Did Lennar Homes make molting chickens of San Francisco voters?

In June 2008, San Francisco voters were presented with dueling ballot measures concerning the former U.S. Navy property at Hunter's Point, the largest potential development in the city since World War II.

Local community groups and housing advocates wanted to make sure the current residents of the area, San Francisco's last Black enclave, got some of the planned units, so they backed a low income housing set-aside measure. Mayor Gavin Newsom, the Labor Council (led by the Building Trades unions), and many of the more malleable local non-profits lined up behind a plan to give the $1.2 billion project to the Lennar Corporation to remake the area. Lennar invested in a slick PR campaign. Not too surprisingly, the little guys got run over by big money and power.

All this came to mind as I read 13 Bankers -- Simon Johnson and James Kwak's dissection of the "The Wall Street Takeover and the Next Financial Meltdown." Here is their metaphorical description of the frenzied phase of the housing bubble.

On a factory farm, when hens start laying fewer eggs, they "force-molted" -- "starved of food and water and light for several days in order to stimulate a final bout of egg laying before their life's work is done."

After 2004, when many qualified borrowers had already refinanced and houses were so expensive they could only be bought with exotic mortgages, the real estate and finance industries launched an all-out effort to get people into new houses and squeeze out a few last years of golden eggs.

In [those] peak years, the bubble was sustained by brand-new mortgage products that only existed because they provided raw material for CDOs [collatteralized debt obligations = Wall Street's creative casino chips]. At the height of the boom, over half of the mortgages made by Lennar, a national housing developer, were interest-only mortgages or optional-payment mortgages whose principal went up each month; in 2006, almost one in three had a piggybank second mortgage. ...

The end result was a gigantic housing bubble propped up by a mountain of debt -- debt that could not be repaid if housing prices started to fall, since many borrowers could not make their payments out of their ordinary income. Before the crisis hit, however, the mortgage lenders and Wall Street banks fed off a giant moneymaking machine ...

With the housing (and mortgage) market going bust, I guess San Franciscans looked like another flock to pluck...

More on 13 Bankers soon; it is intelligible and scary. Full disclosure here: I do some work with one of the local groups that got run over by Lennar's proposition.