On the Ground: Camp Washington
An article in Cincinnati magazine featuring neighborhoods right before the collapse: June 2007. This features a very quick glimpse into Camp Washington, characterizing it as “slow and steady,” with an “old world feel.” But homes are being rehabilitated and investors are taking interest. This article demonstrates the importance of community to revival.
Camp Washington demographics compared to Cincinnati. Some statistics that stand out include the much lower population density compared to Cincinnati, much higher rates of residents with less than high school education attainment, and lower percentages of families.
Real estate website displaying information by neighborhood. This is a piece of statistical data that displays information on standards of living, including crime, transportation, food, affordability, stats, hazards, and traffic. Housing prices, restaurants and businesses, and population ages are especially helpful here.
Camp Washington is mostly a statistic online, and home of Camp Washington Chili and the American Sign Museum, which is housed in a historical landmark. On the internet, it appears as a ghost town, and in real life, many people ask, “Where is that?” These articles all convey a sense of hope for rehabilitation of this neighborhood that was once very populated with industry leaders’ factories. They help us understand that the population has a lower number, generally less educated, and living in a food desert, compared to the rest of the city.
Anatomy of a financial collapse: The financial collapse is the result of four interconnected factors, which exemplify a system that was deeply mistreated, leading to major threats to the entire U.S. financial system. These unethical practices occurred through high risk lending, the failure of the Office of Thrift Supervision, Inflated credit ratings, and irresponsible Investment Banks, all due to the prioritization of their own financial interests over their clients’. This procrastination of acknowledgement of long-term, large-scale sacrifices to the financial system led to a traumatic collapse that devastated consumers and institutions, and eliminated any faith that was once held in U.S. capital markets.
An overall theme of dishonesty plagues the financial system in the years preceding the collapse. The resistance to accept failure, especially in the early stages, led to a game that standardized the practice of disregarding issues within the system by maintaining a surface-level appearance of a constantly successful establishment, as to not deplete consumer confidence. This approach neglects the interests of investors and consumers by favoring a high-risk lending strategy only to elevate growth and profit of one bank. Once one leg of the system allows themselves this method of practice, it further perpetuates the acceptance of unethical practices within the system.
Regulatory failure happened because of this lack of correction, despite promises to correct problems identified by the Office of Thrift Supervision. “OTS failed to respond with meaningful enforcement action, such as by downgrading WaMu’s rating for safety and soundness, requiring a public plan with deadlines for corrective actions, or imposing civil fines for inaction;” this downright laziness not only defeats the purpose of the OTS’s involvement, but creates more deceit by rating the situation as financially sound. A vicious cycle.
Inflated Credit Ratings are next. Here is another case of disrespect for the purpose of ratings in order to hide the deterioration of the mortgage market and continue issuing investment grade ratings because of the desperation to “win business and greater market share.” The situation would be a lot less frustrating if it weren’t for the obvious awareness of the problems rising in the mortgage market. Rather than yielding to this awareness, credit rating agencies continued to deplete the system by taking advantage of inaccurate ratings.
Finally, the abuse of investment banks meant that banks could benefit from the failure of “structured finance products,” which meant the bank continues to profit and the clients continue to lose. “Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high risk, poor quality loans and that magnified risk throughout the U.S. financial system.”
The 2008 Housing Crisis defends the government’s involvement in the collapse. The article examines the conservative critics’ tendency to blame government housing policies by analyzing evidence that suggest these claims are irrelevant. The establishment of government policies did not lead to the housing crisis, rather it was the failure to adhere to these policies and respect their intent that contributed to failure within the financial system. The United States is very unique for its abundance of homeownership. This is due to the federal dedication to create an economic environment that aims to make homeownership as affordable and beneficial as possible, through the use of mortgages. Unfortunately, the success of this plan relies on the obedience of each establishment associated with the mortgage market. Predatory lending and malicious miscommunication left consumers especially vulnerable. High house prices and absurdly high credit ratings created a misleading situation for investors. This was a new phenomenon, which meant that credit rating agencies had no trouble convincing investors that these mortgage-backed investments were exceptionally safe.
In order to gain a better understanding of the financial world, I sought out a more user-friendly summary of the 2008 Financial Crisis (https://www.youtube.com/watch?v=GPOv72Awo68). This visual approach is more conversational, and is dedicated to explaining the information in a way that is digestible to someone who is not familiar with economics. The definition of important terms is vital to understanding the situation, and supplemented by the big ideas congruent to those that were conveyed in the two articles. I pulled out some eye-opening quotes from this crash course:
“Rapid price increases driven by irrational decisions.”
“Expensive houses and ballooning mortgage payments.”
“Incredibly complicated web of assets, liabilities, and risks.”
“Moral hazard, when one person takes on more risk because someone else bears the burden of that risk.”
The financial collapse was the result of institutions within a system avoiding “formalities” that are more than just “formalities.” The resistance to adhere to a system, perhaps due to the temptation of the crazy amount of money involved, maintaining a reputation, and focused on small-scale, short-term successes, created irreversible effects and norms leading up to the market’s eventual collapse.
- A plan written in 2005 to begin the regrowth and renovation of businesses and residential areas in the Camp Washington area
- “Camp Washington NBD was once seen as a strong business community, the center of commerce for the industrial and residential communities. More recently, Camp Washington NBD has been perceived as an economically viable area for reinvestment.” (2)
- Would be an interesting followup to see if these goals were achieved
- Useful history about the area and what major projects have occurred over the years
Thesis: Two years before the financial crash of 2007, Camp Washington developed a multi year redevelopment and market feasibility plan. Comparing their goals with today’s redevelopment, Camp Washington hasn’t been able to achieve all of the benchmarks they set for themselves.
- News segment about plans to renovate areas of Camp Washington today
- Still trying to get funding and renovations under way (all still speculative)
- Rhinegeist wants to put medical marijuana plant (needs to win bid)
- Crosley Building Renovation (radio building to housing)
Thesis: As of July 2017, there are many speculative renovations and bids on Camp Washington area buildings to turn them into businesses and housing which points at population growth and economic upturn.
- Comprehensive study that covers changes between 2005-2009 of many major social and economic conditions in Cincinnati neighborhoods
- “Among the working class white Appalachian areas Camp Washington, South Fairmount, the East End, and Lower Price Hill saw improvements in the 2000 to 2005-2009 period.” (43)
- P 59- drop out rates increase 14.5% from 2000-2009
- P 88- Unemployment rates increase 2% from 2000-2009
- Joblessness rates increase 1% from 2000-2009
Thesis: Taking data from multiple charts in this study, there is a small but significant increase in both drop out and unemployment rates in the Camp Washington area. These correspond to the 2007 financial crash. Although the area was slightly affected by this economic change, there’s not enough data to support a large financial downturn due to it.
Synthesis: Looking at these three documents, it’s unclear if some of the financial downturn Camp Washington has experienced post 2007 is due fully to the crash or if other factors affected it. Currently, there are a few Camp Washington area organizations that are working to renovate and redevelop with the help of investors and local area businesses (which is a good sign that money is being put into the area). Overall, it seems like the financial crash slightly affected the business district of Camp Washington, but 10 years later, they are still creating jobs and income for the area with new renovation projects.