Good Intentions Won’t Stop the Eviction Crisis

About the author: Sheila Bair is the former chair of the Federal Deposit Insurance Corp.

My grandmother used to say the road to hell is paved with good intentions. Case in point is the $47 billion Emergency Rental Assistance Program. It was created by Congress with the noble aim of helping low-income households hit by the pandemic pay missed rent and utility bills. But it has turned into a devil of a mess.

By the end of June, barely $3 billion had been distributed to some 630,000 households. The Census Bureau estimates that over seven million households are behind in their rent, with 3.6 million saying they were “somewhat” or “very” likely to soon face eviction. The Biden administration has boldly extended a national moratorium on evictions in place in one form or another since March 2020. While that provides temporary relief to tenants, the moratorium has hurt cash-strapped landlords working in good faith as rent arrearages pile up.

Thanks to heroic efforts by the U.S. Treasury Department and a few states—Virginia and Alaska have model programs—the pace of distributions is picking up. But ERAP still struggles with the usual flaws that thwart programs designed to help people in financial need: bureaucratic complexity, excessive documentation, and reliance on intermediaries who have conflicting incentives.

Instead of federal administration, Congress authorized state and local housing agencies to distribute the funds. A block-grant approach might have been a reasonable choice were the program permanent. But success depended on getting the money out quickly. We have ended up with about 450 programs with varying eligibility and documentation requirements. Compounding the problem: Most of the agencies involved lacked standing infrastructure to deliver emergency aid and had to build it from scratch.

Rest here…