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The Sordid History of ACORN and the Ties to the Financial Meltdown

October 7, 2008

Stanley Kurtz has a great article detailing the history of ACORN and its ties to the financial meltdown. Here is the Cliffs Notes version of his work

  • ACORN intimidated banks into making high-risk loans to low-credit customers using provisions of the 1977  Community Reinvestment Act (CRA). Chicago ACORN was able to delay and halt the efforts of banks to merge or expand until they had agreed to lower their credit standards and to obtain “counseling” compensation.
  • Heidi Swarts, a strong supporter of ACORN and author of Organizing Urban America, notes that ACORN members think of themselves as “militants unafraid to confront the powers that be” and ACORN protesters break into private offices, show up at a banker’s home to intimidate his family, or pour protesters into bank lobbies to scare away customers, all in an effort to force a lowering of credit standards for poor and minority customers.
  • The 1977 Community Reinvestment Act forced banks to increase lending in poor and minority neighborhoods, but its exact requirements were vague and open to interpretation. Bank mergers or expansion plans were rarely held up under CRA until the late 1980s, when ACORN perfected its technique of filing CRA complaintsand intimidated representatives of banks.
  • A provision of the 1989 savings and loan bailout pushed by Democratic legislators, like Joseph P. Kennedy, required lenders to compile public records of mortgage applicants by race, gender, and income.  The statistics produced by these studies were presented in highly misleading ways and groups like ACORN were able to use them to embarrass banks into lowering credit standards.
  • IN 1991, House Democrat Henry Gonzales had announced that Fannie and Freddie had agreed to commit $3.5 billion to low-income housing in 1992 and 1993, in addition to a just-announced $10 billion “affordable housing loan program” by Fannie Mae.
  • A mere month later, ACORN Housing Corporation president, George Butts made news by complaining to a House Banking subcommittee that ACORN’s efforts to pressure banks using CRA were still being hamstrung by Fannie and Freddie. Butts also demanded still more data on the race, gender, and income of loan applicants. Many news reports over the ensuing months point to ACORN as the key source of pressure on congress for a further reduction of credit standards at Fannie Mae and Freddie Mac. As a result of this pressure, ACORN was eventually permitted to redraft many of Fannie Mae and Freddie Mac’s loan guideline.
  • In the Clinton administration, Clinton Housing Secretary Henry Cisnersos pledged to meet monthly with ACORN representatives.
  • At this point, both ACORN and the Clinton administration were working together to impose large numerical targets or “set asides” (really a sort of poor and minority loan quota system) on Fannie and Freddie. ACORN called for at least half of Fannie and Freddie loans to go to low-income customers. At first the Clinton administration offered a set-aside of 30 percent.
  • In early 1994, the Clinton administration floated plans for committing $1 trillion in loans to low- and moderate-income home-buyers, which would amount to about half of Fannie Mae’s business by the end of the decade.
  • In June of 1995, President Clinton, Vice President Gore, and Secretary Cisneros announced the administration’s comprehensive new strategy for raising home-ownership in America to an all-time high. Representatives from ACORN were guests of honor at the ceremony. In his remarks, Clinton emphasized that: “Out homeownership strategy will not cost the taxpayers one extra cent. It will not require legislation.” Clinton meant that informal partnerships between Fannie and Freddie and groups like ACORN would make mortgages available to customers “who have historically been excluded from homeownership.”
  • At both the local and national levels, then, ACORN served as the critical catalyst, levering pressure created by the Community Reinvestment Act and pull with Democratic politicians to force Fannie Mae and Freddie Mac into a pattern of high-risk loans.

In addition to Stanley Kurtz’s work, Michelle Malkin has more on this on her site.

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5 comments

  1. […] that gave community organizing groups such as ACORN to push the boundaries of the law and engage in coercive methods of forcing banks to loan to high risk borrowers. They would threaten to block mergers and […]


  2. […] all in an effort to force a lowering of credit standards for poor and minority customers. read on they also intimidated voters at the polls last election. they registered the the dead. an old […]


  3. […] poor and minority customers. The Sordid History of ACORN and the Ties to the Financial Meltdown source Planting Seeds of Disaster ACORN, Barack Obama, and the Democratic party. link they terrorized […]


  4. In all the bankers I have talked to, each has said the Federal Reserve Bank Examiners were the one’s who insisted they loan money to less qualified persons. The involvement of Acorn is unquestionable but typically functioned on a prestege level. Locally, the Fed examiners were the prodding tool against the banks.

    The offical position of the CRA does not require any bank to lower their standards to loan. If however banks fail the CRA loaning test,they hinder growth or merger possibilities.

    Where is the tie between Acorn and the Fed? Acorn’s efforts made it possible for the Fed to step in and “legitimately” withhold credit. This precipitated the halt of all but “very secure” lending. The corporate banks had been betrayed. The Fed used the coherced bank lending as an excuse to shock our economic system, declaring insolvency and threating action against these “irresponsible” banks.

    Behind all of this was, I believe, the Fed motive. That is, to assure their involvement in our economy and the interest it pays them for decades or more.

    Carter and his double digit inflation birthed the CRA, enforced by the Federal Reserve! Our nation was talking about getting rid of the Fed via a flat tax or a fair tax and still is. You might remember the IRS stepped back from it’s tactics about 20 years ago because people were real upset with them. That was to desensitize us into forgetting about them. The Fed began planning a way to secure their position. Collapse the economy and have a man in place to spend (borrow) his way out of it. Hide behind his known motivations, maybe even a “closet” socialist who wants big government. Flood the view with urgent and costly legislation to distract all, stur emotions against the banks and those accepting bailout funds, knowing the banks will tighten lending standards to protect themselves, from the Fed, while appearing to be the “stingy bad guys” to the public! All the while, the Fed and their machinations are being hidden from public view. Meanwhile we have indebted ourselves so deeply, the Fed is now secure for decades. Finding a tangible thread between the Fed and Acorn, financial or advisory leading to financial, would seal the deal against the Fed. It is out there somewhere.


  5. In all the different bankers I have talked to, each has said the Federal Reserve Bank Examiners were the one’s who insisted they loan money to less qualified persons. The involvement of Acorn is unquestionable but typically functioned on a prestege level. Locally, the Fed examiners were the prodding tool against the banks.

    The offical position of the CRA does not require any bank to lower their standards to loan. If however banks fail the CRA loaning test,they hinder growth or merger possibilities.

    Where is the tie between Acorn and the Fed? Acorn’s efforts and on a local basis, the Fed, made it possible for the Fed to later step in and “legitimately” withhold credit. This precipitated the halt of all but “very secure” lending. The corporate banks had been betrayed. The Fed used the coherced bank lending as a tool to manipulate a senario that excused them as they shocked our economic system, declaring insolvency and threating action against these “irresponsible” banks.

    Behind all of this we see, I believe, was the Fed motive. That is, to assure their involvement in our economy and the interest it pays them for decades or more. Billions upon billions.

    Pres. Carter and his double digit inflation birthed the CRA, enforced by the Federal Reserve! The CRA was an ideal tool for the Fed to manipulate our banking system.

    As a side note, not too long afterward immigration standards were lowered and borders were left unsecured. Clinton tilted the population ballance by advising the INS to fast track applications for citizenship. These and many more since became the people that needed subprime loans.

    Since Carter our nation was talking about getting rid of the Fed and the IRS, via a flat tax or a fair tax and still is. You might remember the IRS stepped back from it’s tactics about 20 years ago because people were real upset with them. That was to desensitize us into forgetting about them. It seems the Fed began planning a way to secure their position. Collapse the economy by withholding credit and have a man in place to spend (borrow) his way out of it. Hide behind his known motivations, maybe even a “closet” socialist who wants big government and can take the blame. Flood the view with urgent and costly legislation to distract all, stur emotions against the banks and those accepting bailout funds, knowing the banks will tighten lending standards to protect themselves, from the Fed, while appearing to be the “stingy bad guys” to the public! All the while, the Fed and their machinations are being hidden from public view. Meanwhile our government has indebted us so deeply, the Fed is now secure for decades.

    Finding a tangible thread between the Fed and Acorn, financial or advisory leading to financial, would seal the deal against the Fed and explain the perfect storm that has overcome us. It is out there somewhere.



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