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| NYPL trustee Stephen A. Schwarzman, a principal subject in Aaron Glantz's new book, "Homewreckers," is featured prominently on its cover and scrutinized within the pages inside. |
It’s time to write, yet again, about why NYPL trustee Stephen A. Schwarzman has a terrible reputation that sinks lower and lower with everything you ever find out about him.
We just got finished writing about Mr. Schwarzman in connection with his friendship and praise for the Crown Prince Mohammed bin Salman (MBS). Crown Prince MBS is the Saudi leader who has enmeshed our country along with his in the war crimes and siege warfare against Yemen and he is the one everyone is looking at in connection with the dismemberment murder of Jamal Khashoggi. See:
Stopped!! NYPL's Plan To Turn Over Its 42nd Street Central Reference Library Grand Celeste Bartos Ballroom For Event Honoring The Infamous Saudi Crown Prince Mohammed bin Salman (Good Friend of Stephen Schwarzman?)
We were writing then because of the plans the NYPL had to turn over its Grand Celeste Bartos Ballroom space in the famed 42nd Street Central Reference Library for Prince MBS to have a reputation laundering event where Prince MBS would teach young people how to manage their reputations. It seems like everything these days is about reputation laundering for reputation management. See:
As The Brooklyn Public Library Holds Gala At The Barclays Arena Honoring Nets And Barclay’s Arena, Citizens Defending Libraries Is There With A Message: End Faux Philanthropy; Take Less And Don’t Sell Our libraries! and
A Flourish of Stories About So-Called Philanthropy Being Used As A Guise For Diminishing The Public Commons– That Includes Libraries.
Yes, in its great unfettered wisdom, the NYPL, its trustees and senior management, was going to allow the Crown Prince to launder his reputation in the grand 42nd Street Library that, already for reputation laundering purposes, is now officially and ostentatiously called the
“Stephen A. Schwarzman Building.”
In that article about MBS and Schwarzman we also passed along information about Stephen A. Schwarzman hobnobbing happily with Gislaine Maxwell, now famous and in the news for the stories about how she was the key and apparently foremost helper, Jeffrey Epstein’s number one elf, in running his pedophiliac sexual and political blackmail ring. . . and we passed along information about how Mr. Schwarzman and his businesses factor prominently in the burning up and deforestation of the Amazon rain forest.
As usual with Mr. Schwarzman, if you hang around a little while, there will be more information arriving that, if it is at all possible, drags your opinion of him down even further.
Now there is a new book out featuring its outstanding villains conspicuously on its cover. Yes, Stephen Schwarzman is one of the main ones the book tells us stories about. The book is
Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Shady Banks and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, by Aaron Glantz. Glantz has won a
Peabody award for investigative journalism and was a recent finalist for a Pulitzer Prize for his reporting on modern-day redlining.
Glantz’s book which has, on its cover, members of what Glantz describes as
“President Donald Trump’s inner circle” has, in addition to Schwarzman and Trump, Trump Cabinet members Steven Mnuchin, the current Treasury Secretary of the United States, and Wilbur Ross the current United States Secretary of Commerce. Helping make Schwarzman more officially a member of that Trump inner circle is that, as you can pick up from the caption to one of the photo illustrations in the book’s interior, Trump made Schwarzman chair of his strategic and policy forum of corporate advisors and “
titans”– You see Trump sitting next to Schwarzman at one of its meetings. (CDL video of them together
here.)
Glantz’s book is about the unfettered mechanics of an enormous transfer of wealth that robbed a substantial portion of Americans of the share of national wealth they once traditionally held, enriching a very few at the very top and very specifically the men on the cover of the book as the prime examples.
Glantz is smart to stand back and unfold his story in big picture terms, laying out the two main aspects it divides into. First, the astonishing transfer of wealth that occurred, removing almost all the wealth and financial security from a broad base of Americans, and secondly, how unfair that transfer to a small elite group of insiders was, accomplished by financial manipulations which government aligned itself to assist, and sometimes even subsidized to make the seizures riskless for those seizing the wealth, and which oft times descended into unchallenged illegalities. Schwarzman was a leader and one of the few key players in these events as Glantz tells the story.
Talking about his book recently on Democracy Now, Glantz speaks of how so
“much of Americans’ wealth is in their homes,” because we as Americans have very few other ways to save. Thus it is of enormous consequence, as he points out that
“eight million Americans lost their homes in the Great Recession” with financial groups like Schwarzman’s acquiring those homes through foreclosures. Now, points out Glantz,
“we live now in a society where the wealth gap between the richest one-tenth of 1% and the other 90% is bigger than it’s been in a hundred years.” And with that shift of wealth along with power comes other things: Although Glanz didn’t note it, the very wealthiest are now paying taxes
at a lower overall rate than the middle class. Schwarzman is an advocate of
taxing the poor more.
The Democracy Now interview with Glantz is at:
Part 1 (part of DN daily broadcast): Homewreckers: How Wall Street, Banks & Trump’s Inner Circle Used the 2008 Housing Crash to Get Rich, October 15, 2019, and
Part 2 (DN Web Exclusive): “The Federal Government Actually Paid Him”: How Steve Mnuchin Profited from the Housing Bust, October 15, 2019.
More specifically Glantz observes:
. . . the richest 0.1 of 1% of the American people have the same amount of wealth as the other 90%. And that is because, in America, 80% of most middle-class families’ wealth goes to only five things: food, housing, shelter, transportation, healthcare. All those other things, besides housing, just disappear as soon as you spend your money. Housing is the only way that most Americans have to save. The average American family has $4,000 in the bank. So, either you put your money in equity in your house, or you pay it to your landlord,
Glanz then asks
“who profited” off this transfer of wealth through foreclosures on these homes. Glanz spotlights Invitation Homes, founded by Schwarzman and his Blackstone group, as one of the main profiteers, and observes that Schwarzman’s company now owns 80,000 homes all across the country. In 2013, on Charlie Rose just a few years after the great recession began,
Schwarzman was able to brag that his was the
“largest real estate investor in the world” and that:
We started actually buying individual houses from Foreclosure about a year and a quarter ago. We're now the largest owner of houses in the United States.
Indeed, unsurprisingly, Glantz’s book confirms that the
“biggest buyer of foreclosed homes was” Schwarzman’s “Blackstone Group.” On that Charlie Rose broadcast, Schwarzman told Rose that he had absolute confidence in the future of the housing market in the United States in light of the real estate market turnaround following the Great Recession’s downturn, which enabled that wholesale acquisition of foreclosed homes by him and his company, and that
“in fact it's turned out to be so even faster than we wanted it to.” Presumably, he could only have been meaning that had the downturn continued longer he would have been able to buy up still more foreclosed homes to profit even more. See: Noticing New York:
On Charlie Rose NYPL Trustee Stephen Schwarzman Confirms Suspicions: His $100 Million To The Library Was Linked To NYPL’s Real Estate Plans, June 22, 2013.
When Americans lose the wealth of their home investments, they lose more: They are at the mercy of the decisions of landlords to increase rents or to neglect to make habitable the premises they then need to rent. Glantz notes of Invitation Homes that because it’s a publicly traded company you can
“very clearly their rent increases” and
“the relatively small amount of money they spend on maintenance.”
Something else has happened, a shift of wealth on another level, with all these foreclosures. Glantz writes:
The Obama administration's bulk sales gave rise to a class of landlord that has never been seen before. At the beginning if 2012, national Real Estate Investor magazine reported, not a single landlord owned as many as a thousand single-family homes. But just two years later, industry analysts were tracking more than a dozen vulture companies that had swooped in after the housing bust to buy thousands—removing then from individual ownership and concentrating wealth in the hands of billionaire investors.
More explicitly, his book covers how, until this sea change, the landlord industry had been mostly an industry run by moms and pops, dominated by
“small investors doing it locally across the country.” In other words, those renting to tenants once comprised an interstitial layer of a somewhat more wealthy group of people with closer ties to the community. Their absence from the local landscape leads to other consequences; writes Glantz:
“the corporate landlords were far more likely to file eviction notices than mom-and-pops.” In fact, the way in which the Blackstone and Invitation Home owners have supplanted the mom and pop landlords means that landlords who once made personal and judgement based decisions about whether to evict families and how to accommodate hardships when families are pulling themselves through a financial crisis have been replaced by a whole new eviction industry running based on numerical formulae. . . .
. . . Worse, that new eviction industry is now pursuing practices that are apparently designed to make money out of the cycle of fines and desperation that launching threatened and actual evictions entail, with, for instance, some owners who
“see the late fees they impose prior to eviction as extra income,” given that tenants can wind up paying
“22 percent more every year in housing costs because of the added fines and fees.” That is not to mention that just raising the rent extraordinarily can be a de facto eviction, and the fact the cost of low income housing, rising faster than inflation, is also rising even faster than expensive apartments.
The late-paying renter, with already limited options, is less able to move because they don’t want an eviction notice trailing them around, and is this forced to continue paying nearly unaffordable rent. They are:
thus transformed into a perpetual debtor. Never able to catch up, her power to demand basic services or repairs, to complain about anything at all, dwindles from little to nothing.
This was covered in (and quotes above come from) the recent multi-part “
On The Media” series about the alarming current state of eviction in the United States, The Scarlet E (especially Part III of the series)* : See:
The Scarlet E, Part I: Why?, June 7, 2019,
The Scarlet E, Part II: 40 Acres, June 14, 2019,
The Scarlet E, Part III: Tenants and Landlords, June 21, 2019, and
The Scarlet E, Part IV: Solutions, June 28, 2019.
(* This On The Media series done by co-host Brooke Gladstone, is an example of the excellence of the work On The Media can often produce, and used to do so more regularly, but it makes for a confusing problem, because On The Media recently has also been churning out some truly appalling propaganda pieces, particularly when it involves reporting on narratives concerning information from the intelligence communities and rationales for more perpetual war. Typically, it's been co-host Bob Garfield who has become the prime mouthpiece for these suspect pieces. Whereas, On The Media used to encourage a meta-awareness of media and often used to teach media literacy by interrogating narratives offered by other sectors of the media, Garfield now, more and more, seems to be stenographically transmitting talking points from the intelligence communities and military industrial complex. It’s been so bad that Garfield even had to broadcast a mea culpa in one follow-up segment- May 24, 2019, his apology though wasn’t as maxima culpa as it should have been. Very interestingly, Garfield’s mea culpa segment stands out exceptionally on the On The Media site as one for which there has been no transcript provided, making it less likely to Google- Garfield's more important apology is thus harder to find than the original apologized for segment for which there is a transcript.)
The Scarlet E series explains how, as the Blackstones of the industry Walmartize property ownership, the increased
“social distance” with landlords no longer personally talking with or intimately interrelating with tenants means there are no personal or locally tailored solutions to problems or avoiding cycles of despair.
The Scarlet E also notes (Part II) that tale that the data tells:
“One of a plague that could have been contained had it not been purposefully designed to diminish the wealth and power of specific populations–black and brown ones.”
During the Democracy Now interview of author Aaron Glantz, Juan González brought up
“the disproportionate impact that this loss of equity in all these homes had, especially on the African-American and Latino communities, which were even more dependent on home equity for what little wealth they had or net wealth they had.” In fact, the following week in a Democracy Now
interview with Keeanga-Yamahtta Taylor, an assistant professor at Princeton University about her new book,
“Race for Profit: How Banks and the Real Estate Industry Undermined Black Home Ownership,” it was noted that:
Recent census data reveals the homeownership rate for African Americans has fallen to its lowest level since before the civil rights movement. In the second quarter of this year, the rate fell to just 40%, the lowest level since 1950.
Glanz responded to González noting that:
What we see is that banks, like Steve Mnuchin’s bank, concentrated their foreclosures in communities of color. And then, when they started making loans again when the economy improved, they didn’t make loans to those communities. [virtually none– Glantz gives numbers.]
And now Steve Mnuchin, as the treasury secretary, is in charge of regulating every American bank.
The book depicts how, throughout the transfer of homeownership wealth and equity resulting from the Great Recession, the government wasn’t on the side of the resident homeowners; it was on the side of the big investors like Schwarzman. In the Democracy Now interview Juan González note,
“Julián Castro, now a presidential candidate, was at HUD supposedly in charge of the efforts to assist homeowners, and that’s come under heavy criticism, what the Obama administration did to help these homeowners.”
Big picture, some may remember– everyone ought to remember– that at the beginning of the Great Recession there was even a question about whether a firm like Goldman Sachs
would go bankrupt given the risks it had taken along with similar financial institutions that were bad bets. The bad bets and inappropriate risk taking on the part of Wall Street firms were what triggered the enormous economic downturn that negatively affected everyone else in the economy. Other firms, Lehman and Bear Stearns did collapse, and if firms like Goldman had been allowed to fail it could, properly handled, have led to a generally desirable break up the monopolies in the industry that are not good for democracy (
see Tim Wu’s work).
Instead, with Goldman advisors sitting in the top positions in government guiding most of the decisions, government saved Goldman and the rest the firms like it, coming to Wall Street’s rescue. Government did not concentrate on rescuing the resident homeowners who had been negatively affected by Wall Street’s bad decisions. It was a question of how and where the money to
“rescue” the economy was pumped into the economy. It went to the financial sector and was used to fund the overall transfer of homeownership wealth.
In 2008, there was fear of a
“deflationary recession” as had occurred during the Great Depression. In essence, that’s a market recognition that values of homes were now inflated. A recognition that homes generally were not worth what had been presumed when banks made loans on them would normally mean that both the homeowners and the bank that lent them money would be forced together and at the same time to cope with the fact that they had both made bad more or less, the same, mostly shared bad decisions about the market. If the home is worth less than previously, there aren’t alternative buyers on the horizon and the bank’s best outcome is to write down the amount of the loan and allow the resident homeowner to pay off a lower mortgage amount or pay a reduced rate of interest. In that case, the wealth reflected by the homes doesn’t get transferred elsewhere.
There are ways to avoid
“deflationary recession” and keep the resident homeowners in place. That’s if the choice is to bail out homeowners (rather than Wall Street), and Glantz told Democracy Now that there were many
“very senior people” inside the Obama administration who pushed for those kinds of programs as an alternative response, but he says that advice was consistently ignored. Glantz says:
all these people came forward, and they said, “We don’t need to bail out the banks. We can have a program like Franklin Roosevelt did back in the 1930s to bail out the people.” And then learning that that New Deal program actually made money for the government as it helped millions — it helped a million Americans stay in their homes, created the 30-year fixed mortgage, and then how, even when foreclosures happened, this government-run bank sold them off one at a time to individual families instead of in bulk to speculators . . there were like very senior people in the room who were making this argument the whole time, who were just ignored every step of the way.
Instead, the threat of deflation was battled by pumping up the market back up by streaming money into the hands of the banks. With pumped in funds, the financial sector, sidestepping the need to take necessary loses and it gained the upper hand to force transfers.
In the Scarlet E series it is noted that what made things significantly worse for the prospect of resident owners continuing to own their own homes was the way the banks, who had previously been requiring little equity be paid before the Great Recession, changed the borrowing rules as the federal
“rescue” money flowed to Wall Street. The changed rules favored big investors:
. . banks went from stupid to stupid . . they [started giving out loans to no one]. You had to put 25, 30 percent down. So then the question is who has the opportunity to take advantage of this market. The answer I think is larger landlords or private equity; people that have capital. . . that property gets consolidated in fewer and fewer hands. And so then the house -- the most intimate of spaces the most sacred, protected of spaces -- the house becomes a pure commodity and it becomes something that's driven completely by a market logic.
Under the terms by which some of the federal money was dispensed, there were, in theory, some rules at least, to benefit the beleaguered homeowners. They were supposed to be followed by the banks getting the federal dollars being pumped in. Glanz, however informs us about how those rules were not, in fact, followed.
Part of Glantz’s book involves tracking the stories of actual individual homeowner families affected by the crisis. One of the happier through lines of these stories in his book is about Sandy Jolley, albeit, she is one of those lost her home to foreclosure. After losing her home, Ms. Jolley won an $89 million whistleblower settlement against Steve Mnuchin’s bank. An attorney who took her case had her meet with the Justice Department, the FBI, and the HUD inspector general when she contacted him to present
“evidence of a massive fraud.” Of that multi-million dollar settlement, Ms. Jolley got $1.6 million for herself. It took ten years. By that time, Steve Mnuchin had profitably sold his bank and was the Treasury Secretary. Also, Glantz points out that while Mnuchin’s bank had to pay the $89 million whistleblower settlement, it had received over $1 billion in federal subsidies in connection with its foreclosure portfolio.
In his book Glantz describes the sweet deal
“loss-share” agreement subsidies that his
“homewreckers” got from the government; Mnuchin for OneWest Bank, John Otting for US Bank, Wilbur Ross and Stephen Schwarzman for BankUnited– The banks got to keep all the money they made on foreclosures or anything else, but if they
“lost money foreclosing on homeowners, the government would pay for it,” to the tune of
billions of dollars. By the way, note how this lays the pavement on the raceway to speed up home foreclosures all the more.
In Glantz’s Democracy Now interview, there was a natural focus on candidates now running in the 2020 presidential campaign. In addition, to noting, as mentioned above, that Democratic presidential candidate Julián Castro was at HUD when HUD and the federal government was failing so miserably to address the needs of those who owned their own homes, Glantz gave prominent mention in the interview to the fact that a number of the other Democratic candidates in the field have plans
“to tackle the housing challenges of ordinary Americans, many who are still struggling after the devastating 2008 housing market collapse.” Specifically listed as having proposals are Bernie Sanders, Elizabeth Warren, Cory Booker, and Pete Buttigieg. Joe Biden was mentioned as apparently having no plan. Julián Castro got no mention as having a plan. Glantz also made specific mention that
“Kamala Harris says she wants to put $100 billion towards promoting African-American homeownership.” And he noted
“black homeownership rate in this country is below the level that it was at when segregation and discrimination was legal.”
That made it sound like Kamala Harris could be depended upon to be part of a solution. But, as needs to warned, Democracy Now’s often excellent news coverage tends to give you
about 85% of the news. It’s been said that Steve Mnuchin would probably not be Treasury Secretary today if he had been prosecuted for his bank’s
mortgage fraud in California back when it was happening. (And much the same applies to
Wilbur Ross as Commerce Secretary.) And prosecuting Mnuchin and his bank is something it has been noted, Kamala Harris, who was Attorney General of the state of California at the time didn’t do.
Although it went unmentioned in the Democracy Now interview, Glantz’s book deals (pages 86 to 88) with how Mnuchin’s bank OneWest falsified and backdated documents and evaded other required procedures in order to accelerate the foreclosure mill operations maximally- it would also have disqualified the bank from receiving more federal foreclosure subsidies. Kamal Harris disregarded the
“strong recommendations of her staff” and did not sue Mnuchin’s bank.
Something else you didn’t hear on Democracy Now that you would have heard if you were picking up your news from Jimmy Dore’s Radio Show (one of the shows on WBAI radio,
currently subject to a destructive dismantlement attack on the Pacifica Public Radio Network)— Steve Mnuchin has since that time been a donor to Kamala Harris’ campaigning. In other words, if you get a lot of your news from Democracy Now, you need to work to supplement what you hear there by informing yourself from other sources as well.
Citizens Defending Libraries has included the following
in flyers it has distributed:
It has been noted that if Steve Mnuchin had been vigorously
prosecuted at the local level for his business’s mortgage fraud,
misrepresentations, backdating and falsification of documents to rev up
the pace of his OneWest foreclosure mill, he wouldn’t be Treasury
Secretary, appointed by Donald Trump today- Similarly, had NYS Attorney
General Eric Schneiderman investigated the shrink-and-sink Donnell Library plunder with Blackstone’s Stephen A. Schwarzman involved on the selling side and Trump son-in-law Jared Kushner as principal financial beneficiary, those two Trump henchmen might not be in significant positions of power today. The whole political landscape at the national level could be different, not to mention having healthier local politics.
Two of the co-founders of Citizens Defending Libraries spoke to Amy Goodman, the Democracy Now host who created the Democracy Now program (incubated out of WBIA radio her in NYC), on November 12, 2015 at the
Brooklyn For Peace fund raiser where Ms. Goodman was honored and they discussed with her why Democracy Now should cover these matters and the sell off and shrinkage of New York City libraries. We sent follow up materials to the Democracy Now producers about what that coverage ought to consist of. Democracy Now never followed up and never covered this other story other story they could have covered involving Steve Schwarzman before Trump was elected and Schwarzman appointed the head of Trump’s economic policy council.
Not only did the unprosecuted Mnuchin become Treasury Secretary, he was able to sell his OneWest bank at a nice profit. Glantz makes a point in his book about how small the club of elites is. The club is so small that Mnuchin did no have to go very far at all to sell his bank, he sold it to his neighbor John Thain owning another apartment in the 740 Park Avenue where they both live. Glantz makes a point about how many of the characters in his book, corporate raider Ronald Perlman, Steve Mnuchin, former Goldman chief John Thain, and Steve Schwarzman all reside at 740 Park Avenue. Nowhere in Glantz's book does he mention that the address is also famous as David Koch’s address or that the conglomeration of billionaires at 740 Park Avenue was the subject of a documentary about escalating wealth and income inequality that Alex Gibney made, “
Park Avenue: Money, Power & the American Dream.”
Schwarzman’s apartment at 740 Park Avenue was formerly owned by John D. Rockefeller, Jr. Small world, he bought it from another wealthy NYPL trustee. It’s twenty thousand square feet, has thirty-five rooms, thirteen bathrooms. Schwarzman doesn’t have to worry about going out to the public library, he has his own
“pine-paneled library” in the apartment. The apartment is just one of Schwarzman’s homes. Amy Goodman’s reaction on Democracy Now:
So, when you want to sell banks or whatever, you just go trick-or-treating in your own apartment building.
In his book, Glanz describes the lavish birthday parties Schwarzman has given himself, both his sixtieth birthday party in 2007 (where the wealthy attending came dressed as European nobility of the past and
“Among the most popular costumes was Marie Antionette"- Rod Stewart was paid something around $1 million to perform and Patti Labelle sang as well) and his seventieth birthday (Gwen Stefani sang there). The seventieth was quite as lavish as the sixtieth, live camels, trapeze artists, fireworks, etc., but Glantz notes that while the 2007 birthday's lavishness
“sparked condemnation” even from conservative sources, by 2017 with Trump in office, this kind of excess was taken largely in stride, going mostly unnoticed and unremarked upon.
Glanz’s book says that
“Schwarzman sought to rehabilitate his image” after his
“controversial [sixtieth]
birthday party” by transferring $100 million to the New York Public Library, which is when Schwarzman’s name was put on New York's 42nd Street Astor, Tilden, and Lenox Central Reference Library (the one with the lions). Glanz apparently didn’t do enough research on Schwarzman to realize that this $100 million transfer was not merely for reputation laundering purposes, it was also
intended to jump start New York library real estate deals, including the first one, the shrink-and-sink Donnell Library sale that benefitted Jared Kushner.
Schwarzman is thoroughly covered in Glantz’s book, which is 330 pages before the acknowledgments start. Schwarzman gets mentioned some 53 there and his Blackstone gets mentioned some 41 times in all.
Blackstone, acting quickly. has a defense web page site up with Invitation Homes attacking the book:
Correcting the Record on Blackstone and Invitation Homes- Correcting the numerous falsehoods and mischaracterizations in Aaron Glantz's recent book that references Invitation Homes and Blackstone. Nevertheless, when you look at that web site, it s not clear what are asserted to be the
"numerous falsehoods," what would make them
"numerous," or what the
corrections are that the site means to offer.
The New York Times has
just reported that NYPL trustee Stephen Schwarzman, Treasury Secretary Steven Mnuchin, and Jared Kushner are all going to Saudi Crown Prince Mohammed bin Salman upcoming economic event despite the infamy. Despite the dismemberment killing. Despite Yemen. It’s just business- as usual.
Notes the Times article:
Since then, many executives have pledged to continue their partnerships with Saudi Arabia, which range from joint investments in entities like Blackstone’s multibillion-dollar infrastructure fund. . .
The Schwarzman Blackstone multibillion-dollar infrastructure fund deal is Saudi seed money to be used to privatize American infrastructure.
Privatization, whether it it turning libraries into real estate deals or selling American infrastructure, is a symptom of wealth inequality. It means that accumulated wealth, running out of other things in which to invest its capital, needs to start buying up what was previously the public commons as one of the few things still left to acquire and collect rent on. It also reflects how the increasing imbalance of power enfeebles the public’s ability to fend off these encroaching advances. Lastly, with the shift of resources to the wealthy and the powerful, there is less and less public money to invest in the public’s resources to maintain them healthily and robustly to benefit all of society.
The parallels of such privatization to the shift of wealth described here and by Glantz with respect to homeownership are obvious.
