Sen. Lou Correa Kills Nation’s First Anti-‘Predatory Equity’ Bill

Tuesday, June 29, 2010
Dean Preston
California Progress Report

Lou Correa, a Democratic State Senator from Orange County, has
killed the nation’s first bill to stop predatory investments that
displace renters from their homes. The bill, AB 2337, authored by
Assemblymember Tom Ammiano (D-San Francisco), sought to ban the state’s public employee pension funds from investing in “predatory equity” schemes.

The issue gained significant attention after real estate investments
by CalPERS and CalSTRS in East Palo Alto and New York City resulted in
the displacement of thousands of rent-controlled tenants and the loss
of hundreds of millions of dollars. Senator Correa’s committee stopped
the bill yesterday at the request of the California Association of
Realtors. Correa has received significant campaign donation from
realtor interests.

“Only someone in the pocket of realtors could possibly oppose this bill,” said Dean Preston, Executive Director of Tenants Together,
California’s statewide organization for renters’ rights. “There’s no
other explanation for Senator Correa’s decision to kill this

Tenants Together and the East Palo Alto Fair Rent Coalition co-sponsored the bill to prevent workers’ retirement funds from being invested
in schemes to evict working people. The bill had the broad support of
at least twenty nonprofit housing organizations, labor groups and
government entities. The only opponents were several landlord groups
and the California Association of Realtors.

The California Bankers’ Association, which originally opposed the
bill, removed its opposition based on substantial author’s amendments
that narrowed the scope of the bill. CalPERS and CalSTRS, the very
entities whose investments would have been restricted under the bill,
also took a neutral stance on the bill after amendments were
incorporated into the language of the bill.

The full Assembly had approved the bill by a vote of 43-30 before it
landed in Senator Correa’s committee yesterday. Senator Correa did not
pose a single question at the hearing to the author or witnesses about
merits of the bill, instead derailing the bill without explanation.

Despite these developments, Ammiano’s groundbreaking bill was not in
vain. The bill forced a discussion about predatory equity investment
practices and drew considerable media attention to the problem.
Additionally, in response to the bill, CalPERS and CalSTRS adopted new internal policies
banning future predatory real estate investments, a move praised by
tenant advocates a major step toward stopping public pension funds from
financing evictions.

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