Matthew C Klein, Columnist

California Mortgage Grabs Are a Terrible Idea

A careful study of the data show that most of the city's claims are without merit.

September 17, 2013 at 3:10 PM UTC

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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During World War II, Richmond, California, was the home of legendary shipyards that could build a single Liberty cargo vessel in a matter of days. Now it's mostly known for hosting a Chevron refinery and for being one of the most dangerous cities in the United States.

This month it also became the first municipality to formally express interest in using eminent domain to seize certain mortgages held in private-label securitization trusts and then restructure them. Not only is this probably unconstitutional, a thorough examination of the facts shows it is a bad idea for the city and deeply unfair to the current owners of the targeted mortgages.