Economic Crisis, ACORN, and the Democratic Party

"One of the common themes of modern American history," writes John Hinderaker,  "is that liberals will create a problem by ill-advised government action,  then benefit from it politically by proposing ever more intrusive government action to solve it.  That appears to be happening again in connection with today's credit crisis."

Obama's mendacity continues to amaze me in, among other things,  his framing of the economic situation and sub-prime mortgage crisis as a failure of Republican policy,  neglecting his own involvement as attorney for and subsequent association with ACORN (Association of Community Organizations for Reform Now);  the donations he received from Fannie Mae and Freddie Mac;  and the sequelae of  "affirmative action" credit initiatives by the Carter and Clinton administrations in context of the Community Reinvestment Act,  forcing banks to "distribute risk more broadly" by extending high-risk loans to low- and moderate-income borrowers "who would not have gotten credit otherwise"  (see video and comments in right sidebar).

Drew Griffin and Kathleen Johnston (CNN Special Investigations Unit) report that

A subsidiary of [ACORN] was paid $800,000 by Democratic presidential candidate Barack Obama's campaign to register voters for the 2008 primaries, and ACORN's political wing endorsed Obama back in February. But Obama's campaign told CNN that it "is committed to protecting the integrity of the voting process," and said it has not worked with ACORN during the general election.

Caucus fraud took place in many locations during the primary, and documentation implicates ACORN and other Obama supporters.  It challenges credulity to accept that nothing of the sort is at play in the general election.  In his testimony before the Civil Rights and Civil Liberties and House Administration Subcommittee on Elections, at the Joint Hearing on "Federal,  State and Local efforts to Prepare for the General 2008 Election" (24.09.08),  James Terry cautioned against ignoring ACORN's repeated abuses:

ACORN routinely says it will clean up its act.  Yet,  given its decade-long history of voter fraud,  embezzlement,  and misuses of taxpayer funds,  ACORN's pattern of fraud can no longer be dismissed as a series of 'unfortunate events.'

The problem of voter registration fraud raises serious questions for this committee,  and the Consumers Rights League appreciates that the right questions are being asked.

Here are the most important questions right now: We know about the thousands of potentially fraudulent voter registration cards turned in by ACORN and caught by officials.  But given the size of ACORN's efforts and the fact that the abuses appear to be systemic,  we believe it is fair to question how many more fraudulent registrations have not been discovered[.]  Furthermore,  as this mega organization with a decades long history of violating the law is turned to get out the vote efforts, we believe it is fair to question how many fraudulent registrations may lead to fraudulent votes or what other activities they are willing to undertake to influence the election.

These are serious questions,  especially in light of recent election results which show that a just few votes can change the outcome of an election,  the course of our country and the course of history.

With respect to the economic crisis,  it is important that we accurately assess the origins of the problem we face,  rather than leap to unfounded conclusions and ill-advised policy with even more problematic consequences.  To that end,  in the following article,  consider the observations of Stanley Kurtz,  Senior Fellow with the Ethics and Public Policy Center.

Obama's rhetoric and the MSM's propagation of memetic idealizations cannot serve as substitutes for critical thinking in this election.

Source: Spreading the Virus: How ACORN and its Dem allies built the mortgage disaster.
Stanley Kurtz, New York Post (13 October 2008)

TO discover the roots of to day's economic crisis, consider a tale from 1995.

That March, House Speaker Newt Gingrich was scheduled to address a meeting of county commissioners at the Washington Hilton. But, first, some 500 protesters from the Association of Community Organizations for Reform Now (ACORN) poured into the ballroom from both the kitchen and the main entrance.

Hotel staffers who tried to block them were quickly overwhelmed by demonstrators chanting, "Nuke Newt!" and "We want Newt!" Jamming the aisles, carrying bullhorns and taunting the assembled county commissioners, demonstrators swiftly took over the head table and commandeered the microphone, sending two members of Congress scurrying.

The demonstrators' target, Gingrich, hadn't yet arrived - and his speech was cancelled. When the cancellation was announced, ACORN's foot soldiers cheered.

Editorial writers from Little Rock to Buffalo condemned ACORN's action as an affront to both civility and freedom of speech. Editorialists also pointed out that the "spending cuts" the protesters railed against were imaginary - Gingrich proposed merely to slow the growth in some welfare programs and turn control back to the states.

Yet ACORN had only just begun. Two days later, 50 to 100 of the same protesters hit their main target - a House Banking subcommittee considering changes to the Community Reinvestment Act, a law that allows groups like ACORN to force banks into making high-risk loans to low-credit customers.

The CRA's ostensible purpose is to prevent banks from discriminating against minorities. But Rep. Marge Roukema (R-NJ), who chaired the subcommittee, was worried that charges of discrimination had become an excuse for lowering credit standards. She warned that new, Democrat-proposed CRA regulations could amount to an illegal quota system.

FOR years, ACORN had combined manipulation of the CRA with intimidation-protest tactics to force banks to lower credit standards. Its crusade, with help from Democrats in Congress, to push these high-risk "subprime" loans on banks is at the root of today's economic meltdown.

When the role of ACORN and congressional Democrats in the mortgage crisis is pointed out, Democrats reply that banks subject to the CRA represent only about a quarter of the loans that led to our current troubles. In fact, the problem goes way beyond the CRA.

As ACORN ran its campaigns against local banks, it quickly hit a roadblock. Banks would tell ACORN they could afford to reduce their credit standards by only a little - since Fannie Mae and Freddie Mac, the federal mortgage giants, refused to buy up those risky loans for sale on the "secondary market."

That is, the CRA wasn't enough. Unless Fannie and Freddie were willing to relax their credit standards as well, local banks would never make home loans to customers with bad credit histories or with too little money for a downpayment.

So ACORN's Democratic friends in Congress moved to force Fannie Mae and Freddie Mac to dispense with normal credit standards. Throughout the early '90s, they imposed ever-increasing subprime-lending quotas on Fannie and Freddie.

But then the Republicans won control of Congress - and Rep. Roukema scheduled her hearing. ACORN went into action to protect its golden goose.

IT struck as Roukema aired her concerns at that hearing. Pro testers, led by ACORN President Maud Hurd, stood up and began chanting, "CRA has got to stay!" and "Banks for greed, not for need!" The protesters then demanded the microphone.

With the hearing interrupted and the demonstrators refusing to leave, Roukema called the Capital Police, who arrested Hurd and four others for "disorderly conduct in a Capital building" - a charge carrying a penalty of a $500 fine, six months in prison or both. As the police arrived, two of the protesters menacingly approached Roukema's desk, still demanding the hearing microphone.

Requests to the Capital Police to release the activists from Sen. Ted Kennedy (D-Mass.) and Rep. Joe Kennedy (D-Mass,) failed. Then Rep. Maxine Waters (D-Calif.) showed up at the jail and refused to leave until the protesters were released; the Capital Police relented.

Meanwhile, instead of repudiating ACORN's intimidation tactics, Rep. Kennedy berated Roukema for arresting one of his constituents and accused the Republicans of preparing for "an all-out attack on CRA." He also promised to introduce legislation to expand the CRA's coverage to mortgage bankers and large credit unions.

THIS little slice of political life from 1995 had a variety of ripple effects. Above all, ACORN's intimidation tactics, and its alliance with Democrats in Congress, triumphed. Despite their 1994 takeover of Congress, Republicans' attempts to pare back the CRA were stymied.

Instead, Democrats like Rep. Barney Frank (D-Mass.) and Reps. Kennedy and Waters allied with the Clinton administration to broaden the acceptability of risky subprime loans throughout the financial system, thus precipitating our current crisis.

ACORN had come to Congress not only to protect the CRA from GOP reforms but also to expand the reach of quota-based lending to Fannie, Freddie and beyond. By steamrolling the GOP that March, it had crushed the last potential barrier to "change."

Three months later, the Clinton administration announced a comprehensive strategy to push homeownership in America to new heights - regardless of the compromise in credit standards that the task would require. Fannie and Freddie were assigned massive subprime lending quotas, which would rise to about half of their total business by the end of the decade.

WHEN the ACORN-Democrat alliance finally succeeded in blocking Republicans from restoring fiscal sanity in 1995, the way was open to virtually unlimited lending quotas - and to a whole new way of thinking about credit standards.

Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system - far beyond the sort of banks originally subject to the CRA.

So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system.

Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of "fairness" - and the contagion spread.

And when financial institutions across the board saw that they could make money by trading what would once have been considered junk loans, the profit motive kicked in. But the bad seed that started it all was ACORN.

HOW does Barack Obama fit into all of this? Obama has been a key ally of Chicago ACORN going back to his days as a community organizer.

Later, as a young lawyer, he offered leadership training to the activists who were forcing Chicago banks into high-risk subprime loans. And when he made it on to the boards of Chicago's Woods Fund and the Chicago Annenberg Challenge, he channeled money ACORN's way.

Obama was perfectly aware of ACORN's intimidation tactics - indeed, he oversaw a Woods Fund report that boasted of managing to fund the radical group despite its shocking behavior.

And as a lawmaker, in Illinois and in Washington, he has continued to back ACORN's leglislative agenda.

ACORN's high-pressure tactics live on. And congressional Democrats are still covering for ACORN, funneling it money and doing its legislative bidding. ACORN also continues its shady ways, using a vast network of technically separate but in fact quite interconnected organizations to evade federal laws on the politicized use of government money.

Perhaps most disturbing of all, the Obama campaign appears to have little more regard for freedom of speech than Reps. Kennedy or Waters did when they backed up ACORN's thugs in 1995. The campaign actually practices ACORN-style tactics, sending out "action wires" that call on supporters to block Obama critics from radio appearances (a tactic once applied to me) and demanding legal actions against unfriendly political advertisers.

As a presidential candidate, Obama promises a massive national-service program closely allied with the nonprofit sector. He wants to remove "barriers for smaller nonprofits to participate in government programs."

In other words, he plans a massive effort to funnel America's youth into volunteer work alongside the likes of ACORN. So Obama's favorite community organizers may soon be training your child.

ACORN's alliance with the Democratic Party is at the root of the current financial meltdown. And Barack Obama has stayed true to ACORN's ways.

Pretty soon, the folks who poured into the Washington Hilton to shut down Speaker Gingrich in 1995 may no longer need to take over the microphone. They'll be in charge of it.

Looking for the Roots of the Economic Crisis

CSPAN — Secretary Cuomo (Clinton Administration) admits actions to force banks to "distribute risk more broadly", making high-risk loans to low- and moderate-income borrowers "who would not have gotten credit otherwise". Huckabee explains "NINJA loans" (No Income No Jobs [no] Assets) made on that basis. Community Reinvestment Act. "ACORN bullied the banks." ACORN's attorney at the time: Obama. "ACORN uses militant tactics - they call it 'direct action.'"

Andrew Cuomo
Distribute Risk More Broadly
(04-06-98) [CSPAN]

While some disagree that the CRA is responsible for the economic crisis, arguing, for example, that the "real root causes of this economic crisis are an unregulated 'shadow banking system' that fostered unmanageable risks, extreme corporate avarice and consumer excess', but others see it as ill-advised public policy that certainly contributed to the mess. According to Thomas J. DiLorenzo, professor of economics at Loyola College,

[...] When the CRA was created during the Carter administration, the administration also funded with tax dollars numerous "community groups" that have helped the Fed, the Comptroller of the Currency, and other federal regulatory agencies to enforce the act. Under the CRA, if a bank wants to make virtually any change in its business operations — merging, opening up a new branch, getting into a new line of business — it must first prove to regulators that it has made "enough" loans to the government's preferred borrowers. The (partially) tax-funded "community groups" like ACORN (Association of Community Organizations for Reform Now) can file petitions with regulators that stop the bank's activities in their tracks, perhaps defeating them altogether. The banks routinely buy off ACORN and other "community groups" by giving them millions of dollars as well as promising to make even more dubious loans.
In order to try to diversify the risk of these loans, the Federal Home Loan Mortgage Company ("Freddie Mac") pioneered the "securitization" of bundles of these high-risk loans so that they could be sold on secondary markets. Such "securitization" exploded during the 1990s as a result of government regulation. As Fed Chairman Ben Bernanke himself stated in a March 30, 2007 speech entitled "The Community Reinvestment Act: Its Evolution and New Challenges" (published online by the Fed),

Securitization of affordable housing loans expanded, as did the secondary market for these loans, in part reflecting a 1992 law that required the government-sponsored enterprises, Fannie Mae and Freddie Mac, to devote a large percentage of their activities to meeting affordable housing goals. (p.3)

[...] The myth that the CRA would not be harmful to bank-industry profits was hidden for years by the Fed-created housing bubble, which allowed for easy refinancing of all the bad debt. "[The] CRA increased lending and homeownership in poor communities without undermining banks' profitability," Robert Gordon proudly proclaims. But now that the bubble has burst, all those unqualified borrowers — whom the government calls "subprime," as though their credit ratings are only a tiny, tiny smidgen below "prime" borrowers with the very best credit ratings — are defaulting on their mortgages in droves.

Bank profitability has been extremely "undermined," to put it mildly. The bursting of the Fed-generated housing bubble is the reason why the CRA scam was not exposed until now, despite having been in operation for some thirty years.

ACORN, Obama,
and the Bailout
Lou Dobbs (8.10.08)



Barack Obama & Friends
U.S. Economic Crisis
(28.09.08) [Fox]