On September 29, the article “Bank of America Pulls ACORN funding” appeared on the CNN political ticker. While the short piece thankfully does list some of ACORN’s recent scandals, such as the Breitbart video investigation and the voter registration fraud, it didn’t answer the question that was surely on every reader’s mind: What exactly was Bank of America paying ACORN for?
Let’s not fault writer/editor Amy Sabha for not addressing the topic, as she was clearly very busy working on this video in which she goes up and down the UN escalator.
Instead we can just go to the Bank of America community website, which notes that the firm works with ACORN in more than 20 cities to provide “special mortgage products.” Or we can go to the ACORN Housing website, which describes a program that produced $246 million in mortgages from Bank of America with “flexible underwriting and discounted pricing.” Or this page, which describes a program with low down payments, no private mortgage insurance, no cash reserve necessary, and flexibility on income requirements, such as being able to include public assistance.
Yes, ACORN and Bank of America joined forces to become the ultimate subprime lender. So much for the organization’s lofty social justice rhetoric.
Yet there’s more. In February, right after the inauguration, Bank of America reported that it had made $2 million in national grants to ACORN Housing Corporation between October 2007 and June 2009 (planned). Only a handful of conservative outlets (Michelle Malkin, for example) picked up the story.
It’s easy to pick on Bank of America. The firm has received more than $45 billion in taxpayer money during the bailouts, was fined for securities fraud — specifically withholding information — in the purchase of Merrill, paid out millions in bonuses, and even introduced bank accounts for illegal aliens a few years ago, a sound practice that surely had nothing to do with their financial troubles today. They are an embarrassment to an industry that has little shame left.
Still, they’re not the only ones that gave millions to ACORN, and we should expect further announcements in the coming days. JP Morgan Chase is already under fire, identified more than a month ago as a multi-million dollar ACORN donor or partner by the National Legal and Policy Center. (Story picked up by CNN? Of course not — try Glenn Beck and Judge Andrew Napolitano.)
In this sordid tale, the unsympathetic banks are more victims than villains. The Community Reinvestment Act gives groups like ACORN considerable power over the institutions. It can accuse them of economic discrimination against minorities, forcing them to defend their business practices and reputations against de facto charges of racism. The penalties can be hefty fines and even blocked mergers.
ACORN perfected this “pay for protection” business model in the 1990s. And it is a business. While some of the ACORN organizations are non-profit, others are not, which means that by working together they can get the best of all worlds: political actions, union-style organization, tax-exempt status, privacy, and profit.
In 1994, ACORN sued Citibank under the Community Reinvestment Act alleging racism. Their lawyer? None other than our post-racial president. In 1998, St. Louis ACORN was able to extract concessions from Mercantile in advance of a merger. Most banks paid attention and soon understood that it was easier to partner with ACORN than to fight them.
A few did fight back. In 2004, after being accused of predatory lending by ACORN, Wells Fargo came out swinging. But three years later, they settled a class action lawsuit in California for $6.8 million. At some point the ACORN payments just became the cost of doing business.
Subprime lending put millions of unqualified homeowners into houses they couldn’t afford. This pushed up home prices for other purchasers. The housing bubble became an investment bubble once Fannie and Freddie and the investment banks joined the party. The twin bubbles popped, taking down the banks, the markets, and the economy.
It’s all easy to understand, unless you’re a progressive whose entire belief system depends upon not understanding it.
Subprime lending isn’t specifically illegal, but it creates plenty of opportunities for mortgage fraud. This “undocumented income,” as it is euphemistically called, creates a path to home ownership for people who aren’t otherwise qualified — including both criminals and illegal aliens.
All of the incentives were there for ACORN to commit this fraud, and if the investigations are ever completed, the results won’t surprise anyone. The Breitbart videos made it very clear that ACORN was ready to facilitate just about any financial transaction required.
The New York Times says they were a step behind the ACORN story, as they were with the Van Jones story. One would think they would have been more careful, given allegations in March that they spiked a story on Obama’s ties to ACORN. (Michelle Malkin, again.)
Perhaps at some point they will understand that this isn’t a story that has come and gone, allowing them to wring their hands over having missed it. It’s a story that’s here to stay, and there’s at least fifteen years of ACORN corruption to sift through — and that means fifteen years of business partners. At what point do they start reporting?
For example, in February 2008, ACORN partnered on a foreclosure prevention program with Countrywide, the same lender that gave the sweetheart deal to Chris Dodd and then lost the associated documentation. Countrywide is now a Bank of America company. We’ll have to ask CNN or the Times whether that’s newsworthy.
We can be thankful of one thing, at least — ACORN’s not in charge of teaching our children.
Well, unless they happen to attend the ACORN High School for Social Justice. Thanks, New York City Department of Education. (More here. Also, an excellent source on ACORN Housing’s business model at the Consumers Rights League report.)