Shady deal for a liberal hero

July 29, 2008

Zach Zill reports on an instructive example of the kind of favor-trading that goes on all the time in U.S. politics.

CHARLES RANGEL, one of the best-known Black Democrats in Congress, is embroiled in a scandal over his use of not one, not two, but four rent-stabilized apartments in Manhattan.

The New York Times reported earlier this month that Rangel has been renting three adjacent units on the 16th floor and one unit on the 10th floor of Lenox Terrace, a large development complex on 135th Street in the heart of Harlem in New York City. The three adjacent units in the luxury building are a one-bedroom, a two-bedroom and a studio, which Rangel has been allowed to connect into a 2,500 square-foot home. He uses the one-bedroom on the lower floor as a campaign office.

Together, the four units rent for a total of $3,894 a month. According to the Times, at the equivalent market rate for units in the same building, Rangel should be paying twice that in rent.

The scandal comes amid a crisis of affordable housing in New York City and around the country. During the housing bubble that inflated real estate values, working-class renters were pushed out of Manhattan as developers and speculators cashed in on the boom. Now that the bubble has burst, renters are still stuck with inflated rents--and more and more, the threat of eviction when apartment building owners get foreclosed on.

Rep. Charles Rangle (D-N.Y.) speaks at a rally in Washington, D.C.
Rep. Charles Rangle (D-N.Y.) speaks at a rally in Washington, D.C.

It's not like Rangel needs help financially. As a member of Congress, he makes $169,000 a year, and he has a net worth of $566,000 to $1.2 million, according to congressional disclosure records. Rangel owns a villa in the Dominican Republic and has engaged in property speculation, buying and selling properties in Harlem and Florida, from which he made hundreds of thousands of dollars. He owns shares in mutual funds with a combined value of between $266,000 and $765,000.

Yet he is taking up apartments that could easily house four working-class families in a city where there is a desperate shortage of affordable housing.

HOW DID Rangel pull off such a sweet deal for rent-stabilized apartments in Harlem?

The law allows New York City tenants to have more than one rent-stabilized apartment, but it also says the apartments must be used as a primary residence--which Rangel definitely isn't doing with the one bedroom he uses as an office. But taking action against tenants who violate the rules lies with the landlord, not the state, and the Olnick Organization, which owns and operates Lenox Terrace, has turned a blind eye to Rangel's situation.

Why? Because Rangel isn't an ordinary tenant--he's a powerful politician who can use his influence to protect his landlord.

Some were shocked that a politician like Rangel, a liberal Democrat with a reputation for sticking up for his poor and working-class Black constituents--would be caught taking advantage of his power like this. People have grown accustomed to seeing Republicans taken down for improprieties involving gifts from corporate lobbyists or other "ethics violations," but Rangel was supposed to be different.

In reality, Rangel's situation isn't that surprising. His sweetheart deal with the Olnick Organization is a typical part of ruling-class politics in the U.S. Whatever their rhetoric, the Democrats, including liberals like Rangel, are as reliable as Republicans in defending the interests of the business establishment.

Whether it is out in the open or not, favor trading happens all the time in U.S. politics.

For example, it was recently revealed that Sens. Chris Dodd (D-Conn.), head of the Senate Banking Committee, and Kent Conrad (D-N.D.), who chairs the Senate Budget Committee, both got special deals from the giant mortgage lender Countrywide Financial, thanks to their connections with the company's CEO, Angelo Mozilo. No wonder Countrywide hasn't faced the kind of congressional scrutiny you'd expect, even though it was one of the main peddlers of predatory sub-prime loans that led to the mortgage crisis.

Whether with favors of a more personal nature, such as these real estate deals, or their contributions to campaign funds and various political action committees, corporations in the U.S. keep Republican and Democratic politicians alike buttered up--so the politicians know whose interests they really have to look out for.

For Rangel and other power-brokers, the gravy train never ends, even in economic hard times--while ordinary working-class people pay the price for the crisis.

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