Could Home Dream Become Nightmare?

The American dream is owning your own home, and for more than half a century the government has encouraged home ownership through low-interest loans and tax breaks. Today, about two-thirds of American households own their homes. Or I should say, partly own them. Banks and other mortgage lenders own the other part. And here’s the potential problem.

You see, homes are about the only assets whose value has increased during these bleak economic times. That’s at least partly due to the fact that interest rates are at rock-bottom lows, meaning that a lot of people can now afford a mortgage to buy a home, thereby boosting the housing market.

Low interest rates also make it easy for many cash-strapped Americans who already own their home to borrow more money against its value, and banks are only too happy to oblige. Homeowners are using the cash to buy all sorts of things they otherwise couldn’t afford. More likely, they’re using the cash to pay down mounting credit-card debt. You see, interest rates on home-equity loans are only about half that on credit card debt, and home-equity interest payments loan can be deducted from income taxes.

Last year, homeowners raised $130 billion through home-equity loans. That’s nearly double the amount they raised the year before. So far this year, the home-equity borrowing binge keeps growing. Now, what happens if you can’t repay your home equity loan because you lose your job or your paycheck starts shrinking? Well, as long as the value of your home keeps rising, you can always take out another loan — which is exactly what many people are doing. Or if worse comes to worse, you can sell your home for more than the amount you owe, pay off your debt and settle into a smaller house.

But here’s the catch. When interest rates start heading upward again, a lot of home prices will start heading south. That’s because mortgages will become more expensive, which means fewer people will be in the market to buy a home. With all the new homes being built right now, some housing markets are already facing a glut. Home prices are softening in Oklahoma, North Carolina, Indiana, Ohio and Washington state.

If you can’t repay your home-equity loan and the price of your home is flat or declining, you’re in trouble — and so is your bank. “Equity delinquencies” are on the rise. In Oklahoma alone, there was a fourfold increase at the end of last year. Not only will a lot of people lose their homes, but a lot banks will be holding pieces of paper not nearly worth their face value.

I can’t predict the future, but I can tell you three things for sure: First, interest rates will be heading up again. I mean, just look at projected federal budget deficits and you’ll find reason enough. Second, many people have taken on way too much home-equity debt and are going to find themselves in hot water. Third, a lot of boomers who assume their homes will be their nest eggs in retirement are going to have an unpleasant surprise.

Robert Reich, former secretary of labor in the Clinton administration, is professor of social and economic policy at Brandeis and the author of “Reason: Why Liberals Will Win the Battle for America.”


Holocaust Survivors To Receive Payments

Payments from a $1.25 billion settlement reached last year with several Swiss banks will start reaching Holocaust survivors by the second half of next year, according to the executive director of the World Jewish Congress.

Some details of the payout plan still need to be worked out by a U.S. District Court later this year, said Elan Steinberg. Details about eligibility are being spelled out this week in newspaper ads throughout the world, and applications must be submitted by Oct. 22.

Individuals who believe they are eligible may call (888) 635-5483 or visit the Web site at — Staff Report

The Mitzvah of Tzedakah

Last month, the major private Swiss banks signed an agreement to implement the $1.25 billion fund to pay to survivors of Nazi-era crimes or their heirs. So far, this is the only major settlement in the raft of cases — some 28 to date, with more to be filed shortly — that seek redress against many of the banks, insurance companies and heavy industries that participated in and profited from Nazi Germany’s massive campaign of plunder, enslavement and killing.

By its terms, the Swiss-banks settlement extends to “targets and victims of Nazi persecution.” According to the settlement, that term includes Jews, homosexuals, people with physical and psychiatric disabilities, and Roma (a people who are popularly but inaccurately known as Gypsies). The settlement also includes refused asylum-seekers in Switzerland and people who were forced or slave laborers for Swiss companies.

The Swiss-banks settlement does not, regrettably, include all of the victim groups that the Nazis singled out. The landscape of death and suffering inflicted by the Third Reich was on a far vaster scale, one that is only slowly coming to public perception. The amount of the settlement, while seemingly large, is, to put it in perspective, less than three times what Merrill Lynch agreed to pay Orange County for allegedly faulty investment advice. Arithmetic dictates that, for a fixed fund, there will be a smaller per-capita recovery the larger the class of defined victims is.

Initially, the World War II-era litigation involved relatively discrete claims for unredeemed bank accounts and insurance polices. The Swiss-banks case and most of the others, however, are now driven mainly by other issues — slave labor and looting and plunder of property. The German war machine was kept up and running by the unlimited supply of free labor funneled to it by the SS. Banking and industry were greatly and unjustly enriched in the process.

Companies that have already been sued for their use of slave labor include Ford, Siemens, Volkswagen, Heinkel and Degussa — the last of which is also accused of manufacturing Zyklon B for the gas chambers. Others are expected to be added soon. The major German and Austrian banks are also alleged to have reaped large profits from slave labor and looted assets.

Who were the Nazi’s victims? The Swiss-banks case has one definition. Other pending and future litigation may provide a fuller historical picture.

The Nazis intended to exterminate the entire Jewish people. The Roma were also marked for total extermination. While Roma are included in the Swiss-banks settlement, many aspects of their persecution, however, are not well understood by the public. The stereotype of Roma as shiftless nomads, for instance, has not withstood scrutiny. It has become clear that many European Roma had, by 1933, joined the ranks of the middle class and owned considerable property and other wealth. The Germans labeled the Roma a people of artfremdes Blut (alien blood). Nazi policy from the outset was to render the Roma zukunftlos (futureless), first by forced sterilizations — Roma accounted for some 94 percent of those the Germans carried out — and then by outright killing.

The persecution of people with physical and psychiatric disabilities has also received some public attention. These individuals who had the misfortune to live within the Reich were, as the Roma had been, also labeled lebensunvertes Leben (lives unworthy of life) — and dealt with accordingly.

Homosexuals were forced to submit to “medical experiments” or subjected to forced labor.

The Swiss settlement appears not to account for several other groups of victims. There were those, for example, whose actions were deemed contrary to the interests of the state. Early in the Nazi years, socialists and communists were arrested en masse and their assets seized. Laws devised to combat the political left were later used against the Jews. Many communists fled to the Soviet Union; the Kremlin authorities then often sent them to the Gulag or handed them back to the Nazis after the German-Soviet nonaggression pact of 1939. Jehovah’s Witnesses, who refused to salute the flag, serve in the army or work in war industries, were also seized. Many Spanish republicans who had fled to France in the wake of Franco’s victory were rounded up by both the Nazi occupation and the Vichy regimes.

Prisoners of war were killed in enormous numbers. We have the testimony of a witness of no lesser stature than Primo Levi, in his last completed work, “The Drowned and the Saved,” that, in Auschwitz, Soviet POWs — a total of 2.2 million to 3.3 million of whom were killed in German captivity — were considered “only one degree superior to the Jews.” Bergen-Belsen began as Stalag 311, a prisoner-of-war camp. The historian Sybil Milton has reported that the 15,000 Russian prisoners at Auschwitz-Birkenau suffered a 99.2-percent mortality rate.

The suffering of non-Jewish Poles and other Slavs — whom the Nazis deemed untermenschen (subhumans) — under German occupation was also extreme. In pursuit of German policy “to see to it that only people of purely Germanic blood live in the East,” Hitler ordered the SS to “send to death, mercilessly and without compassion, men, women and children of Polish derivation.” Already by the end of 1940, the SS had expelled more than 325,000 Poles from their homes and looted their property. Scholars estimate that between 1.8 million and 1.9 million non-Jewish Poles became victims of German occupation policies and the war.

Slave labor was a favored fate for the Polish people. Indeed, Poles made up perhaps the single largest group of slave laborers. By war’s end, at least 1.5 million Poles had been impressed into forced labor and transported throughout the Reich to work in every economic sector. In August 1942, a subaltern of Alfred Rosenberg — the chief Nazi ideologist and the Reich minister for the Occupied Eastern Territories — put it this way: “The Slavs are to work for us. In so far as we do not need them, they may die.” Resisters were executed, and many more died from the exhausting work and harsh conditions. Poles — who were identified by purple P’s sewn to their clothing — became prisoners in nearly all of the concentration camps within the Reich’s far-flung system.

The list of defendants in the U.S. litigation is lengthening. At the same time, the recognition of who their victims were is becoming clearer. While true compensation is, of course, impossible, the record must reflect the realities of history, and those responsible should be held to account for actions of enormous magnitude and scope.

Barry A. Fisher is an international human rights lawyer in Century City. He is one of the attorneys for the plaintiffs in the Swiss-banks litigation and some dozen other lawsuits involving World War II-era assets.