Monday, June 30, 2014

Did Doris Kearns Goodwin Blow It At Gettysburg?

This was originally published on  on July 3, 2013.  This reissue is scheduled to post one year from the date of the opening ceremonies for the Gettysburg Sesquicentennial on the evening of June 30, 2013 or Day 0 in the reckoning of this real timer.  Here is the Goodwin speech which stirred up a bit of controversy.  To me it was DKG being DKG, but then I'm an Imus fan.

Cover of "Team of Rivals: The Political G...

Of all the things I have experienced since arriving at Gettysburg on Saturday, the Doris Kearns Goodwin speech Sunday night does not rate very high on the impression list.  As I mentioned in a previous post, I am here with six other people. There is my covivant and my two friends from Central Florida and their three children.  I have decided to call the entire assemblage the Magnificent Seven, but we have not really been operating as a unit for the most part.  Thus, I was unaware that Mr. CF had led his family out of the event in silent protest until I discussed a link he sent me to this article by Tony Lee:
On Sunday, a stunned audience sat in silence as Doris Kearns Goodwin turned the keynote address at the opening ceremony for the 150th anniversary of the Battle of Gettysburg into a political lecture focusing on women's and gay rights.
Now as far as  the "stunned audience sat in silence" part goes, I was there.  Here is one observation about just about everybody involved in the sesquicentennial in any way. They are a very polite bunch of people.  Of course everybody was silent.  There was somebody speaking.  Duh.  Even Mr. CF and his family were silent.  They got up and walked out.  So the one tenth of one percent of the audience that I am familiar with did not sit in "stunned silence".  Neither CV nor I were stunned and the CF family did not sit.  That does not mean that Doris Kearns Goodwin did not do a crappy job.  On reflection I think she did.  And it is not just because when you are at Gettysburg and you say Stonewall, as one word, you should be talking about how things might have turned out if General Jackson had not been involved in a friendly fire incident at Chancellorsville.

Why Doris Kearns Goodwin Was A Reasonable Choice
Doris Kearns Goodwin is the author of Team of Rivals on which the movie Lincoln is based.

I have my own theory that Lincoln is a cinematic response to Birth of A Nation

Thanks in part to Birth of A Nation, the "Lost Cause" narrative, although stripped of its explicit racism, is the one most deeply embedded in popular culture.  Here is what the "infallible source" has to say about the "Lost Cause":
The Lost Cause is the name commonly given to an American literary and intellectual movement that sought to reconcile the traditional white society of the U.S. South to the defeat of the Confederate States of America in the American Civil War of 1861–1865.Those who contributed to the movement tended to portray the Confederacy's cause as noble and most of its leaders as exemplars of old-fashioned chivalry, defeated by the Union armies through overwhelming force rather than martial skill. Proponents of the Lost Cause movement also condemned the Reconstruction that followed the Civil War, claiming that it had been a deliberate attempt by Northern politicians and speculators to destroy the traditional Southern way of life.
Even though, or perhaps because, it is the site of a major Union victory, Gettysburg is powerfully iconic to the Lost Cause.  You get to stand near the spot where Armistead fell

There is a bit of a monument debate, that got rather heated at one time, about whether it was troops from Virginia, North Carolina or Mississippi that made the deepest penetration through Union lines - the High Water Mark.  By all reports, the most attended public hike will be Pickett's charge today.  I was going to stand where my probable cousins in the 69th Pennsylvania stood, but I changed my mind and bought another hat and will do the walk.  After all I have a Florida CPA license to go with the one from Massachusetts.

At any rate, Lost Cause, compelling as it is and cherished as it must remain, deserves a counter narrative and that is that the small number of Americans who stood up for racial equality in the period leading up to the war were also incredibly brave.  They risked being lynched anywhere in  the country.  When war came, some of them, like Thomas Wentworth Higginson, rather than going to war with neighbors and friends, would volunteer to command liberated slaves, with a promise from Jefferson Davis that, if captured, they would be considered fomenters of servile insurrection rather than officers entitled to treatment as prisoners of war.

At any rate, I see the logic in inviting Doris Kearns Goodwin to keynote the televised piece of the events of this week.  I guess when you invite somebody like that to speak, she gets to say whatever she wants.  So the screw-up, to the extent it is one, is hers alone.

What I Heard 

I wasn't bothered by her talk because it was Doris Kearns Goodwin being Dorothy Kearns Goodwin.  I had heard most of the anecdotes that she related from listening to Imus. (CV was puzzled wondering why the talk was mostly about Doris Kearns Goodwin) Also her counter narrative to Lost Cause- Abolition to Racial Equality to Women's Liberation deserves some respect, regardless of whether you agree with it.  The sesquicentennial is paying much more homage to the counter narrative than the centennial which was all Lost Cause, all the time.

How She Screwed Up

I think her screw-up is that she forgot that she was not on Imus.  She had been accorded a great honor to keynote this event.  She should have spent some time preparing rather than throwing her speech together at the last minute.  We were all there thinking about an event that has had one hundred fifty years to marinate in our national consciousness.  It is not the place to celebrate last weeks Supreme Court decisions that might sweep some divisive issues off the political table.  Trying to use the Supreme Court to take a divisive issue out of the hands of the electorate was one of the things that led to the need for a National Cemetery at Gettysburg.  The seceding states were reacting to an election that threatened to mess up their major Supreme Court victory:
A free negro of the African race, whose ancestors were brought to this country and sold as slaves, is not a "citizen" within the meaning of the Constitution of the United States.
When the Constitution was adopted, they were not regarded in any of the States as members of the community which constituted the State, and were not numbered among its "people or citizens."
The only two clauses in the Constitution which point to this race treat them as persons whom it was morally lawfully to deal in as articles of property and to hold as slaves.
Every citizen has a right to take with him into the Territory any article of property which the Constitution of the United States recognises as property. Scott v. Sandford - 60 U.S. 393 (1856)
Hooray for the Supreme Court.  They really nailed it with the Dredd Scott decision

What Was Required

The keynote speech needed to be a unifying message.  I think one of the things that we as individual Americans need to always remember is that if something really bad happens in our community, the outpouring of generous support and, if required acts of heroism, will be, in some arbitrarily large percentage, from people with whom we profoundly disagree on deeply held moral beliefs.  If the keynote speaker needed to work an up-to-the minute reference into the speech, it being on television and all,  she would have been well advised to choose the Granite Mountain Hotshots of the Prescott Fire Department.  Doris Kearns Goodwin and I might agree that the Stonewall drag queens had courage, though of a different sort than Stonewall Jackson's, but there is a time and a place for the expression of every sentiment.

In some ways, the promise that the veterans of Gettysburg made when they would walk across the large field or stand behind the stone wall and shake hands after the old men from the South had made that long walk was that we should remember that the practically insane courage that allowed that charge might be required from time to time and should be remembered, but that it is not what is required for us to live together with our differences.  That's why we have elections and when we don't like the way they turn out we wait for the next one and, in the mean time, and particularly on some special occasions, we treat one another with respect.

You can follow me on twitter @peterreillycpa.

This parody of Goodwin is a bit amusing

Hopes of Our Country Were on Our Bayonets - Gettysburg Day 0

Originally published on  This represents Day O of Last Year's Gettysburg Sesquicentennital.

Today, June 30th, might be considered Day 0 of the Battle of Gettysburg.  John Buford's cavalry has arrived.  As you can see on the map from the classic Avalon Hill game, his brigades under Gamble and Devin are positioned to slow the advance of the Army of Northern Virginia, giving the Army of the Potomac time to occupy the high ground (dark brown).

In the morning, while foraging our breakfast, I saw somebody with an A&E ID badge.  I asked him what was going on with them and he told me it was the 150th Anniversary of the Battle of Gettysburg.  No kidding.  He said he was a sound technician.  I asked him if all that equipment up by Meade's HQ was for their event tonight. He told me that they were "on the battlefield".  That narrows it down.

Our first stop was the Eisenhower Inn, where a collector's show was wrapping up.  So many books, so little time.  Of course, books were not even the main thing on display, although that is all I was about to buy. The most impressive piece I noted was being offered by a dealer named Edward Birnbaum. He was wearing a hat with Hebrew writing on it.  He said that it translated to "Israeli Counter-terrorism School".  He had a matched pair of dueling pistols from around 1840.  They were going for $12,500.

I am going to have to do a follow-up post on Doctor Fred Goldstein.  He had some rare coins from the period that he was showing.  He gave me some fairly detailed information to persuade me that the market for rare coins has bottomed out. He even recommends them as a fit investment for qualified plans (not IRAs).  I'm going to do some studying and may work up a post on that.  Doctor Goldstein's fascination with gold, relates to his background in dentistry.

Probably the most fascinating guys at the event were a couple of federal employees.  Mitchell Yockelson is an Investigative Archivist for the Office of the Inspector General of the National Archives.  The other fellow is a special agent, who preferred to keep a low profile.  Apparently there are a lot of documents floating around that really belong in the National Archives and these guys are charged with hunting them down.  Maybe that will make another post.

Pickett's Charge

My plan had been to pretty much stick with Park Service events and not check out the re-enactors, but our trip to the Inn brought us in close range, so we decided to take a look.  It ended up absorbing most of the afternoon, but it was well worth it. The Blue Gray Alliance's grand finale for the weekend was Pickett's charge.

The layout on private land was done pretty well, with a stone wall at the top of the slope and a fence inconveniently dividing the field.  It was narrower and not as long, but that would be picky.  There was a sustained barrage before the guys kicked off in good order.  The spectators were to their left and some of us followed along as they moved.  As you watched the fellow limping back, you could vaguely hear the boys in blue yelling "Fredericksburg ! Fredericksburg !"  It took me quite a while to relocate my covivant and my back-pack.  CV indicated that a civil war reenactment was now off the bucket list.  If CV is only going to have seen one, that was a really good one to have seen.

The fellow on the horse represents a private in the Second South Carolina Cavalry.  He said it takes about four years to train one of the horses.  I heard a few interesting lines as I was running around but I think the best was a fellow who said "I just want to know when 3rd Manassas is going to be."

What the A&E Guys Were Up To ?

There were some very moving ceremonies by Meade's Headquarters including Doris Kearns Goodwin as the keynote speaker.  You'll be able to watch them yourself eventually.  Here is the link.  Have to get up early tomorrow to be there for the first shot.  I'm hoping I'll be able to interview some "real timers."

You can follow me on twitter @peterreillycpa.

Sunday, June 29, 2014

Gettysburg Braces For Invasion

Originally published on on June 30, 2013.  By following these post's you will be able to experience last year's Gettysburg Sesquicentennial in real time.
I got a late start looking for a hotel room for the Gettysburg sesquicentennial.  I threw it out as a challenge to somebody I knew in the time share business, but he came up empty.  Then I had my travel agent try and amazingly, he came up with two rooms at the Gettysburg Hilton.  He was kind of amazed telling me that it looked like Super Bowl pricing.  I figure every 50 years or so, I can afford to splurge.  Public accounting has been good to me.  So my covivant and I are encamped at the Gettysburg Hilton.  The other room was taken by my friend from Central Florida who brought his family his wife, Mrs. CF and three boys CF1, CF2 and CF3.

CV and I arrived in Gettysburg around 9:30 AM on Saturday and headed for the Visitor Center.  As we walked by the Ranger Activity stations, we stopped to listen to a woman in period costume talking about what it was like for the residents of the town cleaning in up in the time after the battle.  The smell of rotting bodies of men and horses.  Kids being injured and killed as they fooled around with loaded muskets left on the field and unexploded ordnance.  At the other activity station, kids were being "enlisted".  We would see them learning to March on the way out.

Oddly the crowds have not started getting huge.  The battle went from July 1 - July 3, but apparently the biggest crowds will be next weekend when the largest number of re-enactors are expected.  The Park Service does not allow re-enactors to be tramping around the actual battlefield firing muskets (Just the powder charges, no bullets).  There will be "interperters".  Near the Pennsylvania monument, we saw a campground being laid out, with one large tent already set up.  It had a "hospital' sign on it.  It was set up by Bob Tycenski, a Verizon power technician, who represents the medical services of the 14th Brooklyn.  He told us that the Society of Civil War Surgeons, who will be represented there, has some real physicians as members.  Bob said he did re-enacting for about 15 years, but got tired of running around in the hot sun, so he transitioned to something where he could sit in the shade and talk to people.  I saw his uniform hanging in the tent.  A blue jacker with red pants.  The 14th Brooklyn fancied themselves "Chasseurs".  Brooklyn's hipster roots are deeper than I realized.

I spoke with Rick, a paramedic with the Gettysburg Fire Department.  They are volunteers.  The Borough of Gettysburg does not have  a very large population, less than 10,000.  Rick said it is shrinking.  Thanks to battlefield preservation there is no development and old houses on the main drags are converted to gift shops and the like.  Since 1863, the Borough has become accustomed to being invaded.  Rick told me that many residents have rented out their houses, although he did not know what the going rate.  Others have just moved out for the week.

Rick was directing traffic in front of Meade's headquarters for Empire Productions.  There was some massive  sound and video equipment in the adjacent field for live coverage of some of the events. I briefly chatted with a sound crew from AVS Production, who were in from New York.  They did not know who exactly they were setting the equipment up for.  As a veteran of the hotel industry (two and a half years as a night auditor), I knew where I could get intelligence on the matter.  According to the front desk clerks, there are a lot of people from A&E encamped at the Hilton with me and CV.  Somebody also mentioned the History Channel.  I didn't know that the History Channel was still interested in history.  Whenever I turn it on it seems to be overweight guys struggling with family dysfunction.

The big splurge yesterday was hiring a private tour guide.  Traffic was still pretty light.  Although I consider my knowledge of the Late Unpleasantness pretty superficial, it is rather deep compared to CV.  Licensed guide Fred Wieners kept it very interesting for both of us.  Mr. Wieners is a retired Air Force officer who has taught at the War College.  The battlefiled was under the supervision of the War Department till the 1930s when it was turned over to the Park Service.  Cadets from West Point would do battlefield tours to learn small unit tactics among other things.  Maybe they still do.  That is why Dwight Eisenhower retired to Gettysburrg.  Mr. Wieners told us that he made many of the lessons about communications and intelligence that are illustrated here relevant to young officers training in cyber warfare.  He told us that there is something called cyber high ground.

The team from Central Florida rendezvoused with us at Camp Hilton last night.  When we were foraging at Ruby Tuesdays, the hostess asked us how many and we said seven.  I was inspired to say "Magnificent Seven", so I may stick with that in the rest of my reports.  I have to close out now as we are going to start scouting soon.

You can follow me on twitter @peterreillycpa

Gettysburg Interlude - Understanding Historiography

This was originally published on on July 5, 2013 as part as my Gettysburg Sesquicentennial coverage.  For the anniversary of the anniversary, I am putting this first.  The rest of the Gettysburg posts will be as close to real time as possible.  There will also be many more pictures than I put up on

Civil War enthusiasts.  Civil War buffs. Civil War nuts.  Call them what you want.  Despite my covivant's conviction to the contrary, I will not cop to being one of them.  The main evidence in my favor is that I embraced the Margaret Fuller bicentennial with much more enthusiasm than the Civil War sesquicentennial.  Gather 1,000 Civil War buffs in a room and I doubt you will find 20 who know who Margaret Fuller was.  When she died in 1850, she was the most famous woman in the United States of America.

Margaret Who ?

Born in 1810, Margaret Fuller inspired a generation of younger activists.  Among them was Thomas Wentworth Higginson one of the "Secret Six" who backed John Brown's raid on Harper's Ferry. Included in the  grievances that are listed in the Declaration of the Immediate Causes Which Induce and Justify the Secession of South Carolina from the Federal Union are these acts of the Northern states:
Those States have assume the right of deciding upon the propriety of our domestic institutions; and have denied the rights of property established in fifteen of the States and recognized by the Constitution; they have denounced as sinful the institution of slavery; they have permitted open establishment among them of societies, whose avowed object is to disturb the peace and to eloign the property of the citizens of other States. They have encouraged and assisted thousands of our slaves to leave their homes; and those who remain, have been incited by emissaries, books and pictures to servile insurrection.
So why don't Civil War buffs know who Margaret Fuller is ?  Or even Thomas Wentworth Higginson who would command a regiment and whose memoir, Army Life In A Black Regiment, is considered by some one of the best civil war memoirs.  In order to answer that question you have to think about historiography.

What is Historiography ?

According to the infallible source:
Historiography refers either to the study of the methodology and development of "history" (as a discipline), or to a body of historical work on a specialized topic. Scholars discuss historiography topically – such as the "historiography of Catholicism", the "historiography of early Islam", or the "historiography of China" – as well as specific approaches and genres, such as political history and social history. Beginning in the nineteenth century, with the ascent of academic history, a corpus of historiographic literature developed.
In order to understand what the Civil War means to people now and how it came to mean that, you have to study historiography.

Idiot's Guide To Civil War Historiography

To say that you can boil Civil War historiography into two schools might seem absurd, but I think a reasonable case can be made.  Among enthusiasts, on either side, the two schools are the right one and the wrong one or the things that "they" want you to believe and the truth.  As somebody once told me, my problem is that I am an Aquarian and want everyone to get along.  So I will refer to the two schools as Lost Cause and Neo-abolitionist.  Fortunately, I did not make either of those terms up so I can go to the infallible source for definitions.

Lost Cause
The Lost Cause is the name commonly given to an American literary and intellectual movement that sought to reconcile the traditional white society of the U.S. South to the defeat of the Confederate States of America in the American Civil War of 1861–1865.Those who contributed to the movement tended to portray the Confederacy's cause as noble and most of its leaders as exemplars of old-fashioned chivalry, defeated by the Union armies through overwhelming force rather than martial skill. Proponents of the Lost Cause movement also condemned the Reconstruction that followed the Civil War, claiming that it had been a deliberate attempt by Northern politicians and speculators to destroy the traditional Southern way of life.
Neoabolitionist (or neo-abolitionist or new abolitionism) is a term coined by historians to refer to the heightened activity of the civil rights movement in the late 1950s and early 1960s. The term was soon used by leading historians to refer to the moral impulses of historians influenced by the Civil Rights movement in their studies of slavery, Reconstruction, segregation and Jim Crow. Bradley (2009) says, "Inspired by the civil rights movement, neo-abolitionist historians such as John Hope Franklin, Kenneth M. Stampp, and Eric Foner took their cue from DuBois and placed blacks front and center in their Reconstruction narratives." They led a re-evaluation of Reconstruction and its aftermath that focused on the significance of full citizenship and suffrage for African Americans. Thus Allen C. Guelzo (2009) refers to "the most recent neo-abolitionist histories from Henry Mayer and Paul Goodman" as well as "older neo-abolitionists like James McPherson, Howard Zinn, and Martin Duberman.".George M.Fredrickson (2009) says, "Neo-abolitionist historians profess to derive their standard from the abolitionists of Lincoln's own time."
Who Is Right ?

You have to be kidding to ask that question. Lost Cause believers and Neo-abolitionists ask different questions of different sources.  They can both tell true stories that are deep and rich and inspiring.  Lost Cause has one very serious weakness. In order to continue to believe wholeheartedly in the full Lost Cause narrative, you have to avoid reading material that is written in the South before 1862.  If you are a Lost Cause enthusiast, I would never try to talk you out of it.  I would ask that you read just one thing -  Declaration of the Immediate Causes Which Induce and Justify the Secession of South Carolina from the Federal Union.  Read it a couple of times and then explain it to me.  The only theory that I have been able to come up with is that it was really all about tariffs, but they were embarrassed about that, so they just said it was about slavery.

Why Did They Fight ?

When people start arguing about this they usually do it by setting up straw men that are relatively easy to knock over.  Nobody has ever seriously maintained that Northern soldiers were incipient NAACP supporters.  There were probably not that many officers who would give speeches where they said they were an army fighting to make other men free.

You will, however, find Lost Cause enthusiasts "proving" that they are right by showing how racist Northern soldiers were.  My own reading leans me towards concluding that a large portion of the Southern elite was very pro-slavery.  A very small portion of the Northern elite were militant abolitionists.  Regular folks - there is a lot of controversy and a lot of problems with the evidence.  The debates can make you a little crazy.  Maybe most Southern soldiers did not come from slave-holding families - depending on how broadly you define family.  On the other hand, if you are twenty years old and don't own a car or a house, it does not mean that you would not like to own one.  Clearly, though, to the extent there was an idealistic motivation for most regular folks, it was that bad guys were trying to take their country away.  Some of them thought they lived in a bigger country than others.
Why Can't We All Just Get Along ?
The Lost Cause had a pretty good historiographical run.  It served the interest of white people in both the North and the South.  And it is not as if you cannot find a lot to support it.  Lost Cause people may have buffed up the image of Robert E. Lee a bit, but they had really great material to work with.  Paul H. Buck explained the process in his Pulitzer Prize winning Road to Reunion in 1937.
The memories of the past were woven in a web of national sentiment which selected from by- gone feuds those deeds of mutual valor which permitted pride in present achievement and future promise. The remarkable changes that had taken place within the short span of a single generation had created a national solidarity hitherto unknown in American life. The reunited nation was a fact.
Lost Cause was not a purely Southern invention.  Even a governor of a Northern State, a Medal of Honor winner, wounded six times and promoted to Major General had a hand in it. Joshua Chamberlain wrote:
I was told, furthermore, that General Grant had appointed me to take charge of this parade and to receive the formal surrender of the guns and flags. Pursuant to these orders, I drew up my brigade at the courthouse along the highway leading to Lynchburg. This was very early on the morning of the 12th of April. ......

At such a time and under such conditions I thought it eminently fitting to show some token of our feeling, and I therefore instructed my subordinate officers to come to the position of 'salute' in the manual of arms as each body of the Confederates passed before us. .......
The General [Gordon] was riding in advance of his troops, his chin drooped to his breast, downhearted and dejected in appearance almost beyond description. At the sound of that machine like snap of arms, however, General Gordon started, caught in a moment its significance, and instantly assumed the finest attitude of a soldier. He wheeled his horse facing me, touching him gently with the spur, so that the animal slightly reared, and as he wheeled, horse and rider made one motion, the horse's head swung down with a graceful bow, and General Gordon dropped his swordpoint to his toe in salutation.
Around the same time that Road to Reunion was published Lost Cause entrenched itself firmly in popular culture.

For the last fifty years neo-abolitionism has been gaining ground.  It won the colleges early.  If you win the colleges, within a generation you have the high schools and the elementary school. The centennial was all Lost Cause all the time, but the sesquicentennial is heavily neo-abolitionist.  As you walk into the museum at the visitor center you see a sign that says in part:
Americans fought one another over three fundamental issues: the survival of the union, the fate of slavery, the common rights of citizenship - what it means to be an American -the war resolved the first two issues.  The nation struggles with the third to this day.
Now that is neo-abolitionist with a vengeance.

How Do We Get Along ?

We get along by practicing a form of apartheid.  The educational system is neo-abolitionist.  Popular culture remains Lost Cause to a significant extent.  The educational system does not pay very much attention to the actual war.  Civil War buffs do not pay very much attention to what happened other than things relating to the actual conduct of the war.  When I was a history major, one of the professors told me they did not offer a course specifically on the war itself, because when professors  did that they always ended up with a couple of pain-in-the-ass nineteen year old buffs who knew more than they did.  I'm sure that has evolved some, but when I was at the Pickett's charge event, a high school history teacher from South Carolina was grumbling about the curriculum not having anything about actual battles.

How Does It Work At Gettysburg ?

Gettysburg is ground zero for both interpretations.  I think what the organizers for the Sunday night televised event did was invite Doris Kearns Goodwin to the wrong party.  Her speech aggravated some people by being too much about Doris Kearns Goodwin.  It outraged other because of its reference to the DOMA decision.  When Doris Kearns Goodwin said "Stonewall", she was not talking about how the battle might have turned out had General Jackson not encountered friendly fire at Chancellorsville.  If Doris Kearns Goodwin had given the same speech four and a half months from now and a few hundred yards to the east, only the self-absorption would have been aggravating.  The high water mark and July 3 will forever belong to the Lost Cause and nobody should try to disturb that. Neo-abolitionists have a very strong claim on the Gettysburg address where it was reconfirmed that we are dedicated to the proposition that all are created equal.

My next post will be about the July 3 experience, which, like the Centennial, was all Lost Cause all the time.

You can follow me on twitter @peterreillycpa.


 Like many people I think of the rise of Neo-Abolitionist views as beginning around the 1960s.  Lost Cause enthusiasts will still refer to them as "revisionist".  A recent book I read The Southern Past - A Clash Of Race And Memory by W. Fitzhugh Brundage gave me a bit of a different perspective.  We will often think of Lost Cause as the Southern version, but that would be while accurate, perhaps imprecise.  Lost Cause is the white Southern version.  Black Southerners in their segregated schools learned a history that was more celebratory of emancipation.

Day 0 Pickett's charge reenactment not on the battlefield.

Thursday, June 26, 2014

Should Student Loans be Dischargeable in Bankruptcy ?

Originally published on on December 29, 2011, this is my first guest post from Allan Collinge.  The student loan struggle is still ongoing making this as timely now as it was two and a half years ago.

What Congress can do to Solve the Student Loan Crisis

At long last, the nation is beginning to acknowledge the very large problem that student debt has become.  The national dialogue has been noisy and confused to this point, however, and the few legislative attempts to address the issue, while pleasant sounding, will do little to ease the debt burdens of the vast majority of borrowers, and do nothing to address escalating college prices and the associated debt loads being imposed upon the citizenry. Ultimately, this distracted dialogue and feeble legislation serve no one well, and the protests we are seeing now across the country echo this point.  In order to understand and solve the student loan crisis we now face, it is critical to understand the unique fiscal dynamics that govern the student lending system, and the institutional and political behaviors that results.  Forget about the for-profit college scandal for a moment.  Put the public vs. private student loan debate on hold.   The following must be addressed if these debates, or others, are to be productive.

First, it must be acknowledged that the lending system supporting our higher education system is structurally predatory.  In the absence of fundamental, free-market consumer protections like bankruptcy, statutes of limitations, refinancing rights, and others), and in the presence of unprecedented collection powers that would make "mobsters envious" (Elizabeth Warren's words), we have a student loan system where the big lenders make significantly more money on defaulted loans than healthy loans.  What is worse:  The guarantors (the entities that are supposed to police the lenders) make, on average, 60% of their revenues from penalties and fees attached to defaulted loans. What is almost unbelievable:  Even the Department of Education (According to the President's Budget), gets back $1.22 for every dollar they pay out in default claims for Federal Family Education Loan Program (FFELP) loans.  Even subtracting generous collection and other costs from this profit still leave them clearly in the black.  Imagine if it turned out that JP Morgan Chase, Fannie Mae, and even The Housing Department were making more money on defaulted sub-prime home mortgages than those which remained in good stead.  This is the reality for student loans- a reality that demands very careful consideration.

A few common-sense questions are compelled here:  Would you want to take a loan from someone who wanted you to fail in your endeavor?  Doesn't this put the lending system in a position of bad faith?  Is this not a defining characteristic of a predatory lending system?   Adam Smith, Milton Friedman, and every other western economist would answer yes on all counts (Ironically, Republican members of Congress were, by all accounts, more responsible for the legislation that caused this than members from the other party, but that is a topic for another discussion).

These financial motivations explain a wide and deep array of systemic defects, conflicts, and corruptions in the system that involve the lenders, schools, and most importantly, the Department of Education.  One example, Sallie Mae and others have been found to have defaulted student loans en masse- without even attempting to contact the borrowers!  Another example:  all colleges routinely mislead students prior to taking out loans about  their true default rates- they instead doggedly promote their reasonable sounding "cohort" default rates, and the Department of Education never does anything to correct this false impression  (The true default rate across all schools is roughly 1 in 3, and has been for years, whereas the cohort default rate typically lies between 4%-8%).  Similarly, students usually aren't made aware that all the consumer protections mentioned above- and more- don't exist for student loans.  These are only a few of the hundreds of significant examples of false information, omissions, and outright deceptive behaviors that one could point to in this discussion.  The readers can imagine the multitude of other dishonorable activities that might result from the anti-borrower financial motivations that have taken hold of this lending system, and more than likely they will find these to be happening, in fact, on the ground.
Those who claim that the new, improved  “Direct Lending” system is cured of these predatory underpinnings are wrong.  Defaulted loans still carry all the same penalties and fees as before, and Sallie Mae and the other big player are still both servicing healthy loans, and collecting on defaulted loans in the same conflicted manner as before.  The collection frenzy around massively inflated, defaulted loans may even be exacerbated under the new system, where interest income is no longer a possibility for these contractors.  In any event, the new system clearly doesn't curb the predatory nature of the debt instrument.

The most troubling outcome resulting from this lending environment, however, is the massive tuition inflation that the schools are imposing at will upon the students.  Congress enables this, year after year, by repeatedly increasing the lending limits, in the absence of protest from the Department of Education, which has known about the astonishingly high default rates for years, but has promoted this pollyannish view of higher education, instead of telling the hard truth.   And of course this affects all students, not just those who borrow.  Wealthy and moderately wealthy families who must pay out of pocket for kids to go to college feel this, and feel it more sharply, arguably, than those who borrow.

Some perspective is needed here.  If there is an infectious disease outbreak, the CDC is pretty snappy about warning the public.  Similarly for the USGS and earthquakes, NOAA and tsunamis, etc. Should we not expect the same type of response from the Education Department in the face of exponentially increasing student loan debt and astonishingly high default rates?   When we were looking at a Trillion dollars in national student loan indebtedness, and the default rate was north of 1 in 4, why wasn't the Department of Education sounding the alarm?    These questions have yet to be posed to those in charge at the Department, but need to be.  By Congress.   Department staff who should have warned congress and the public but didn't should be held accountable. This isn't a question of good government. Rather it would seem that is a question about minimally adequate government.

So the question now is how to “fix what is broken”, to borrow a phrase from President Obama, Secretary Geithner, and others following the most recent State of the Union Address.  Gainful employment rules, dickering around with the Pell Grant, and similar activities do nothing here.  Neither do the various repayment programs that are being marketed by the higher ed crowd as viable substitutes for the consumer protections that were stripped from the system. Some policy “thought leaders”, in fact, are pointing to these untested, unproven programs as a basis for dramatically increasing the federal loan limits!  This is not the direction we want to go. We cannot afford it, and to claim otherwise is hugely irresponsible.

Don't be distracted by the sophisticated, confusing rhetoric being forced into this debate by those who would maintain the status quo no matter what the cost, or those who would end public support for higher education altogether.  Neither extreme has the interests of the citizens at heart. Remember only that reall, this is not a difficult problem.   Congress created it by removing fundamental, free-market consumer protections from student loans.  Congress can and must fix it by essentially undoing what they did.  Quite simply, it begins by returning, at a minimum, the bankruptcy protections that were removed without rational basis (when bankruptcy was the same for student loans as all other loans, far less than 1% of federal loans were discharged this way).  With this fundamental, free market mechanism returned, the Department of Education will have a vested interest in compelling the schools to provide a high quality product at a low cost, and at reasonable debt levels.

With financial motivations aligned with the interests of the students, instead of against them, we should expect the Education Department to take its job seriously, crack the whip on the schools, lenders, and ultimately compel not only a significant decrease in college prices, but also an end to a myriad of corruptions and conflicts that have taken root across higher education and are too numerous to mention, here.

Until Congress does what is right and the Department of Education has skin in the game for students, the invisible hand will not operate like it does for all other lending systems, and no fix (like gainful employment, for example)  will have any meaningful effect.  Prices, debt, and defaults will increase to the point where the American public will reject the entire lending system and all it supports. The related social consequences of this are not clear, but it is clear that we don't need to go there.  And as the American Street demonstrates, this is likely something that Congress must do sooner rather than later, and in a non-partisan manner.
Alan Collinge is founder of StudentLoanJustice.Org and author of The Student Loan Scam: The Most Oppressive Debt in U.S. History - and How We Can Fight Back (Beacon Press, 2009).

Wednesday, June 25, 2014

Housing the Echo Boomers - Next Big Real Estate Opportunity ?

Originally published on on December 21, 2011.

 Tim Smith blogs on the "Echo Boom", also known as Generation Y (Americans born between 1980 - 1995).  His most recent guest post indicated that Echo Boomers might not be that excited about becoming homeowners.  There are a lot of them and they will have to live somewhere, so there may still be opportunity in housing them.

     Seize the Next Biggest Financial Opportunity

Are you an investor in real estate?  Are you a real estate agent?  Are you a homeowner looking to sell?  Are you trying to rent a nice apartment complex?  If you have any interest in housing, you may have cringed when reading about the Millennial attitude toward housing.  However, whether Echo Boomers rent or buy, they will need housing, and there are 80 million of them.  In other words, recognizing their demographics and preferences will separate the winners from the losers and that has huge financial implications in a generation as large as the Echo Boomers.

Who Will Buy and Who Will Rent?

In the past, I’ve argued that single moms and females will produce the strongest demand for housing in the future.  Then a few articles I covered mentioned a different take: the new renter is probably a single mom.  However, single moms and females of the Millennial generation listed owning a home as a financial goal more than males, even though males are more likely to be homeowners (by a 7% margin).  Married Echo Boomers also reported home ownership as a financial goal (approximately 21% of Echo Boomers are married).  As this generation matures, I’d expect the strongest demand to come from these three segments of the Millennial generation.

Many single males stated that home ownership was not a financial goal.  A few of these male renters wanted to buy land and build their own home outside of the city (approximately 10-15%), while the rest seemed satisfied with renting.  Those in the real estate industry should be aware that renters are a profitable group, if you build housing that renters want.

Are there exceptions to these trends?  Of course, and if the Millennial generation sees its marriage rate increase, there will be a growing demographic to sell homes to.  In some cases Echo Boomers may opt to live with relatives or friends rent-free due to their economic circumstances.  But even the ones who lived with their relatives or friends told me that they planned to be independent soon.

What Will They Want?

    For now, most of Generation Y seem to want modest homes, the demand of which may be indicative of their young age.  But it might also represent a demographic shift against large housing that is often overpriced and unnecessary.  Because many Echo Boomers don’t have or make significant money, a small house offers the ability to save on energy.  Other traits of housing that Echo Boomers want:
            ·         Some Echo Boomers prefer to drive less or take public transportation.  This indicates that they would prefer housing that is close to work, school and social areas.  Keep in mind, that close housing will save them money so that they can afford other things in the area (an opportunity to attract businesses).
            ·         For apartments, modern designs with social areas are replacing old apartments (and this will continue to grow).  An example of this in terms of design, an example would be to replace carpet with hardwood floors.  Builders and real estate developers can also attract businesses that offer social areas, like coffee shops, to open near the area.
            ·         Since some Echo Boomers lack financial resources, always consider how your housing saves them money.  Is it small and efficient?  “This place will save you money on bills.”  Is it close to their favorite places?  “This place will save you money and time on transportation.”  Does it offer their favorite activities?  “This place offers a gym without an additional cost.”  Always create win-win situations – it communicates that you value your customers.

Time Will Be the Ultimate Judge

            While Echo Boomers may mature like older generations and buy houses in the suburbs, they may not.  Time will answer questions about the housing demand from the Millennial generation, and what type of housing they’ll prefer.  Either experts are right when they state that Echo Boomers are extending adolescence, or the zeitgeist of “making it” is changing for this generation.  For now, anyone with a financial interest in real estate should pay attention to trends and find ways to meet their consumers’ needs.  And best of all, you can win with the renters or the owners – you’re not stuck with one opportunity