x Abu Dhabi, UAESaturday 22 July 2017

State targets federal cash for jobless

The governor of Denver is to draw up a rescue package while the hardships caused by the global financial crisis leave people struggling for answers.

A sheriff's deputy supervises as a landlady clears out a home in Lafayette, Colorado, after the tenants were evicted.
A sheriff's deputy supervises as a landlady clears out a home in Lafayette, Colorado, after the tenants were evicted.

DENVER // Bruce Webster did everything right: he purchased and paid off his home. He started a small business installing electronics systems in new houses, and watched his annual turnover grow to US$1.5 million (Dh5.5m). "We had a good little thing going," he said. But then the home foreclosure crisis set in, and the US economy came tumbling down behind it. The market for new houses - once getting built at a record pace in Denver - crashed.

When the pace of construction first showed signs of slowing, Mr Webster thought it would be temporary, so he took out a mortgage against his home to meet standing costs and cover the payroll. Eventually, he had to lay off his employees and shutter a warehouse full of equipment. Still, his debts mounted. Now, with more than half his wife's salary going into the monthly mortgage, Mr Webster is faced with filing for bankruptcy, and worries he will lose his home.

"We always tried to make prudent decisions," he said in an interview. "And then suddenly the carpet was pulled out from under us." With the US economy in the worst turmoil since the Great Depression, and 13 million homeowners under threat of foreclosure, many US residents are asking who is to blame: was it predatory lenders who made loans to unqualified buyers? Was it the buyers themselves, who should have known they could not afford the homes they purchased? Or was it the financial community, which repackaged loans and resold them at highly leveraged rates?

But for tens of thousands of Americans like Mr Webster, who made no obvious bad choices, the question is far simpler: how did I get caught in the undertow? Last week, the president signed a stimulus plan worth $789 billion to try to revive the US economy, as well as a separate $75bn bailout for troubled homeowners. Last Thursday, Mr Webster was among dozens of people who attended a "town hall meeting" in the cafeteria of a Denver high school to see if they could grab hold of the federal lifeline.

The group included people who had been laid off from work or who faced deep cuts in their working hours. Others were threatened with eviction or home foreclosure, or had to make the impossible choice between paying rent or buying medicines. Grim-faced, they listened to state officials explain the complexity of the United States' fiscal bind, and took notes as officials listed places where they might seek relief.

"It is going to take some time," Tim Powers, a spokesman for the Colorado Bankers Association, told the crowd. "But we are starting to pull out of this." Apart from the tax rebates that make up a major chunk of the bailout package, a representative for the governor, Bill Ritter, said the state of Colorado stands to receive as much as $3bn in stimulus money. "And that's all about jobs," Ben Curtis said. "The federal government considers that money alone will create 60,000 jobs in Colorado."

States that can provide "shovel-ready" projects move to the front of the line for the cash, Mr Curtis said, adding that the governor's office was quickly drawing up projects that can start within months. But many in the crowd wanted work sooner. "Is there a place I can call tomorrow to sign up?" one man asked. Others worried there would be nothing suiting their skills set. "I am a secretary," said Quetta McNeil, a middle-aged African-American woman. "What are construction jobs going to do for me?"

An official from the city workforce centre told the crowd where they could take free classes to improve job skills, beef up their résumés and get job counselling. There would be work created in fields other than construction, the officials promised. Kathi Williams, the director of Colorado's division of housing, was on hand for Mr Webster and people in similar situations, explaining how to call the state's foreclosure hotline, where counsellors have helped four out of five homeowners avoid losing their property.

"Colorado was one of the first states in the toilet where foreclosures are concerned," Ms Williams said. "But the good news is we are on track for a 20 per cent decrease this fiscal year." The talk seemed to calm nerves in a crowd where the concern was palpable."We have all been scared enough," said Penelope Zweller, who said that just picking up the newspaper in the morning made her nervous. After the meeting, the officials said restoring public confidence was their most critical task because positive perceptions of the economy would be critical to moving it back into a healthy sphere.

"We know that people are hurting," said Beth McCann, a Democratic state representative. "We want them to know that help is out there." gpeters@thenational.ae