2014/4/10/wall_streets_land_grab_firms_amass
Wall Street’s Land Grab: Firms Amass Rental Empire, Ousting Tenants & Threatening New Housing Crisis
THURSDAY, APRIL 10, 2014
VIDEO AT LINK
The Blackstone Group, a private equity firm, is now the largest owner of single-family rental homes in the country. In one day alone, Blackstone bought up 1,400 houses in Atlanta. And as private equity firms gobble up huge swaths of the housing market, they are partnering with big banks to bundle the mortgages on these rental homes into a new financial product known as "rental-backed securities," reminiscent of the "mortgage-backed securities" that helped cause the last financial crisis. Could this new private equity rental empire help spark the next housing crisis? We are joined by Laura Gottesdiener, author of
"A Dream Foreclosed: Black America and the Fight for a Place to Call Home," who calls this wave of purchases "a land grab." Gottesdiener’s latest article focuses on New York City’s rental market, a case study in what critics call "predatory equity." Large firms have used abusive tactics to oust tenants in a bid to hike up rents — and tenants have been resisting. We are also joined by Benjamin Warren, who, along with nearly 1,600 families in 42 buildings, is a victim of one of the largest single foreclosures in the city’s recent history.
GUESTS
Laura Gottesdiener, author of
A Dream Foreclosed: Black America and the Fight for a Place to Call Home. She’s an editor at
Waging Nonviolence. Her most recent
article for
TomDispatch is called "When Predatory Equity Hit the Big Apple: How Private Equity Came to New York’s Rental Market — and What That Tells Us About the Future."
Benjamin Warren, a housing advocate who has been part of his building’s tenant committee in the South Bronx since the 1980s. He is a member of Community Action for Safe Apartments, or CASA.
TRANSCRIPT
This is a rush transcript. Copy may not be in its final form.
JUAN GONZÁLEZ: You may not have heard of the Blackstone Group, but it’s the largest private equity firm in the world. And now it’s become the largest owner of single-family rental homes in the country. Over the last few years, Blackstone and other Wall Street firms have been quietly grabbing up huge swaths of the rental housing market, purchasing more than 200,000 cheap homes, hoping to turn a profit. At one auction in Atlanta, Blackstone swept up 1,400 houses in a single day. A new report released Wednesday by Right to the City Alliance found like Blackstone tenants in Atlanta had reported a range of issues, from burst pipes and exposed plumbing to bed bugs, which their Wall Street landlord has been slow to fix. In addition, private equity firms are partnering with big banks to bundle the mortgages on these rental homes into a new financial product known as "rental-backed securities," reminiscent of the mortgage-backed securities that crashed the economy in 2007 and 2008.
AMY GOODMAN: Now a new article turns the spotlight on New York City, a case study on what critics call "predatory equity." Here in New York, private equity firms have bought up rent-regulated properties, hoping tenants will leave so they can hike up the rent. When tenants fought to stay, the firms resorted to predatory tactics, from sending out fake eviction notices to shutting off heat or water. Right now in New York City, 1,600 families in 42 buildings are falling victim to one of the largest single foreclosures in the city’s recent history, after a conglomerate of private equity firms failed to pay its mortgage.
For more, we’re joined now by two guests. Ben Warren is with us. He’s a housing advocate who has been part of his building’s tenant committee in the South Bronx since the 1980s. He’s a tenant in one of those 42 buildings now being hit by the massive foreclosure, member of Community Action for Safe Apartments, or CASA. And Laura Gottesdiener is with us, the author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home. It was published by Zuccotti Park Press. She’s an editor at Waging Nonviolence. Her most recent piece for TomDispatch is called "When Predatory Equity Hit the Big Apple: How Private Equity Came to New York’s Rental Market—and What That Tells Us About the Future."
We welcome you both to Democracy Now! Laura, tell us about this particular case.
LAURA GOTTESDIENER: Sure. Thanks for having me. It’s—you know, as we’ve been looking at the growth of this single-family rental empire across the country, what we hear over and over again is that this is an utterly unprecedented phenomenon, that nothing like this has ever happened in the history of the United States. In many ways, that’s true. But in other ways, in New York City, we have this case study of what it’s looked like over the last decade when private equity firms have gone in and seen what they consider to be opportunities in the housing market to make a lot of money really quickly. I know this is something, Juan, that you’ve covered extensively for the Daily News. And what’s important to see, both in this case right now that Benjamin is living through and that 1,600 other families are living through and in a slew of other past very high-profile deals, is that this has been something of a disaster not just for tenants, but also from a financial perspective. These are deals that they were betting big—these private equity firms were betting big that they could turn these buildings around by pushing out hundreds of thousands of families. They weren’t able to push out families, because families organized. And as a result of that organizing, these deals failed, and it made a situation where the broader housing market in New York City got hit and these tenants had to live in completely inhumane conditions.
JUAN GONZÁLEZ: Well, what about the rise of this private equity involvement? Because, I mean, most of these private equity firms often depend on pension funds, on labor pension funds to invest in them to create the capital they amass to then do these cash buyouts. Hasn’t there been any reaction on the part of activists to tell—question these pension funds on how they’re investing their money?
LAURA GOTTESDIENER: Yeah, I think that’s one of the most important aspects of this story that is very rarely reported. So, for example, one of the most spectacular private equity deals, predatory equity deals, to fail in New York City happened in complexes in Manhattan called Stuyvesant Town and Cooper Village. And these were—these are massive properties, you know, in lower Manhattan where a private equity firm, the BlackRock Group, or BlackRock—which is different than Blackstone, but they’re often confused—believed that it could buy up these properties, transition these families out, force these families out—
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