The White House and Congress want to expand a 30-year-old law–the Community Reinvestment Act–that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks to seek the permission of community activists to get regulatory approval for bank expansions and mergers. Often this means striking a deal with activist groups such as ACORN or unions like the Service Employees International Union (SEIU) and agreeing to allocate credit to poor and minority areas that are underserved.
In short, the CRA encourages banks to make loans they would not ordinarily make. What’s more, these agreements often require that banks offer no-money-down mortgages and remove caps on how much debt a borrower can take on. All of this is done in the name of “financial democracy.”
Take a look at the amount of CRA-commitments forced on banks in the run-up to the 2008 financial crisis:
As for the speculative action on Wall Street that contributed to the crisis, Peter points out that Washington had a hand in that too. Peter argues that the Clinton administration fueled the speculation by bailing out big investment houses such as Goldman Sachs and Morgan Stanley five times during the Clinton years. The Clinton team not only pulled their chestnuts out of the fire from derivative investments around the world, they ensured that they actually profited from their risky behavior.
In finance they call this “moral hazard.” It’s like bailing a friend with a DUI charge out of jail, giving them the keys to the car, and throwing a six pack in the back seat.
Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.
President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency’s core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls “a group of examiners specially trained and certified in community development” (otherwise called community activists). The administration says, in its literature about the reforms, that “rigorous application of the Community Reinvestment should be a core function of the CFPA.”
For good measure, Obama’s plan also calls for the CFPA to work closely with the Department of Justice to combat perceived discrimination in lending.
What this will amount to is the worsening a financial crisis through expanding bad debts, while at the same time there’s a credit crunch affecting small businesses.
Or, as Dennis, who sent me the link, said, “Folks, this is Loony Tunes.”
The FBI is investigating its voter registration efforts in several states, amid allegations that almost a third of the 1.3 million cards it turned in are invalid. And yesterday, a former employee of Acorn testified in a Pennsylvania state court that the group’s quality-control efforts were “minimal or nonexistent” and largely window dressing. Anita MonCrief also says that Acorn was given lists of potential donors by several Democratic presidential campaigns, including that of Barack Obama, to troll for contributions.
The Obama campaign denies it “has any ties” to Acorn, but Mr. Obama’s ties are extensive. In 1992 he headed a registration effort for Project Vote, an Acorn partner at the time. He did so well that he was made a top trainer for Acorn’s Chicago conferences. In 1995, he represented Acorn in a key case upholding the constitutionality of the new Motor Voter Act — the first law passed by the Clinton administration — which created the mandated, nationwide postcard voter registration system that Acorn workers are using to flood election offices with bogus registrations.
Ms. MonCrief testified that in November 2007 Project Vote development director Karyn Gillette told her she had direct contact with the Obama campaign and had obtained their donor lists. Ms. MonCrief also testified she was given a spreadsheet to use in cultivating Obama donors who had maxed out on donations to the candidate, but who could contribute to voter registration efforts. Project Vote calls the allegation “absolutely false.”
She says that when she had trouble with what appeared to be duplicate names on the list, Ms. Gillette told her she would talk with the Obama campaign and get a better version. Ms. MonCrief has given me copies of the donor lists she says were obtained from other Democratic campaigns, as well as the 2004 DNC donor lists.
In her testimony, Ms. MonCrief says she was upset by Acorn’s “Muscle for Money” program, which she said intimidated businesses Acorn opposed into paying “protection” money in the form of grants. Acorn’s Brian Kettering says the group only wants to change corporate behavior: “Acorn is proud of its corporate campaigns to stop abuses of working families.”
Here are my notes from the call:
“Among the many questions the testimony raises,
How did ACORN get the list from the Obama campaign? Who in the campaign was the contact person for ACORN?
Why do we have to learn about this from organizations outside the news media, such as the court system?
Why is Obama not held accountable for not telling the truth about his relationship with ACORN?”
Ron Clayborne, ABC news: Is your only evidence the testimony of Ms MontCrief?
A: Yes, she testified that they were in direct contact with the Obama campaign, and they were given spreadsheets and funds to use in the registration effort. It was important to note that Ms MontCrief is a senior staffer within the ACORN organization, and that the Project Vote organization has a long-standing tie with Barack Obama, and he worked for them in the past…Karen Gillette used to work for secretary of state Brunner in Ohio and they’ve had problems with registrations in Ohio, and the web of connections continues to increase.
Q: What do you see ACORN’s role in Florida?
A: Not aware of ACORN activity in Florida, but they claim over 1.2 million registrations nationwide, 1/3 fraudulent, 1/3 repetitive. Ms MontCrief claims that training is inadequate and when people complain they get thrown under the bus. When ACORN responds to accusations, it’s never ACORN’s fault, but the individuals doing the registrations. In Florida, Governor Christ has always worked hard to make sure the registration system is clean, unlike in Ohio, where there are a lot of issues with registrations.
Q. Chuck Ross from Gannett: Obama campaign’s ad with Bush in McCain’s rearview mirror:
A: Let me flip it around & ask about Obama’s motivation on this. The most bankrupt argument in this campaign is the effort to make John McCain look like George Bush’s running mate. In many issues, the economy, war in Iraq, pushing back on the legal jeopardy of captives in the war on terror, the argument just doesn’t hold water. I think it’s a desperate attempt in the part of Obama. You really have to be desperate to attack McCain’s & Palin’s relationships, while saying that Obama should not be held accountable for his associations with Ayers, and Khalidi and others.
Q. Michael Barone, US News: Tracking polls showing progress. What futher information can you give us?
A: There’s no question that there’s a closing in this campaign, and in battleground states. Suburban men are coming to the campaign. McCain has striken a chord on the Obama redistributive policies. From our perspective it’s interesting and instructive to see the places Obama is going to, and he’s going to our core state. Where Obama goes, we’ve been going up. There are a number of states we see bouncing back, Nevada and New Mexico, with larger Hispanic margins there.
Biden so disliked West’s line of questioning that the Obama campaign canceled a WFTV interview with Jill Biden, the candidate’s wife.
“This cancellation is non-negotiable, and further opportunities for your station to interview with this campaign are unlikely, at best for the duration of the remaining days until the election,” wrote Laura K. McGinnis, Central Florida communications director for the Obama campaign.
McGinnis said the Biden cancellation was “a result of her husband’s experience yesterday during the satellite interview with Barbara West.”
I understand that you’re not a drinker, Senator. Good: drunken oblivion is too easy an out for you for dealing with the fact that you had to tell the world that Obama’s mistaken views on Iraq were better than yours, let alone John McCain’s.
Biden: all the gaffeine, with all of the calories.
Did he have a little cheese with that whiiiiiiiine?
The New York Times carried a story on Saturday, October 4, 2008, that proved you had a significantly closer relationship with Bill Ayers than what you previously admitted. While the issue of your relationship is of concern, the greater concern is that you lied to America about it.
The Chicago Sun reported on May 8, 2008, that FBI records showed that you had a significantly closer relationship with Tony Rezko than what you previously admitted. In the interview, you said that you only saw Mr. Rezko a couple of times a year. The FBI files showed that you saw him weekly. While the issue of your relationship is of concern, the greater concern is that you lied to America about it.
Your speech in Philadelphia on March 18, 2008, about “race” contradicted your statement to Anderson Cooper on March 14 when you said that you never heard Reverend Wright make his negative statements about white America . While your attendance at Trinity Church for 20 years is of concern, the greater concern is that you lied to America on March 14.
In your 1st debate with John McCain, you said that you never said that you would meet with the leaders of Cuba, Venezuela, Iran, and North Korea without “preparations” at lower levels … Joe Biden repeated your words in his debate with Sarah Palin … while the video tape from your debate last February clearly shows that you answered “I would” to the question of meeting with those leaders within 12 months without “any” preconditions. While your judgement about meeting with enemies of the USA without pre-conditions is of concern, the greater concern is that you lied to America in the debate with McCain.
On July 14, 2008, you said that you always knew that the surge would work while the video tapes of you from more than a year ago show that you stated that the surge would not work. While your judgement about military strategy as a potential commander-in-chief is of concern, the greater concern is that you lied to America on July 14.
You now claim that your reason for voting against funding for the troops was because the bill did not include a time line for withdrawal, while the video tapes of you from more than a year ago show that you voted against additional funding because you wanted our troops to be removed immediately … not in 16 months after the 2008 election as you now claim. While your judgement about removing our troops unilaterally in 2007 is of concern, the greater concern is that you lied to America about your previous position.
You claim to have a record of working with Republicans while the record shows that the only bill that you sponsored with a Republican was with Chuck Lugar … and it failed. The record shows that you vote 97% in concert with the Democrat party and that you have the most liberal voting record in the Senate. You joined Republicans only 13% of the time in your votes and those 13% were only after agreement from the Democrat party. While it is of concern that you fail to include conservatives in your actions and that you are such a liberal, the greater concern is that you distorted the truth.
While you read the article, please do keep in mind that Community Reinvestment Act,
a law that allows groups like ACORN to force banks into making high-risk loans to low-credit customers
is still active. None of the legislation has repealed the CRA to date:
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.
And where is Obama in all this?
As Kurtz states in his article, Obama
Was an ally of ACORN during his community organizing days
As a young lawyer, he offered leadership training to the activists who were forcing Chicago banks into high-risk subprime loans
Channelled money from the Woods Fund (over $200,000) and the Chicago Annenberg Challenge
Additionally, the Obama campaign has paid $832,000 to an Acorn affiliate, while
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.
As readers of this blog are well aware, ACORN is deeply involved in voter registration fraud. Just yesterday Rick Moran noted yet one more instance of ACORN’s criminality: Shelby Holliday, doing the investigative work that the lamestream media has forsaken, shows ACORN vans driving newly-registered people to polls in Ohio where they aren’t required to show ID or proof of residency in order to cast their ballot, in the absence of Republican election observers who were not allowed to be there. One Christopher Barkley of Cleveland estimates that he registered to vote “10 to 15” times after ACORN relentlessly pursued him; another man, Freddie Johnson, filled out voter registration cards a total of 72 times over the course of 18 months.
Regarding those denials from the Obama campaign, read this: Obamacorn
Obama’s Web site proclaims, “Barack was never an ACORN trainer and never worked for ACORN in any other capacity.” Then how is it that Chicago ACORN leader Toni Foulkes sang Obama’s praises for his work for ACORN in his article, “Case Study: Chicago — The Barack Obama Campaign,” which appeared in Social Policy magazine in 2004?
Foulkes said ACORN first recognized Obama’s talents as a community organizer when he was organizing on Chicago’s far south side with the Developing Communities Project.
Foulkes wrote: “When he returned from law school, we asked him to help us with a lawsuit to challenge the state of Illinois’ refusal to abide by the National Voting Rights Act . . . . Obama took the case, known as ACORN vs. Edgar . . . and we won.”
Then Illinois Gov. Jim Edgar balked at implementing the new federal “Motor Voter” law out of concern that allowing people to register via postcard and blocking the state from pruning voter rolls might invite vote fraud. We wonder where he got that idea.
Foulkes says that “Obama then went on to run a voter registration project with Project VOTE in 1992 that made it possible for Carol Mosely Braun to win the Senate that year. Project Vote delivered 50,000 newly registered voters in that campaign (ACORN delivered about 5,000 of them).”