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ACORN and the Community Reinvestment Act

I wrote a post a few weeks ago about the role that the Community Reinvestment Act played (or, rather, did not play) in causing the current global financial meltdown. I was planning to get out of the issue there, but a really nice article by Devilstower over at Daily Kos sucked me back in. During the time when I wasn't paying any attention to the issue, the right wing noise machine added a new villain to their attempts to blame Wall Street's mess on the left: ACORN.

In 1977 Democratic President Jimmy Carter passed the Community Reinvestment Act to provide housing to poor people. In the 1990s Bill Clinton had Attorney General Janet Reno threaten banks under red lining rules into giving loans to people who could not afford them. Then in the last 8 years, the leftist group ACORN, which has ties to Barack Obama, went to banks and threatened them to relax their rules again. Banks had to give loans to people who had no jobs or no identification.

Devilstower followed up on this with a must-read explanation of what the now-infamous credit default swaps actually are, and why they - and not the CRA - are responsible for the current mess. Along the way, he discussed what the CRA actually entails, what the Clinton-era changes to CRA regulations did, and what the default rates were on mortgages during the early part of this decade. I couldn't help but notice, though, that there was an element missing from his post: the ACORN involvement.

I picked up on the omission because I'd read an article by Eileen Markey on just that topic a couple of weeks ago. In that article, Markey noted that ACORN had actually conducted protests at various banks in an effort to get them to reign in their more predatory subprime lending habits. I resisted the urge to blog the article at the time (and resisted it again when my mother emailed me a link to the same article a week or so later), but after reading Devilstower's post I went back and took another look at it.

The concept of ACORN as a group that tried to head off the current catastrophe is certainly not something that fits in well with the picture that the noise machine is trying to paint. It wouldn't be the first time that the right has promoted an alternate reality, of course, but I figured that it wouldn't do any harm if I did a little fact checking on the Markey piece before blogging it. As it turns out, I was wrong. The "harmless" fact checking cost me some time, and left me much, much angrier at both the loan industry and at the current Administration than I was before.

The quick fact check on the (well-written and accurate) City Limits article quickly turned into a massive, multi-hour geek-out. Looking at ACORN's role lead me to learn more about how the big banks actually pushed people into riskier loans when alternatives were available, about how a little-known federal agency eviscerated state-level attempts to oversee the banks, and about the futile attempts that a number of the very people the right is attempting to vilify made to warn people about the danger posed by predatory subprime lending.

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