◼ Caught between rising pension costs and declining tax receipts, several local governments in California have gone bankrupt, including the city of San Bernardino, which has stopped making its required contributions to the California Public Employees Retirement System. CalPERS is threatening to sue. - Mark Cabaniss/Cal Watchdog
Meanwhile, the county of San Bernardino is thinking of trying to help the local economy by injecting it with billions of dollars, which, unfortunately, it doesn’t have. So the people who run the county are thinking of simply seizing the money by using eminent domain. But an examination of the plan reveals a simple scheme in which the right hand of government robs the left hand of government, because the idea that has been floated is simply to confiscate the money from institutional investors — and many of these institutional investors are pension funds, including government pension funds like CalPERS.
The plan came from Mortgage Resolution Partners, or MRP, of San Francisco, and it goes like this: local governments would try to help local homeowners out of the housing crash by using eminent domain to condemn underwater mortgages, then refinance the mortgages with lower principal amounts, which would then have lower monthly payments, so local homeowners wouldn’t have to take the losses from the bursting of the property bubble.
MRP would take a $4,500 fee for each refinanced home. As there are an estimated 20,000 to 30,000 homes in San Bernardino County that would be good candidates for the plan, that would make MRP’s cut $90 to $135 million in San Bernardino County alone. And the plan might expand elsewhere in California, even other states.
A public purpose supposedly would be served because each refinanced homeowner would suddenly have hundreds of dollars of “free money” each month to pump into the local economy. But so far, there has been no mention of who would lose all of this free money, other than some vague references to “Wall Street...” More at the link.
