Bravo! When we had an excellent left-populist movement bubbling up in the early 1990s in South Africa (the SA National Civic Organisation), their demands went into the African National Congress' Reconstruction and Development Programme in February 1994, as the main campaign platform for the incoming government of Nelson Mandela. Needless to say, all progressive campaign promises were broken. Nevertheless, here they are, including the innovation that housing finance insurance should be 'demand-side' so that instead of the bailouts going to the Bear Stearns and Northern Rocks of the world, the funds would go to subprime victims who would then be able to stay in their houses. It was too radical, given the prevailing balance of forces, and particularly the proclivity of the first housing minister (Joe Slovo) to support neoliberal not communist ideas. Oh well, with out 10,000 municipal protests each year in SA, it won't be too long before we get a second left-populist programmatic wind, I reckon. Here are some ideas worth tracking through:
THE RECONSTRUCTION AND DEVELOPMENT PROGRAMME
2.5 HOUSING
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2.5.14 Subsidies. Government funds and private sector funding must be blended in order to make housing finance affordable. A national housing bank and national home loan guarantee fund must be initiated to coordinate subsidies and financing most efficiently. Subsidies must be provided in ways which reduce corruption, promote transparency, target the poor and eliminate gender discrimination. Mechanisms (such as time limits on resale, or compulsory repayment of subsidies upon transfer of property) must be introduced to prevent speculation and downward raiding. Subsidies could apply to a variety of tenure forms, but must be paid directly to individuals, groups or community-controlled institutions. Communities must get sufficient funds in order to ensure that they are not divided.
2.5.15 Finance. End-user finance and credit must be made available for diverse tenure forms, community designs and housing construction methods. Commercial banks must be encouraged, through legislation and incentives, to make credit and other services available in low-income areas; `redlining' and other forms of discrimination by banks must be prohibited. Community-controlled financing vehicles must be established with both private sector and government support where necessary. Locally controlled Housing Associations or cooperatives must be supported, in part to take over properties in possession of banks due to foreclosure. Unemployment bond insurance packages and guarantee schemes with a demand-side orientation must be devised. Interest rates must be kept as low as possible.
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4.70 REFORM OF THE FINANCIAL SECTOR
4.7.1 The apartheid system severely distorted the South African financial system. A handful of large financial institutions, all linked closely to the dominant conglomerates, centralise most of the country's financial assets. But they prove unable to serve most of the black community, especially women. Nor do they contribute significantly to the development of new sectors of the economy. Small informal-sector institutions meet some of the needs of the black community and micro enterprise. They lack the resources, however, to bring about broad-scale development.
4.7.2 The regulatory framework. The democratic government must modify regulations and support innovative financial institutions and instruments which mobilise private domestic savings to help fund the RDP, while not reducing incentives for personal savings. The democratic government must enhance accountability, access and transparency in the financial sector. In cooperation with other stakeholders, it must review both regulations and regulatory system to determine which aspects prove an unnecessary impediment to the RDP, and more generally to greater efficiency in the allocation of savings. Government must encourage the private sector to cooperate in extending financial services to those who presently do not have access to these services. The establishment of a smoothly functioning and inexpensive payments system, assuring safety of consumer deposits, must be considered a high priority. To improve flexibility in the legal environment, parliament should establish an oversight committee for the financial sector.
4.7.3 Prohibition against discrimination. The democratic government must introduce measures to combat discrimination on the grounds of race, gender, location and other non-economic factors. The democratic government must, in consultation with financial institutions, establish prudent non-discriminatory lending criteria, especially in respect of creditworthiness and collateral; reform the laws on women and banking to ensure equality; forbid blanket bans on mortgage bonds to specific communities (`redlining'); require banks to give their reasons when turning down a loan application; establish community liaison boards; develop simpler forms for contracts and applications, and create an environment which reduces the risk profile of lending to small black-owned enterprises and requires banks to lend a rising share of their assets to small, black-owned enterprise. The law must also require that financial institutions disclose their loans by race and gender; their assets and liabilities by subregion and sector; their staff by race and gender; the location of their branches and defaults by neighbourhood. To enforce laws against discrimination, the democratic government must establish an ombuds for the financial sector. At the local level, ombuds structures must include community representatives. Where anti-discrimination measures do not generate enough credit for housing, small enterprise and other RDP programmes, the government must provide appropriate kinds of financial support. The democratic government should consider reapplying the Usury Act to small loans (in addition to loans above R6 000, as presently applies), and should enforce the Act more effectively.
4.7.4 Housing bank and guarantee fund. The democratic government must establish a Housing Bank to ensure access to wholesale finance for housing projects and programmes. A Guarantee Fund will protect private sector funds from undue risk. Approximately half the Bank's funds will come from the government in the form of recurrent housing subsidies, in order to ensure affordable bonds.
4.7.5 Community banking. Community banks of various types have proven able to finance informal entrepreneurs, especially women. The democratic government must encourage community banking. It must reform regulations to foster the development of community banks while protecting customers. Where possible, government structures at all levels should conduct business with these institutions. The government must encourage the established banks and other financial institutions to help fund the community banks.
4.7.6 Pension and mutual funds. Pension and provident funds should be made more accountable to their members, and insurance companies to contributors. The democratic government must change the law to ensure adequate representation for workers through the trade unions and compulsory contributions by employers, and move towards industry funds. It must also legislate a transformation of the boards of the Mutual Funds to make them more socially responsible. The RDP must embark on a review of financial institution legislation, regulation and supervision to ensure the protection of pension and provident funds and other forms of savings and investment.
4.7.7 The Reserve Bank. The Interim Constitution contains several mechanisms which ensure that the Reserve Bank is both insulated from partisan interference and accountable to the broader goals of development and maintenance of the currency. In addition, the law must change the Act governing the Reserve Bank to ensure a board of directors that can better serve society as a whole. The board must include representatives from the trade unions and civil society. In future, a stronger board of governors should emerge through the appointment of better-qualified individuals. The new constitutional requirement that the board of governors record its decisions, publicise them when feasible, and account to parliament should help in developing a more professional executive, with greater credibility to exercise its mandate than the present board of governors.
4.7.8 The democratic government should immediately increase the resources available in the Reserve Bank and other appropriate agencies for combating illegal capital flight. Furthermore, the democratic government must enter into discussions with holders of wealth in an effort to persuade them of the harmful effects their actions are having on our economy.