With wanton disregard for the economic well being of America, a
decade ago the social justice entrepreneurs of the ultra-leftist
Association of Community Organizations for Reform Now (ACORN) let
Americans know their strategy for bringing equality of result to
the housing market — at all costs.
In a circa 1999 document, “To Each Their Home: Success Stories
from the ACORN Housing Corporation,” the ACORN affiliate called
the American Dream a sham and bragged about undermining banks’
underwriting standards.
The brochure acknowledged there may be scattered “stories of hope
and success” in ACORN-targeted communities, but “they also belie
the supposition that if you simply work hard, sacrifice and save,
you can easily buy a home of your own.” (The document is
available
here.)
ACORN Housing took credit for developing “several innovative
strategies” to get around pesky traditional lending guidelines,
which were unfair because they “were geared to middle class
borrowers.”
Instead of using passé measures of creditworthiness
such as, say, credit history and having an adequate income, ACORN
convinced lenders to adopt “more flexible underwriting criteria
that take into account the realities of lower income
communities.” Henceforth, some banks serving inner cities would
accept “less traditional income sources such as food stamps.”
(See Foundation
Watch, November 2008.)
It’s unclear why ACORN stopped there. Perhaps the rent-a-mob
group, renowned for occupying banks, disrupting legislative
hearings and emergency medical facilities, surrounding the homes
of politicians and CEOs, and annoying trapped motorists into
paying tribute as part of its “toll roads” program, could have
convinced narrow-minded bankers to accept another financial
innovation. How about accepting “Monopoly” money for down
payments?
Financial tomfoolery like including food stamps on loan
applications was encouraged by the Carter-era Community
Reinvestment Act (CRA), which opened banking to ACORN-style
agitation that over time weakened underwriting criteria and
helped to alter the culture of financial institutions in the U.S.
This 1977 law, whose enactment ACORN lobbied for, punishes
lenders for limiting loans to wealthier, more creditworthy
markets, a practice called “redlining.” It gives banking
regulators discretionary authority to make trouble for banks that
fail to lend enough money to “underserved” minority communities.
After the CRA went into effect, Saul Alinsky-inspired groups such
as ACORN and the Greenlining Institute used the law to get into
the shakedown business. Rev. Jesse Jackson egged them on at an
ACORN “banking summit” in 1992, asking rhetorically, “Why did
Jesse James rob banks? Because that’s where the money was.”
The shaking down of lenders intensified when then-Treasury
Secretary Robert Rubin presided over the Clinton administration’s
effort to put the CRA on steroids. Banks began to make risky
subprime loans and Fannie Mae and Freddie Mac aggregated them for
sale in the secondary market as mortgage-backed securities. These
practices made it easier for banks to give in to ACORN’s demands
to originate more and more doomed mortgages because they knew
they could offload their high-risk debt on quasi-governmental
suckers Fannie and Freddie, which were under intense political
pressure to service the subprime market.
Economists like Stanley Liebowitz of the University of Texas
blame the CRA for helping to cause Wall Street’s current
problems. He writes that the current mortgage market debacle is
“a direct result of an intentional loosening of underwriting
standards – done in the name of ending discrimination, despite
warnings that it could lead to wide-scale defaults.” Liebowitz is
hardly alone in pointing out that U.S. financial markets are now
being strangled by a terrible credit crunch that might have been
avoided if lenders had refrained from doling out loans they ought
to have known were doomed to default.
Of course, even now as the economic fallout from the collapse of
the housing market spreads, getting class-warriors to admit
they’re wrong about anything is an exercise in futility.
Liberals, who reflexively defend ACORN, have twisted themselves
into rhetorical pretzels in recent weeks while defending the
catastrophic economic egalitarianism of the CRA.
An ardent proponent of the CRA, ACORN benefactor, organizer, and
trainer Barack H. Obama, Esq., contributed to the increasingly
hostile environment for banks when he represented the plaintiffs
in the 1995 class action lawsuit Buycks-Roberson v.
Citibank. The suit demanded that the bank grant mortgages to
an equal percentage of minority and non-minority mortgage
applicants. The bank settled the case three years later and
reportedly agreed to beef up its lending to unqualified
applicants.
ACORN refuses to acknowledge the role that it and the CRA played
in the current crisis on Wall Street, and as recently as Jan. 21
Obama said in a candidates’ debate that the CRA should be more
strictly enforced.
Michael Ettlinger of John Podesta’s Center for American Progress
feverishly derides CRA critics as “antigovernment ideologues,”
while Business Week’s Aaron Pressman calls them “know-nothings.”
Not to be outdone, ACORN ally House Financial Services Committee
chairman Barney Frank (D-Mass.) says criticism of the law is
tantamount to attacking poor people and minorities. Cynthia
Tucker of the Atlanta Journal-Constitution concurs,
arguing that pointing out the flaws of the CRA constitutes
“playing the race card.”
ACORN’s overall strategy has a name. It’s called the
“Cloward-Piven Strategy” of manufactured crisis (named after two
anti-capitalist sociologists) and it calls for packing the
welfare rolls to encourage dependency on the government and to
overload it with financial demands in order to hasten the
collapse of American capitalism.
ACORN founder Wade Rathke, who created ACORN in 1970, was
previously an organizer for the now-defunct National Welfare
Rights Organization (NWRO) that was founded in 1967 by the two
sociologists. Not surprisingly, ACORN’s “People’s Platform,”
inveighs against the perceived injustices inherent in the
American system:
“Enough is enough. We will wait no longer for the crumbs at
America’s door. We will not be meek, but mighty. We will not
starve on past promises, but feast on future dreams.”
The CRA and ACORN aren’t wholly to blame for the meltdown on Wall
Street, but they played a starring role.
