U.S. Economic/Financial News

Homelessness Among Families on the Rise

Aug. 17 (EIRNS)—The number of homeless families is on the rise throughout the United States, while the Department of Housing and Urban Development (HUD) has been unable to adequately track the actual extent, which is the basis for social services. Traditionally, homeless services focused on those defined as "chronically homeless." Such individuals historically suffer from mental illness, substance abuse, and/or medical or physical conditions that prevent them from working. The big waves of individual homelessness began with cutbacks more than a decade ago in funding for residential mental-health facilities. As the result, people needing mental health care were dumped out onto the streets. However, recent surveys of homelessness have revealed more families with children, are now on the streets or in shelters. The numbers have swelled in the past two years of massive home foreclosures and job losses.

The HUD's Annual Homelessness Assessment report, released in June, found that 37% of the 643,067 homeless people, or about 238,000, counted on a single night in January of 2009, were in families. The number of families that used homeless shelters at some point in 2009 was slightly more than 170,000—a 30% increase since 2007.

The HUD numbers are open to dispute and certainly under-report the magnitude of the problem, but even their flawed data confirms that homelessness is on the rise among families (defined as at least one adult over 18 and one child under 18). The state of Iowa, indicative of the growing crisis, officially reported a 38% jump in its homeless population in 2009. Of 23,808 individuals counted by the Iowa Finance Authority as homeless, 14,068 were in families. Another 13,153 people in families were counted as at risk of homelessness. One shelter operator in Little Rock, Ark. reported to AP on June 20 that "We're being swamped with more and more women, and more and more families with kids." He disputed the HUD report's finding that the number of homeless people in that state is declining. He said his shelter is "overwhelmed, outnumbered and outgunned."

Shelter operators consistently report that they are seeing more families and more people than ever before. A shelter operator in Harrisburg, Pa., the state capital, told the Patriot-News last January that "everybody is here because their jobs ended." Food pantries report similar increases in demand for meals.

Homeless people are, obviously, at higher risk of poor health and disease. According to an April 2010 article on Huffington Post, a survey of 211 homeless people living on the streets in Detroit found that 51% of them were found to have one or more medical conditions, mental illness, and/or substance abuse, that put them at risk of dying. Among the 211, there had been 358 hospitalizations in the last year, and 456 emergency room visits in the previous three months. In December 2008, there was a significant spike in incidents of tuberculosis among the homeless population in Santa Barbara, Calif.

FDIC Closes Obama-Linked ShoreBank

Aug. 21 (EIRNS)—In a deal that has the aroma of corruption about it, the FDIC and the Illinois Department of Financial and Professional Regulation moved to shut down ShoreBank of Chicago and sell it to a newly chartered firm called "Urban Partnership Bank." The FDIC described ShoreBank as a "Community Development Financial Institution" (CDFI), which was "mission driven" to focus on the needs of its low income, minority clients in living and doing business in Chicago's South Side.

However, the list of investors in Urban Partnership hardly reveals concern for the plight of the urban poor. The investors, according to the Chicago Tribune, include American Express, Bank of America, Citigroup, Ford Foundation, GE Capital's equity investments arm, JPMorgan Chase, Key Community Development Corp., Morgan Stanley, Northern Trust, PNC Investment Corp., Goldman Sachs, and Wells Fargo. A source told the Tribune that the group was putting about $120 million into the bank, which is acquiring all of ShoreBank's deposits and most of its assets. The new bank is to be run by former First Chicago executives. The investors in Urban Partnership had previously put up $150 million in capital in an effort to secure a TARP bailout for ShoreBank, an effort that ultimately failed and led to the FDIC's action on Aug. 20. The FDIC will absorb the costs of 80% of ShoreBank's bad loans, amounting to $368 million.

While the Obama-linked bank—it has promoted on its connections to Obama on its website—portrayed itself as a "community bank" helping the poor, it also had far-flung international operations, including in micro-credit in Kenay, Bangladesh, small business loans in Eastern Europe, Central Asia and Africa, and even in the drug producing areas of Afghanistan, under the auspices of the USAID.

FDIC Closed Eight Banks Aug. 20

Aug. 21 (EIRNS)—In addition to Chicago's Shorebank, the FDIC closed seven other banks on Aug. 20, bringing the total number of bank failures in 2010 to 118, compared to 140 in all of 2009. Four banks were closed in California: Los Padres Bank of Solvang, with $870.4 million in assets and $770.7 million in deposits, was taken over by Pacific western Bank of San Diego; Pacific State Bank of Stockton, with $312 million in assets and Butte Community Bank of Chico with $498.8 million in assets and $471.3 million in deposits were both taken over by Rabobank National Association of El Centro, Calif,; and Sonoma Valley Bank of Sonoma, with $337 million in assets, was taken over by Westamerica Bank of San Rafael.

The FDIC closed two banks in Florida: Community National Bank of Bartow, with $67.9 million in assets, and Independent National Bank of Ocala, with $156.2 million in assets, were both acquired by CenterState Bank of Winter Haven. The FDIC also closed Imperial savings and Loan Association of Martinsville, Va., which was taken over by River Community bank, also of Martinsville. Altogether, yesterday's failures cost the deposit insurance fund $473.5 million.

TVA Nuclear Power Plant Construction Proceeds

Aug. 21 (EIRNS)—The Board of the Tennessee Valley Authority (TVA), announced on Aug. 20 that the FY11 budget includes $248 million for the next phase of construction engineering design, increased staffing, and components that require long-term procurement, for the Bellefonte Unit 1 nuclear power plant. In 1974, the plan was for two units at Bellefonte, but construction of the first unit was halted in 1988, when it was more than half complete. TVA estimates it will cost $4 billion to finish it, and have it operational by 2018, which is cheaper and faster than ordering a new plant. Next Spring, the Board will decide whether or not to go ahead with the build.

Going full speed ahead, is Unit 2 at Watts Bar, which is allocated $635 million next year, towards its 2013 completion date. The year that TVA decided to finish Watts Bar, 2007, the only nuclear power plant in this country to come on line in this century, TVA's Browns Ferry Unit 1, was completed.

Today, TVA has six nuclear reactors on line, meeting 30% of the electricity needs of its 9 million consumers. Some of the power from the upcoming plants will allow the utility to retire some of its oldest, most polluting coal-burning plants. But, most important, they will lay the basis for the future, as President Franklin Roosevelt intended, when he signed the law creating the TVA, within his First Hundred Days.