Jim Rokakis Meets the Bloggers UPDATED

The evening before last I attended one of the best Meet the Bloggers interviews ever, a fast-paced and highly substantive talk with Cuyahoga County Treasurer Jim Rokakis.

Comments on the interview have been posted by Tim, Gloria, and Wendell, and George (the coolest guy in the known universe) has posted the audio.

Rokakis is an exceedingly bright and committed public servant. He has been in office so long (ten years) and has assembled such a competent staff that he is able to focus his attention on pressing policy issues and even write and help pass important legislation. Most recently, he headed up a gubernatorial transition team looking at the Ohio Housing Financing Agency.

Much of our discussion centered on Cuyahoga County's foreclosure crisis. In 1995 there were 3,400 private mortgage foreclosures in the county, and by last year that number had swollen to 12,000. Vacant housing units all around the county suck the property values out of surrounding parcels, deter development, and are a magnet for vandalism and crime.

Rokakis is in the forefront of efforts to combat this urgent problem. I will supplement this post with more details on the situation and Rokakis' ideas for addressing it, but right now I must rush off to Akron for an appearance by Rep. Tim Ryan (D-Niles) so I am going to leave this as is for now and promise to come back to it in the next few days.

UPDATE: As promised, some more thoughts from the Rokakis MTB interview. The guy just loves being treasurer. He helped persuade Rich Cordray to run for Franklin County Treasurer, pointing out that when you deal with the money you deal with everything. As Cuyahoga County treasurer he has revolutionized delinquent tax collection, taken decisive action against the foreclosure crisis, and obtained stellar performance for county investments, but he is also brimming with ideas for more improvements and new initiatives.

Rokakis traces the roots of the foreclosure crisis to the growth of collateralized debt obligations, essentially the pooling of mortgage loans so that they can function as an investment on Wall Street. $2.6 trillion worth of mortgages are now held by investors. This was supposedly a good thing, promoting the "American Dream" of home ownership, but it has resulted in the proliferation of "creeps" in the lending industry who lowered the bar for loan approval -- no credit score needed, no down payment needed. Issuing loans on a "stated income" basis (otherwise known as "liar's loans"), they have ignited an explosion of loan defaults by people who had no business even getting their loans.

One principal culprit in the Cleveland area is Argent Loans (formerly affiliated with AmeriQuest), 50% of whose loans wind up in foreclosure within one year. In the Slavic Village area there are 900 houses standing vacant. Of these, 58% are owned by one company, and 90% of those are so deteriorated they need to be levelled. The effect on local property values has been devastating. There are similar problems in other areas, and in other cities. Rokakis said that by 2011, Toledo will be larger than Cincinnati, due to the latter's economic problems. An official in Cincinnati told Rokakis that Cleveland and Toledo are "lucky" because their residents "can't move north" -- i.e., the lake cuts off one direction of exodus.

There are other factors aggravating the situation, including the prevalence of adjustable rate mortages. Rokakis said that when those loans are recalibrated in 2007 ... "look out."

Rokakis is excited by the innovative approach to this problem by Genesee County, Michigan (home to the city of Flint, whose economic decline was the subject of Michael Moore's Roger & Me). The county buys back it's own tax debt, Rokakis said. In other words, instead of selling tax liens, the county buys them, using "tax anticipation notes." I'm not sure how this ultimately works, but the county winds up getting profits that the buyers of the tax liens would otherwise get. The Genesee County landbank wound up owning 9% of the residential real estate there, but with the funding needed to fix up or demolish it as needed. He'd like to see the same thing here, figuring that Cuyahoga County would reap $10 million a year that could be used to tear down derelict structures that depress real estate values.

A couple of things that Rokakis finds appalling are when certain serial defaulters become quasi-celebrities, appearing on national TV shows and web sites. Another is the targeting of young people by the financial industry. He recommended the documentary Maxed Out, by filmmaker Morgan Spurlock of Super Size Me fame, which includes a heart-rending interview with parents whose child committed suicide after getting into severe debt.

On other topics, we talked about the fact that 36% of the property in Cleveland is non-taxable because it is owned by churches, hospitals, and other non-profits. We also talked about the proliferation of payday lenders, which he said now outnumber fast food vendors. They charge exorbitant interest from people who can't quite get from one paycheck to the next. He has talked with Cordray about the possibility of using state treasury money to help those consumers with reasonably-priced emergency loans. We also talked about Rokakis' 19 years on city council, going back to the short and tumultuous mayoral term of now-Congressman Dennis Kucinich. He described the city then as "in free fall" due to crises like forced busing, the indictment of half the council for carnival kickbacks, and of course the city's default on its loans in 1978.