Here are a few of the more blatant political notes - and the real-life events that inspired them. Spoilers abound, so proceed with caution.
Tobias and Lindsay's NINJA loan
In the third episode, "Indian Takers," Lindsay and Tobias Funkë decide to make a new start (or, to use the spelling from Tobias' license plate, "ANUSTART") by buying a home together. They inform their realtor James Carr (Ed Helms) that they have no income coming in, no assets, no credit, no jobs, and no work ethic. No matter — Carr offers them a "NINJA" loan, available to borrowers in exactly that position ("No Income No Job and no Assets"). They end up with guest gatehouses and a mansion that looks like this:
NINJA loans are, shockingly, a real thing. Or at least they were, before the housing crash. But they're slightly different from the kind of loan that Tobias and Lindsay get. NINJA loans, also called NINA loans ("No Income No Assets") weren't loans made to people who actually had no income or no assets, necessarily; they were loans where the lender didn't ask for asset and income information from the borrower.
In March 2007, well before the proverbial fan had been hit, my colleague Steve Pearlstein had a great explanation of these products, and other crazy options available to borrowers pre-crisis, like "liar loans" (where, unlike NINA loans, income and asset information was requested but no documentation was required), "balloon mortgages" (where only interest has to be paid for 10 years, and then a big lump sum payment for the principal is due), and "piggyback loans" (where money borrowed in one mortgage is used as a down payment to secure another mortgage).
So why were banks making these loans to people? Weren't they obviously going to fail? The issue, as explained in Planet Money's great episode, "The Giant Pool of Money", is that the securities that banks turned these mortgages into actually performed really well. That's because housing prices kept rising, so you could always pay for previous mortgages using the equity that accrued to the house since the initial mortgage was made. Mike Francis, a former residential mortgage trader at Morgan Stanley, explained it to Planet Money this way:
It's obvious that they performed well, now, because their property kept increasing in value. And over time, they could continue to take cash out of it, if they needed to, to pay the bill. In other words, they could take out another loan from the bank, against the value of their house, which because of the bubble was now worth more than they bought it for.These loans, called home equity lines of credit, became very popular in the early to mid 2000s partly because they were easy to get, but partly because people needed them to continue making their original mortgage payments. To pay off their debts, they went into more debt.
But even NINA loans involved checking borrowers' credit scores. And given that the entire series started with Lindsay and Tobias fleeing a hotel because they couldn't pay their bill, I somehow doubt their credit score would have been sufficient for a giant NINA loan even in the glory days of 2006. The foreclosure the Fünkes faced, at least, was pretty realistic.
Michael's failed development
Sudden Valley, the development Michael has been working on for the whole show, is finally built by the Michael B Company, Michael's new development firm. Unfortunately, the development is finished just as the housing market comes crashing down. That leaves Michael deep in debt to Lucille Austero, from whom he borrowed $700,000 to finance the development, money he doesn't have because of his failure to sell the homes.
He wasn't the only doomed one. Employment in the residential housing construction sector plummeted between 2006 (when "Arrested Development" was last on the air) and 2009:
And as this excellent report from the Bipartisan Policy Center on the residential construction industry notes, its share of the economy plummeted:
And it was a major drag on economic growth:
Michael actually finished Sudden Valley after the housing market started to fall. By 2007, housing completions were already falling, and starts were in free-fall:
And prices were stagnating, making it harder for companies like Michael B to turn a profit:
That's why the number of companies like Michael B shrunk during the crisis:
The single-family homebuilders that survived have sought out new sources of revenue. BPC found that by far the most popular secondary activity was remodeling existing homes. In 2009, only 8 percent of home building companies reported no secondary activities at all.
So yeah, Michael's prospects were about this dismal, due to little fault of his own:
Selling to sex offenders
G.O.B. thought of a clever way to salvage the Sudden Valley project: sell the plots to registered sex offenders (like Tobias) who won't be barred from living there, due to its distance from schools and parks.
This is actually a serious public policy problem. In Miami Dade county, a law barring sex offenders from living with 2,500 feet of schools, parks, bus stops and homeless shelters led them to take refuge under a bridge, about the only place they had left. The colony was broken up in 2010, but some of its residents are still homeless. As Human Rights Watch has concluded, "The inability of convicted sex offenders to find housing when they are released from prison has become a significant barrier to their successful reintegration into society."
Worse, there is no evidence suggesting that residency restrictions have any effect on sex offender recidivism. A study by the Colorado Department of Public Safety concluded, "there does not seem to be a greater number of these offenders living within proximity to schools and childcare centers than other types of offenders." The Minnesota Department of Corrections analyzed every recidivism case from 1990 and 2002. They concluded, "Not one of the 224 sex offenses would likely have been deterred by a residency restrictions law." Indeed, offenders are likelier to go at least a bit away from where they live in order to avoid being recognized.
Sudden Valley, then, is the unintentional beneficiary of a really disastrous public policy approach.
Buster Bluth reenlists in the Army and becomes a drone pilot. He's a little too good at it, garnering concern from Zach Woods, who plays another one of the pilots.
You can read more about this in our drone FAQ but it's worth noting a few problems here. One is that the Air Force, not the Army, runs the drone program (though the Army does own a few Grey Eagles). And there aren't any drone bases in Anaheim; the closest one to the Bluths is all the way over in Riverside. But location-wise, the Southwest is the main area from where we pilot drones, with Creech Air Force Base in Nevada running all operations until 2009.
Herbert Love's 'High/Low' tax plan
Herbert Love (Terry Crews), a clear homage to failed 2012 GOP presidential primary contender Hermain Cain (his campaign manager even has a mustache and smokes), runs for Congress against Lucille Austero on his "High/Low" tax plan, promising low taxes for people with high incomes.