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Obamacare sign ups top 11 million

Written By limadu on Rabu, 18 Februari 2015 | 14.44

Consumers raced to apply before open enrollment ended Sunday, with more than a million people picking plans in the final nine days, officials said.

"It gives you some sense of how hungry people were out there for affordable, accessible health insurance," President Obama said in a video that was posted on the White House Twitter and Facebook accounts.

The tally includes people who signed up for the first time and existing consumers who were automatically re-enrolled for this year.

The number may grow somewhat in coming days. While open enrollment officially ended on Sunday, those who had trouble signing up because of technical issues or long wait times last weekend have a few more days. The federal exchange is allowing these consumers to enroll through Feb. 22, while most state exchanges have also extended their deadlines.

Pressure is also mounting on the White House to extend enrollment to April 15 for those who have to pay a penalty for being uninsured in 2014.

Related: Obamacare penalty payers ask, 'Where's my refund?'

Advocates argue that many Americans won't know they are subject to the penalty until they complete their taxes this year and that may prompt them to want to enroll for 2015. Up to 6 million taxpayers may be subject to the fine for 2014, which is $95 or 1% of income, whichever is greater. The penalty for lacking coverage this year grows to 2% or $325, whichever is greater.

Washington, which runs its own state exchange, has already made this move. Administration officials said they would make a decision in the next two weeks.

Related: I have to pay back my Obamacare subsidy

Obamacare is likely to surpass its reduced enrollment goal of 9.1 million for 2015, though it will take time to determine how many of the people who signed up completed their enrollment by paying their premium.

The administration sought to lower expectations last fall by reducing the target from the Congressional Budget Office's goal of 13 million. (The CBO since lowered its projection to 12 million.)

CNNMoney (New York) February 17, 2015: 7:27 PM ET


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Shinzo Abe to Japan, Inc.: Raise wages or else!

Abe has in recent weeks cajoled, threatened and otherwise pressured corporate leaders to hike salaries. The lobbying effort has even extended to the golf course, where Abe is reportedly in the habit of inviting business titans for a round, and then asking them to raise wages.

The success of Abe's economic revival plan may depend on the lobbying campaign. Last week, Abe publicly raised the issue, saying that wage hikes were needed to "spread the warm winds of economic recovery to everyone throughout the country."

The prime minister's plan for Japan's economy, called Abenomics, consists of a massive bond-buying campaign, structural reforms and stimulus from the central government. The ambitious policy has helped end deflation, boost corporate earnings and send stock prices through the roof.

But the government needs businesses to do its part and pass more of their profits to workers. The idea is that workers will then increase spending, completing a so-called "virtuous cycle" that will deliver sustained economic growth.

"It will only be after the strong expansion in aggregate wages is confirmed that consumers will actually feel the economic recovery," said Takuji Aida, an economist at Societe Generale.

Related: Women hold key to fixing Japan's economy

With prices on the upswing, it stands to reason that workers have an extra bargaining chip to use against management. That theory is now being put to the test as labor groups enter negotiations with some of Japan's largest manufacturers over salary increases.

The annual talks, or shunto, help set the tone for wage hikes across the economy. As part of this year's "spring offensive," labor groups are asking for major raises of 2%, or in some cases, even 4%.

Substantial wage increases would take some pressure off the Bank of Japan, which has been trying to raise inflation to 2%. That effort has been hamstrung by drastically lower oil prices. Which means the central bank could again be forced to expand its stimulus program.

Related: Japan's recession is over - but keep the champagne on ice

CNNMoney (Hong Kong) February 17, 2015: 9:07 PM ET


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Chinese New Year 2015: A fortune teller's take on the economy

But what do fortune tellers foresee about the world's second-largest economy?

CNNMoney visited Hong Kong's Master Joseph Wong, a feng shui and destiny consultant, to solicit his predictions on macroeconomics, investing, property and world affairs.

Visiting a fortune teller is no small matter in China, where traditional beliefs -- from numerology to cosmology -- offer insight into everything from love to business deals.

For additional perspective, CNNMoney ran Wong's predictions by another professional prognosticator -- an economist.

The macro vision

"It seems that in the year of the goat, China's economy [will] still have some growth, but maybe slow down compared to last year -- not so strong," Wong said.

This prediction appears to be right on the money. China's economy grew by 7.4% last year, and economists surveyed by CNNMoney expect growth just shy of 7% for 2015.

The forecast "sounds very reasonable, actually," said Julian Evans-Pritchard of Capital Economics.

Related: China posts its worst growth in 24 years

Property bubble?

Wong thinks China's property market will be "quite stable in the first half of the year, but in the second half of the year, according to feng shui advice, there may be some fluctuation."

There's perhaps some truth in that -- China's property sector is pretty rocky these days. But most economists are sour on the market for the entire year.

"There's so much oversupply in the market, that developers are already sitting on such large inventories of unsold property," said Evans-Pritchard.

Even a pick up in property sales won't provide a boost to the economy, he said.

"It's building activity that supports economic activity, not sales ... construction activity is going to remain very weak this year and will be a drag on growth, as it was last year."

Related: Economists are really worried about China's massive property sector

Spend wisely

Chinese believe some of the five elements -- wood, water, metal, fire and earth -- are stronger in certain years.

For this year, metal is the strongest, Wong said. As such, he recommended investors buy into metal-related businesses, such as banking or other finance industry shares.

"But take care during the months of June, July and the end of December -- it seems a bit of market fluctuation will occur," he cautioned.

Evans-Pritchard warns just the opposite, metal or no metal year.

"Obviously, the outlook for banks is not great," he said. "There is going to be an even larger squeeze on bank interest margins going forward, and obviously the credit risk on banks' balance sheets."

Chinese banks have lent much more than they may be able to recoup -- how that debt gets rolled over, and whether it will ever get repaid, could send a shock through the financial system.

Related: Debt-laden 'zombie' firms threaten China's economy

China - U.S. relations

The year of the goat will be quite stable for Chinese President Xi Jinping, born in 1953, the year of the snake, Wong said. Turns out the snake and the goat are friends.

But Xi does "need more communication with his colleagues in order to make the political situation more smooth," Wong said. "He needs to do more hard work regarding the policies of the central government."

Xi certainly has his work cut out for him. In the two years since he took office, he has launched a massive anti-corruption campaign and promised major economic reforms.

There has been some progress. But Xi still faces an uphill challenge to shore up China's economy, and may need more political buy-in to push through reforms.

Xi might be able use some of his luck to help out his American counterpart. Born in 1961, the year of the ox, President Obama is going to have "big changes this year," Wong said. "He may face many problems."

Wong said Obama's luck could improve if he puts a snake or rooster in his office. Maybe he could just invite Xi for a visit.

Read next: China's president makes ... $22,000 a year?!

CNNMoney (Hong Kong) February 18, 2015: 2:17 AM ET


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What we know about the bank hacking ring - and who's behind it

Written By limadu on Selasa, 17 Februari 2015 | 14.44

The numbers are shocking: hundreds of millions of dollars were stolen from 100 banks in 30 countries. The exact amount is unknown at this point. On top of that, the banks could lose possibly hundreds of millions more in related costs. And it all went mostly unnoticed until sometime last year.

On Monday, Russian cybersecurity firm Kaspersky released its report painting a startling picture of a worldwide operation that infiltrated major banks and turned ATMs into cash-spewing zombies.

What did they hit?

These hackers mostly attacked banks in Russia, but they also went after financial institutions in the United States, Germany, China and Ukraine, according to Kaspersky. The company declined to name specific banks, citing ongoing client relationships.

Kaspersky managing director Christopher Doggett said researchers managed to discover as much as they did by hacking into the hackers' computer servers.

"All of the cybercrime we've seen up until this point has been to a different level," he said.

What did they get?

Hackers managed to steal the money in all sorts of creative ways, Doggett said. They managed to take $7.3 million by reprogramming a single bank's ATMs. Another bank lost $10 million from its hacked online platform alone.

Then there's sensitive consumer data. The hackers were also deep enough in the computer systems at banks to gain information about their customers. For instance, hackers had full access to all email accounts at several Russian banks, according to Kaspersky.

Hackers also managed to obtain the secret keys that ATMs use to make sure your PIN is valid, Kaspersky said. It's unclear what they could do with such information.

How did they do it?

Hackers used botnets -- fleets of spam-spewing slave computers -- to send out wave after wave of malware-laced emails.

Bank employees who opened them inadvertently let hackers sneak into computers. The criminals eventually gained complete control of the systems using employee credentials.

With that authority, hackers opened accounts in different places and moved money around at will. Kaspersky notes that, in some cases, they used the interbank network SWIFT (Society for Worldwide Interbank Financial Telecommunication) to quickly shift funds from one place to another.

By having full access to email exchanges, hackers also became intimately familiar with banks' anti-fraud measures. They also learned how to avoid setting off alarms.

For example, they limited theft at any single bank to $10 million to avoid triggering a full-blown analysis, Kaspersky's report said.

Then there's this painful realization: One bank could have avoided getting hacked in a particular way if its employees had just applied the usual Microsoft update, Doggett said.

Who is behind this

Kaspersky researchers traced this attack back to hackers in Russia, China and several spots in Eastern Europe, Doggett said. The report described them as criminals -- not a nation state -- and noted that they mainly targeted Russian-speaking banks with malware-laced emails in Russian.

But one Dutch Internet security firm, Fox IT, claims this attack bears all the hallmarks of a small group of Russian hackers that attacked Russian banks in a similar fashion last year. They used the same malware to break into bank computers, reprogram ATMs and hack into the payment systems at a dozen American retailers.

But Kaspersky said it's too early to tell if both hacking groups are the same.

CNN's Laurie Segall contributed to this report.

Related: Hackers stole from 100 banks and rigged ATMs to spew cash

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Related: Confessions of dating app war stories

CNNMoney (New York) February 16, 2015: 5:20 PM ET


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Some viewers think Brian Williams deserves a shot at redemption

That's according to a new survey by one of the media industry's leading consulting firms, Magid Associates, conducted in the wake of Williams' six-month suspension last week.

Magid surveyed network news viewers and found that the "vast majority" are aware of the allegations against Williams, who apologized earlier this month for misstatements about an Iraq War mission in 2003.

All of those surveyed said they tuned in for a nightly newscast at least once a month. Almost half -- 48% -- said they thought Williams can restore his credibility, 30% said Williams cannot regain credibility, and 22% said they were unsure.

Among daily viewers of nightly newscasts, there was more support for Williams -- 58% of daily viewers said they thought he could earn his credibility back.

"Viewers haven't overwhelmingly called for his firing and many of his viewers still support his return," said Jaime Spencer, a senior vice president at Magid.

"But a lot can happen in six months," he said. "Right now most aren't seeing it as a career ender, but they're following the story and events can certainly change perceptions."

To that point, perceptions may be affected by new revelations about Williams' exaggerations and by punchlines at the news anchor's expense. Sunday's "Saturday Night Live" anniversary celebration included a couple of televised jokes about Williams.

"Where are you hiding Brian Williams? Where is he?" the actor Jim Carrey asked.

He added, "I just want to say something in his defense, okay? If the helicopter in front of me gets hit, I'm taking the story."

Magid's online survey was conducted on Friday with 1,004 Americans ages 18 to 65 (meaning it skewed somewhat younger than the "Nightly News" audience as a whole).

NBC News is not currently a client of Magid, but the consulting firm does work with other divisions of NBCUniversal.

The survey found generational differences in the reactions to Williams' apology, the subsequent scrutiny of his reporting, and NBC's handling of it all.

"Millennials are more likely to give Williams the benefit of the doubt," Spencer said, calling the finding noteworthy because "this generation will own the 25-54 demo for a long time to come, and they're most likely to give him a break."

44% of respondents said they thought NBC's punishment -- the six-month suspension without pay -- was "just right." Another 30% called it "too strong," and only 9% said it was "too weak."

And "more than 80% of viewers have a positive or unchanged perception of NBC News' brand in the wake of the suspension," according to Magid's presentation of the survey results.

So Williams has been hurt individually much more than NBC has been hurt institutionally.

Magid also asked respondents about Jon Stewart's impending sign-off from "The Daily Show" and found that "in the eyes of viewers, Stewart's appeal transcends satire and comedy." In fact, "many see him as credible as mainstream network news journalists," according to the firm's presentation.

26% of "NBC Nightly News" viewers would welcome Stewart as a permanent replacement for Williams, according to the survey.

CNNMoney (New York) February 16, 2015: 1:58 PM ET


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Low down payments make a comeback

low down mortgages

Down payment requirements, which rose after the subprime mortgage crisis, are easing again as lenders and mortgage backers try to draw in new buyers.

"It's one of the things that's inhibiting first-time homebuyers," said Rob Chrane, president of Down Payment Resource. "There are a lot more people who can qualify for a home that don't realize that they can."

FHA cuts insurance costs

The Federal Housing Administration has long backed loans for borrowers with lower credit scores and with down payments as low as 3.5%, but until this year it also required hefty insurance payments.

FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.

"We're starting to get back to what's reasonable," said Hsieh. "The crisis has shaken the market so much that there is no doubt there was an overreaction."

Fannie and Freddie

Fannie Mae and Freddie Mac guarantee more than half the country's mortgages. At the end of 2014, the two government-backed companies announced plans to slash minimum down payments from 5% to 3%.

The new program from Fannie Mae went into effect in December, and the one from Freddie Mac will begin in March. Both are only for first-time homebuyers, and the Freddie Mac program is restricted to low-income borrowers.

Related: Where zombie foreclosures are making a comeback

Loans backed by the two mortgage giants still require private mortgage insurance for down payments below 20%.

And just because Fannie and Freddie are willing to buy loans with looser requirements doesn't mean the lenders themselves will change their standards.

"It's a phenomenon of the post-recession where lenders learned their lesson," said David Stevens, president of the Mortgage Bankers Association. "They learned that simply because the investor will allow it, the lender may still not feel comfortable doing it."

"Rural" and VA loans

Other types of low-down payment loans have also become far more popular since the recession.

Despite its name, loans from the Department of Agriculture are available to borrowers in many locations that are hardly rural, and they include no-money-down financing. To be eligible for USDA loans, a borrower must have dependable income and decent credit, and can't already own a home, exceed certain area median income thresholds or live within certain urban areas.

Related: What will your monthly mortgage payment be?

Department of Veteran Affairs loans are also booming, coming close to outnumbering FHA loans. Although not available to the average American homebuyer, VA mortgage backing allows veterans and surviving spouses to purchase property with no money down, no outside insurance and limited closing costs.

Average VA interest rates are lower, and credit and income requirements are also more flexible than conventional loans.

A return to easier credit

The shift toward loans with lower down payments has drawn criticism from some politicians -- after all, easy loans with little money down contributed to the crisis that led to the Great Recession.

Stevens said that new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market.

"Down payment has become the single largest barrier to home ownership," said Stevens. "Quite frankly, it's going to be a lot safer and sounder this time than it was in the past."

CNNMoney (New York) February 16, 2015: 8:45 PM ET


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Coming soon: A change in who gets overtime pay

Written By limadu on Senin, 16 Februari 2015 | 14.44

overtime eligibility

The move could affect millions of workers. It is aimed at addressing what the White House says is an erosion of the rules that established the 40-hour workweek -- a "linchpin of the middle class."

The way it works now, companies can avoid paying OT to any full-time workers making as little as $23,660 -- or $455 a week -- by classifying them as "exempt" and paying them as salaried employees, rather than hourly.

That means when they don't get overtime pay even if they work more than 40 hours a week.

And it's not just managers in lower-paid jobs in this bucket. Exempt positions also include administrators and sales employees, among others.

The expectation among policy experts is that the Department of Labor will propose raising the $23,660 income threshold, most likely to somewhere between $42,000 and $52,000. The agency may also amend how "exempt" duties are determined.

What advocates want: The liberal Economic Policy Institute estimates that 3.5 million more workers would become eligible for overtime pay if the threshold were raised to $42,000. And 6.1 million workers would qualify if the threshold approaches $52,000.

Advocates for an increase, like EPI and the National Employment Law Project, would like to see the threshold raised to at least $51,168 -- or $984 a week.

That threshold would provide automatic overtime eligibility for 47% of workers. That's up from 12% today but still below the 65% eligible in 1975.

What's more, advocates would like the Labor Department to be more specific as to what makes a position exempt from overtime. For example, to be classified as an exempt administrative employee, a worker's primary duty must include the "the exercise of discretion and independent judgment with respect to matters of significance."

Related: Minimum wage increases will give raises to 3 million workers

Since every job requires some independent judgment, "that's meaningless," said Judi Conti, NELP's federal advocacy coordinator.

She would rather the department require that at least 51% of a worker's time be spent on exempt duties.

That would help prevent hollow promotions where a low-paid worker is given the title of manager but not given much managerial power, Conti noted.

What concerns employers: More generous overtime protections, of course, will mean higher payroll costs.

Companies either would end up paying time-and-a-half to more eligible workers, or they may decide it's less expensive to hire more people to cover the extra hours once worked by formerly exempt employees.

But just how much more they'll have to pay is a concern.

"One [income] threshold for the whole country won't work," said Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce.

The Chamber has recommended that the Labor Department apply geographically specific thresholds.

A big change in the income threshold would require employers to reclassify millions of salaried workers to hourly -- and that could cause workers to lose some employee benefits, said Mike Aitken, vice president for government affairs at the Society for Human Resource Management.

Their morale could suffer too.

For instance, while salaried workers are often given some latitude to schedule their day, hourly workers may get pay docked or have to use vacation time for midday appointments, Aitken said.

Some companies, too, offer merit-based bonuses to salaried workers but not to hourly ones. Or they may be put on a different vesting schedule for vacation days, he added.

Related: Many low-wage workers not protected by minimum wage

What's ahead: The Labor Department has February marked on its agenda for release of the proposed overtime rules. But some policy observers suspect the release could come in March or April.

Whenever they new rules are released, however, it will be the start of a comment-and-review process that could take months before anything is finalized.

Advocates for change hope it won't take too long. If the new rules go into effect right before President Obama leaves office, the next president could undo them if he or she doesn't like them.

CNNMoney (New York) February 15, 2015: 5:38 PM ET


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Japan's recession is over - but keep the champagne on ice

But that's where the good news ends for Asia's second-largest economy, which remains stuck in neutral despite the best efforts of Prime Minister Shinzo Abe to deliver a revival.

Gross domestic product grew by an annualized 2.2% in the three months ended December, Japan's Cabinet Office said Monday. The result was much worse than the 3.6% expansion forecast by economists.

The economy grew by 0.6% compared to the previous quarter, but was held back by weaker than expected private consumption.

The lackluster expansion follows two consecutive quarters of negative growth for Japan -- the definition of a recession -- precipitated by a sales tax hike that took a huge bite out of consumer spending.

The results are likely to fuel critics of "Abenomics," the economic plan championed by Abe. The strategy -- a massive bond-buying campaign coupled with structural reforms and stimulus from the central government -- has largely failed to lift wages, or dramatically boost growth.

Related: Japan's economic revival is in jeopardy

Abe, who has staked his reputation on economic progress, won re-election in snap elections held in December.

He also received some surprise support in late October when the Bank of Japan announced it would expand its already aggressive stimulus plan.

Today's round of weak GDP numbers is likely to increase pressure on the central bank to act again.

"Today's result indicates that the Bank of Japan's view on growth is too optimistic, and we still believe that the Bank will announce more easing at the late-April meeting," said Marcel Thieliant of Capital Economics.

Related: Japan's Abe must deliver on economy after victory

CNNMoney (Hong Kong) February 15, 2015: 9:37 PM ET


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Alibaba's Jack Ma: 2014 was nothing special

In a recent letter to employees, the Alibaba (BABA, Tech30) co-founder said his company didn't produce an "extraordinary performance, nor any unexpected achievements" last year.

"The success of the IPO should not be a surprise, as it was the culmination of 15 years of hard work," he said. "To be honest, we could have done better in 2014 on all fronts, from e-commerce to cloud computing to logistics."

As a result, Ma said he won't be handing out a traditional Chinese New Year bonus -- or hongbao -- to employees.

That's perhaps a bit of a surprise, since gifting red envelopes stuffed with money is a long-held tradition amongst friends, family and businesses for the big holiday. Even foreign firms will engage in the practice in their Chinese branches.

An Alibaba spokeswoman said that staffers will still receive annual bonuses worth one month's pay -- but no red envelope.

Related: Who the heck is Jack Ma? Meet the man who built Alibaba

It is true that Alibaba faces a tough path following its IPO, with greater scrutiny from investors and regulators. The company posted lower-than-expected sales in its most recent quarter. And so far this year, company shares have lost 14%.

Just last month, the Chinese government released a scathing report that accused Alibaba of turning a blind eye to illegal activity, and failing to police its online marketplaces. While the paper was later removed from the government agency website, a number of lawsuits were still filed in the U.S. over its possible failure to disclose information to investors.

"Issues like these are unavoidable as we are now a publicly listed company," Ma said. But he sees it as par for the course: "Almost all multinational companies have encountered similar challenges, such as IBM, Microsoft and Wal-Mart."

The decision not to reward employees with a little extra spending money could just be Ma's way of reminding the firm that there's more hard work ahead.

"This is our most crucial moment since Alibaba started 15 years ago," Ma wrote. "We are far from being as big and strong as public opinions imagine us to be."

Read next: Alibaba is using drones to deliver tea

CNNMoney (New York) February 16, 2015: 2:08 AM ET


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Is ending segregation key to ending poverty?

Written By limadu on Minggu, 15 Februari 2015 | 14.44

strong housing markets atlanta

She made sure to provide her three children with every opportunity she could, taking them to ballet lessons, after-school academic programs, plays and activities around the city, encouraging them to work hard at school and stay away from drugs. But the specter of violence and poverty was hard to escape.

Hard to escape, that is, until Harris got an opportunity to move out of the projects to a small village called Alsip, 40 minutes outside of Chicago's city center and 80% white. Harris moved to Alsip 14 years ago and since then has led a quiet, suburban life alongside neighbors who go to work each day and raise their children to go to college.

Harris and her children thrived in Alsip. One of her daughters just graduated from college with a double bachelor's degree in business administration and early childhood education, another is in a bachelor's program for nursing and is a manager at a McDonald's while she attends school. As for her friends who stayed in Altgeld Gardens, Harris told me, "their children have children. My children don't."

Related: The most innovative cities in America

There are hundreds of programs that seek to improve the outcomes of people who live in concentrated poverty. But as Harris and thousands of other mothers like her have demonstrated over the past half century, one of the most effective strategies for lifting families out of poverty is to plunk them down in a completely new neighborhood far away from their past lives.

The program that helped Harris move to Alsip was the result of a lawsuit originally filed in 1966, still being litigated today, referred to as Gautreaux for the original plaintiff, who died in 1968. Among other things, a consent decree related to Gautreaux required the Chicago Housing Authority to provide vouchers for black residents to move to white suburbs beginning in the 1970s. Many of the families who moved to the suburbs stayed there, and their children were more likely to stay out of trouble and go to college than families who stayed within the city.

Despite the strategy's success in Chicago, nationally there are few programs today that focus on helping African American families move from racially segregated, high-poverty neighborhoods to areas where their children will have access to good schools and less exposure to crime. Those that do exist are all results of lawsuits.

One in Baltimore seeks to move 4,400 families to better areas by 2018. Another, in Dallas, exists as a result of a lawsuit filed in 1985. And on Thursday, a Chicago judge approved a Gautreaux-related settlement that -- among other things -- will allow a new host of families to be relocated, with the help of a counselor, to low-poverty, higher-opportunity neighborhoods.

Related: Cleveland's plan to destroy 6,000 homes

Programs like these are small compared with the scale of the problem: Cities are still extremely segregated.

In Chicago, African Americans tend to live in areas where the riots of the 1960s took place, areas that are almost entirely African American today. There are still municipalities in the greater Chicago area with less than 1% African American population, according to a Fair Housing and Equity Assessment from 2013. There are no municipalities where Hispanics make up more than 90% of the population, something that's not true for African Americans, the report says.

The continued segregation, despite decades of anti-poverty programs, raises a question: Should housing authorities be making a more conscious effort to help people who live in segregated, low-income neighborhoods move to wealthier, more diverse areas?

Alex Polikoff, one of the attorneys who filed the Gautreaux case in 1966, says it's a no-brainer. He continues to work on legislation related to Gautreaux and is behind Thursday's agreement, which will require Chicago to move about 200 families in a Gautreaux-type program.

"We know so much about the harm of young kids growing up in severely-distressed neighborhoods. If we have a way to enable kids to escape to better life opportunities, it's immoral not to do that," he said.

* * *

It was while downing pizza on his birthday in January of 1966 that Polikoff was first presented with the idea that the way the Chicago Housing Authority was building new public housing violated the Constitution.

He was a volunteer attorney for the ACLU at the time, and over lunch a friend from the Urban League told him about complaints from a coalition of black organizations that the housing authority was only building new housing projects in black neighborhoods, he recounts in his book, Waiting for Gautreaux. The selection of public-housing sites was politically motivated: The housing authority couldn't buy land in white neighborhoods without the city council's approval. But keeping black people in black neighborhoods violated the equal-protection clause of the Constitution, Polikoff argued, and that argument formed the basis for the lawsuit he filed in August of 1966.

In 1969, a federal judge in Chicago issued an order preventing the housing authority from constructing new public housing in predominantly African American neighborhoods unless it also built public housing elsewhere. It also prohibited the city from constructing dense concentrations of public housing.

Not satisfied with this settlement, Polikoff argued that the U.S. Department of Housing and Urban Development (HUD) should be required to remedy its past errors, and in 1976, the Supreme Court agreed, ruling that the government could be required to use the entire region to do so. A consent decree led to HUD agreeing to fund a voucher program to move black families to the suburbs.

"We thought we were not going to prevail," he told me. "But I think when we amassed the evidence through discovery, the evidence was compelling—they were doing this because they felt they had to keep black people out of white neighborhoods."

Related: America's 10 most unequal cities

Between 1976 and 1998, more than 7,000 families received vouchers through Gautreaux, about half of whom moved to 115 suburbs around Chicago, with the assistance of placement counselors. Suburbs that were more than 30% black were excluded from the program. Families that had more than four children or bad credit did not qualify, nor did those who had been found to have damaged their rental housing.

The move was difficult at first for the families, as James Rosenbaum and Leonard S. Rubinowitz documented in their book about Gautreaux, Crossing the Class and Color Lines: From Public Housing to White Suburbia. In the racially-charged times of the 1970s, black families were sometimes harassed on the streets by whites, followed by teenagers in cars, or called racial slurs. One girl who entered a white school was so unaccustomed to seeing so many white faces that she turned around and ran home.

But many of the families said these threats were nothing compared to the violence they'd been subjected to in the inner cities.

"Here in the suburbs, I don't have to worry about people shooting at people, seeing people chase people, fighting," one woman told the researchers.

Such anecdotal accounts line up with the data: Scholars who have studied the program have found that families who moved to the suburbs were able to achieve more in school and work, not having to worry about violence.

Related: Part-time jobs put millions in poverty

"What I saw over and over again was that low-income kids had unseen potential that they could not see in the housing projects and that emerged when they moved," said James Rosenbaum, a professor of sociology at Northwestern who extensively studied the Gautreaux families.

A study of suburban Gautreaux mothers in the 1990s found that they were more likely to be employed than mothers who had received vouchers to move within the city. Gautreaux children in the suburbs were more likely to graduate from high school, attend four-year colleges, and to have jobs than their peers who had moved to other city neighborhoods. They also had higher pay and benefits than the other children. Even mothers who had not had jobs before were more likely to get jobs if they moved to the suburbs, Rosenbaum told me in an interview.

Later research showed that two-thirds of the families remained in the suburbs 15 years after their move. Long after the program ended, mothers who moved through Gautreaux continued to live in low-poverty areas and have higher household incomes.

Gautreaux isn't easy to empirically evaluate -- it didn't have a control group, and some scholars have questioned whether its effects are really significant, since the participants were screened. But Rosenbaum said some of the families who moved were just following someone else, and were sometimes not good parents at the outset.

"I don't think the 'self-starter' model really describes a large number of them," he said. "You had a thorough change in environment, and there were some high achievers, but even the average and below-average kids in the suburbs can expect good outcomes. That kind of kid in the city cannot."

* * *

Partially because of the success of the Gautreaux program, HUD decided to sponsor a randomized experiment to see whether such an approach could be scaled. Called Moving to Opportunity, the program, which began in 1994, selected families from some of the most distressed housing projects in Chicago, Baltimore, Boston, Los Angeles, and New York. Between 1994 and 1998, the program enrolled 4,604 families. Three-quarters were on welfare and fewer than half of the household heads had a high-school diploma.

Moving to Opportunity was a randomized experiment, and had a control group that did not receive access to any new services through the housing authorities. One group of families got a voucher to move to private-market housing in low-poverty areas and another group got a traditional Section 8 voucher, which they could use to move anywhere.

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Disappointingly, the results from this program were not as positive from those in Gautreaux, though some recent students show positive long-term health effects on families who received vouchers to move to better neighborhoods. Adults were generally not more self-sufficient after moving, and children did not achieve more in school than the non-movers. Girls who moved participated in fewer risky behaviors, but boys who moved actually participated in more.

That's because Moving to Opportunity differed from Gautreaux in a few key ways, Rosenbaum says. Families who moved were given the chance to move to a neighborhood with lower poverty, but unlike Gautreaux, families weren't encouraged to move to areas that were majority white. That meant many of the families ended up close by their old neighborhoods -- in some cases, kids attended the same schools they had before. Families often ended up in slightly better neighborhoods that were still segregated from the rest of the city's population.

With Gautreaux, about 90% of the families who went to the suburbs moved more than 10 miles away, Rosenbaum said; with MTO, 84% moved less than 10 miles away.

Moving to Opportunity also targeted families who lived in extremely high-poverty public housing, where mothers were often struggling with mental-health issues and might have had more difficulty with unfamiliar settings.

The results of Moving to Opportunity showed that race is still a factor in providing access to opportunity, said Ruby Mendenhall, a sociology and African American studies professor at the University of Illinois at Urbana-Champaign who wrote her dissertation on Gautreaux. After all, she said, many of the African American mothers who moved to the suburbs were able to benefit from nearby educational institutions to get ahead. They often found better-paying jobs and got off government assistance in part because of the relationships they made with their predominantly white neighborhoods.

"Unfortunately in our country, more white or integrated areas tend to have more resources, so when race isn't a factor, I think that some relationships aren't on the table," she said.

These results have led federal and state policymakers to largely abandon mobility programs, scholars say. But others argue that the results of MTO shouldn't undermine the success seen in Gautreaux -- Moving to Opportunity was a much weaker program than Gautreaux, even if it was a more scientifically accepted study.

"People have misread MTO, and said, 'Here, we did residential mobility, and it didn't work,'" Rosenbaum said. "That is the wrong message."

* * *

It's hard to imagine that housing-mobility programs wouldn't help residents of Chicago today, which is still one of the most segregated cities in America.

As my colleague Ta-Nehisi Coates outlined in his piece in June's magazine, "The Case for Reparations," discriminatory housing policies in Chicago, and much of the country, have systematically created areas of disadvantage where black residents have less access to opportunity than whites. North Lawndale, the neighborhood he visited, is 92% black. Its homicide rate is triple the rate of the city as a whole, and 43% of residents live below the poverty line -- that's double the rate of the city as a whole.

The city of Chicago has implemented policies seeking to remedy some of that segregation: As a result of a federal program, Chicago in 2000 began its Plan for Transformation, with the goal of dismantling most high-rise public housing complexes such as the infamous Cabrini Green. About 40% of the thousands of households received vouchers which they could use in the private market anywhere they wanted, whether it be in the suburbs, or outside of the state. But only 60 residents using those vouchers now live in the suburbs, and only 11 live out of state, according to a report from the Chicago Housing Authority.

Many of the families being located from the housing towers ended up in all-black neighborhoods where opportunities were only minimally better than they had been before.

Joel Hamernick, who runs a ministry in Woodlawn, an area on the South Side of Chicago, said that the area has seen an influx of families from Cabrini Green (his ministry, too, relocated from Cabrini Green, about a decade ago). That has caused some turf wars among gangs, and increased violence, and caused some families to leave the neighborhood.

"Towards this end, the neighborhood is getting worse," said Kelai Price, who has lived in Woodlawn her whole life, told me when I ran into her in a coffee shop in Chicago last month for a story about Woodlawn.

Many residents of Chicago's public-housing towers didn't want to move far because they had lived in the neighborhood their whole life, and didn't know anywhere else, said Susan Popkin, a scholar at the Urban Institute who has studied where the residents went. In fact, many of the residents who ended up in public housing or mixed-income housing had better experiences than those who received vouchers because they didn't have to deal with private landlords and the stresses of the rental market.

"When it came down to it, a lot of them had lived there for generations, and they wanted to go somewhere comfortable and familiar," she said. "Unless they had a connection, they weren't interested in going any further."

In fact, families who receive Section 8 vouchers rarely leave the neighborhoods that are familiar to them, said Stefanie DeLuca, a sociology professor at Johns Hopkins who studied Gautreaux and Moving to Opportunity with James Rosenbaum. Her research has found that families often get little notice that they're receiving a voucher, and then scramble to find a place before the 60-day window in which they have to use it runs out.

"Families settle for units that they know are subpar out of fear of losing the voucher," she wrote, in a study published in 2013 that looked at families in Mobile, Alabama, who received vouchers. Many also spent their whole lives in poverty and knew little about neighborhoods outside their immediate area.

With some counseling and guidance, though, families who receive vouchers can have much better outcomes, DeLuca said, especially if they're directed to homes in high-opportunity target areas.

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She has now turned her attention to the ongoing Baltimore Mobility Program, which has provided vouchers for 2,600 families since 2003, and says it's an example of how a mobility program can succeed.

"This voucher gets them into the kinds of neighborhoods that have real opportunities for schools, and safety, and high-quality housing," she said. "There appears to be a durability of this program that's strikingly different from MTO, much more like Gautreaux."

The Baltimore program requires residents to live in areas that are less than 10% poor, less than 30% black, where no more than 5% of residents live in subsidized housing. Baltimore provides housing-search counseling to participants, as well as post-move counseling, and requires residents to remain in the area for at least two years. Families also get some assistance with security deposits, attend credit-repair workshops, and go on tours of outlying counties to familiarize themselves with the options.

In her field work, which examined 110 households in depth, DeLuca found that living in a different neighborhood helped the Baltimore families make better choices when it came to housing and their children's schooling. Families had higher expectations for the neighborhoods where they lived and showed "new appreciation" for racial and ethnic diversity and good schools, often becoming willing to make difficult trade-offs for the sake of their families.

Parents said it was a new world: One woman told researchers that she now goes to work, comes home, pays the bills and has fun with her children, whereas she used to go drinking with friends. Another said her kids appreciated not being woken in the middle of the night by sirens and gunshots. Another mother said her 12-year-old son now cried because he was so happy to go to school in the morning and do his homework.

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For DeLuca, the successes of the Baltimore program indicates that it's not enough to just expect people with vouchers for housing or schools to pick the right places to live or to send their children. They aren't used to having good options to pick from, she said.

"Disadvantaged families have only been exposed to low-performing schools and unsafe neighborhoods, and have to come to expect the inevitability of those things," she said. "Experiences like the ones families had with Gautreaux and the Baltimore program -- it's eye-opening. It opens up a whole world of possibilities, and it's hard to understate the transformative power of that."

It's something that Seitia Harris knows all too well. When she moved to Alsip, she says, her family was at first unaccustomed to peace and quiet. There were no more people hanging out on the street corner or shots at night. Parenting plays a role in a child's development, she said, of course. But before she moved, she was a good parent in a bad environment, where there was too much exposure to drugs, negativity, and gangs.

"Seeing people getting up every day and working, wanting to get something out of life -- it taught them better values" than they were exposed to in the projects, she said.

* * *

Of course, moving some families to more affluent suburbs doesn't help the families left behind, and policymakers say there also need to be programs focusing on improving the lives of people in concentrated poverty.

"It needs to be a two-pronged approach -- you can't ignore what happens in these neighborhoods," said Mendenhall, the University of Illinois scholar.

That can be something as simple as improving the quality of the housing available to low-income families, said Popkin, the Urban Institute scholar. In her work studying the families moved out of Chicago's public-housing towers, Popkin found that even families who moved to the same neighborhood but better homes -- such as the mixed-income complexes -- said their lives had improved. Of course, those families saw no marked improvements in educational or employment outcomes, but their living situations were at least better than they had been.

"At its most basic level, for what it was supposed to accomplish, it actually came out better than I and a lot of other observers would have predicted," she said, about the relocations.

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Families who were given intensive case management to help with the move were even more successful, she said. Their employment prospects improved, as did their mental and physical health.

That's why it could be argued that spending money on counseling and mixed-income housing for a whole host of families is more worthwhile than spending it to move just a few families to a completely new neighborhood.

"Thats why theres an ongoing debate about these mobility programs," Popkin said. "Is it worth spending that much money on a handful of families?"

After all, suburbs are no longer the bastions of privilege they once were (though majority white suburbs still, for the most part, are). Since the recession, it's the exurbs in Chicago that have had job growth, while affordable housing near those jobs is often hard to find. Poverty is growing in suburbs across the country, including in Chicago, and moving families blindly out of the city may do more harm than good.

That's why Chicago's leaders are now focusing on helping low-income people live in mixed-income neighborhoods in both the suburbs and the city that have good access to transit and jobs, high homeownership rates, low commute times, walkable areas and a low percentage of people receiving public-housing assistance, said Robin Snyderman, a non-resident senior fellow at the Brookings Institution who also works as a consultant on housing policy in Chicago.

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Nine housing authorities now participate in a regional pool of resources that began more than a decade ago. They include authorities in counties such as DuPage, Lake, and McHenry, using the money to build nearly 30 mixed-income developments in "opportunity areas" that are near transit and job opportunities.

"Just getting rental housing into some of these communities was hard to do for many years," said Snyderman said.

A pilot program launched in 2011, the Chicago Region Housing Choice Initiative (CRHCI), encourages families to use vouchers to move to some of these locations, giving them counseling to help them do so.

Regional authorities and mayors have "adopted new tools for promoting inclusion and diversity, building on the lessons learned from Gautreaux," she said. "I feel more hopeful that the historic segregation in the Chicago region can be transformed -- because it's now not all on the shoulders of the public housing authority," she said.

Still, for Alex Polikoff and some other advocates, the progress that's been made in the past century is not enough. He understands why mobility programs aren't politically viable. After all, using a more expensive voucher to help one family move to the suburbs might mean that fewer families get off the very-long waiting lists for housing assistance. And wealthy neighborhoods often don't want low-income families moving in through government programs.

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But Polikoff strongly believes that housing authorities should make more effort to help some families move far away from the segregated inner city to suburbs where their lives will change, much in the way the lives of the original Gautreaux families changed decades ago. After all, voucher programs that allow residents to go to the private market haven't been effective in desegregating neighborhoods.

He's still battling the Chicago Housing Authority on the issue. The Thursday ruling made official a settlement between Polikoff's firm and the Chicago Housing Authority, allowing the city to extensively rehab Altgeld Gardens, the housing complex where Harris once lived. But in addition to the rehab, Polikoff extracted a promise from the city that it would also issue 218 vouchers to families with children on the CHA waiting list, enabling them to move to designated "Opportunity Areas" and receive pre and post-move counseling.

It's not just Chicago -- Polikoff has proposed a "national" Gautreaux program, making 50,000 housing-choice vouchers available to black families who live in segregated areas, which could be used only in census tracts with less than 10% poverty and fewer minorities. The number of families would be limited, to avoid "threatening" a receiving community, he wrote in a proposal in 2004 (Polikoff told me he still supports this proposal).

I asked Polikoff if this policy could be seen as "reparations" of sort. Not reparations, he said. But an apology to the African American community for centuries of discrimination.

"In a sense it's a very small part of playing makeup here," he said. "We owe it to them to remedy the discrimination of the past, among many other things we owe them."

This article originally appeared on The Next Economy, a joint project of The Atlantic and National Journal.

CNNMoney (New York) February 13, 2015: 7:21 PM ET


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