I covered this yesterday from Stanley Kurtz’ column in the New York Post, but the video makes the point a little more clear. Kurtz tells Steve Doocy and Gretchen Carlson that the financial collapse started with ACORN and other “community organizers” pressuring banks to make bad loans. Barack Obama has longstanding ties to ACORN, which Kurtz wants to bring to light:
STEVE DOOCY: Meanwhile, let’s talk a little bit about this. Could Barack Obama’s former occupation as a community organizer have had a role in the current financial crisis. Joining us right now from our D.C. Bureau, we’ve got Stanley Kurtz, a Senior Fellow at the Ethics in Public Policy Center. Stanley, let’s talk a little bit about this. We understand that in one of the versions of the bailout bill, apparently the Democrats tried to give an organization called ACORN 20%. All right. What is ACORN? And then we’re going to get into Barack Obama’s connection to it. What does ACORN do?
STANLEY KURTZ: Well, ACORN really is at the root of the problem here. ACORN is a group of community organizers, and they specialize in putting pressure, really kind of intimidation tactics, on banks, to get these banks to make high risk loans to low credit customers, and of course that’s very much the source of this whole problem. And they do things like breaking into the private offices of bank officials. They even show up at the homes of bank officials, to scare them and their families. They send demonstrators into lobbies of banks, all to get banks to make these high risk loans to people with low credit.
GRETCHEN CARLSON: What is Barack Obama’s affiliation with ACORN?
KURTZ: Barack Obama had very close ties to ACORN and in particular to the head of Chicago ACORN. Her name was Madeleine Talbot. Madeleine Talbot was an absolute pioneer of these intimidation tactics against banks, and Barack Obama was selected by Madeleine Talbot when he was just sort of a wet behind the ears organizer, she recognized his abilities, and she asked him to train her personal staff. When he came back to Chicago from law school and Madeleine Talbot was really beginning her campaign against these banks, Barack Obama trained the leadership of organizers in ACORN in Chicago.
DOOCY: So Stanley, you’re talking about how ACORN in the past has pressured banks to illegally make loans to people who cannot afford houses, so in effect you’re saying ACORN is one of the foundation or the cornerstones of the crisis that is we’re in right now?
KURTZ: That’s absolutely right. These loans weren’t illegal. In fact, there was a law that allowed ACORN to put on this pressure, the community reinvestment act enabled ACORN to levy complaints against banks when they wanted to merge or expand if they hadn’t made sufficient loans in minority communities, and so using this law, ACORN was able to pressure banks into making high risk loans.
DOOCY: All right, Stanley Kurtz, senior fellow at the Ethics in Public Policy Center, thank you very much for talking to us a little bit about ACORN.
It’s important not to get too carried away with the ACORN connection in the collapse. The real trigger came when Fannie Mae and Freddie Mac began buying up all of these loans and converting them into securities. Without that impetus, which began in 1999 and ran wild under the management of Franklin Raines at Fannie, lenders would have responded to the nuisance complaints by extending lending just enough to comply with the CRA.
Fannie Mae was the real culprit. By creating a market for questionable loans, they encouraged lenders to loan money to anyone willing to accept it, because the lenders could make short-term profits by selling the paper back to Fannie Mae. Instead of holding the paper themselves, though, Fannie (and Freddie) converted them into mortgage-backed securities (MBSs) at greatly inflated value, thanks to the artificial demand Raines created. Had Fannie and Freddie held the paper themselves instead of looking for a short-term profit of their own, then their collapse would have had a much smaller effect on the worldwide financial markets.
Instead, Congress mandated the sale of MBSs, and we are where we are now.
The ACORN connection is an interesting political story more than a financial issue now. It reveals the tactics of Obama and his allies, in a way that makes the recent story of Obama’s Truth Squad thuggery more understandable. Obama doesn’t represent a post-partisan brand of New Politics, but instead the Saul Alinsky tactics of the New Left radicalism that erupted in the 1960s.