TO discover the roots of to day's economic crisis, consider a tale from 1995.
That March, House Speaker Newt Gingrich was scheduled to address a
meeting of county commissioners at the Washington Hilton. But, first,
some 500 protesters from the Association of Community Organizations for
Reform Now (ACORN) poured into the ballroom from both the kitchen and
the main entrance.
Hotel staffers who tried to block them were quickly overwhelmed by
demonstrators chanting, "Nuke Newt!" and "We want Newt!" Jamming the
aisles, carrying bullhorns and taunting the assembled county
commissioners, demonstrators swiftly took over the head table and
commandeered the microphone, sending two members of Congress scurrying.
The demonstrators' target, Gingrich, hadn't yet arrived - and his
speech was cancelled. When the cancellation was announced, ACORN's foot
Editorial writers from Little Rock to Buffalo condemned ACORN's
action as an affront to both civility and freedom of speech.
Editorialists also pointed out that the "spending cuts" the protesters
railed against were imaginary - Gingrich proposed merely to slow the
growth in some welfare programs and turn control back to the states.
Yet ACORN had only just begun. Two days later, 50 to 100 of the
same protesters hit their main target - a House Banking subcommittee
considering changes to the Community Reinvestment Act, a law that
allows groups like ACORN to force banks into making high-risk loans to
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
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
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
It struck as Roukema aired her concerns at that hearing. Protesters, 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
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.
When the ACORN-Democrat alliance finally succeeded in blocking
Republicans from restoring fiscal sanity in 1995, the way was open to
virtually unlimited lending quotas - and to a whole new way of thinking
about credit standards.
Urged on by ACORN, congressional Democrats and the Clinton
administration helped push tolerance for high-risk loans through every
sector of the banking system - far beyond the sort of banks originally
subject to the CRA.
So it was the efforts of ACORN and its Democratic allies that first
spread the subprime virus from the CRA to Fannie and Freddie and thence
to the entire financial system.
Soon, Democratic politicians and regulators actually began to take
pride in lowered credit standards as a sign of "fairness" - and the
And when financial institutions across the board saw that they
could make money by trading what would once have been considered junk
loans, the profit motive kicked in. But the bad seed that started it
all was ACORN.
How does Barack Obama fit into all of this? Obama has been a key ally of Chicago ACORN going back to his days as a community organizer.
Later, as a young lawyer, he offered leadership training to the
activists who were forcing Chicago banks into high-risk subprime loans.
And when he made it on to the boards of Chicago's Woods Fund and the
Chicago Annenberg Challenge, he channeled money ACORN's way.
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 legislative agenda.
ACORN's high-pressure tactics live on. And congressional Democrats
are still covering for ACORN, funneling it money and doing its
legislative bidding. ACORN also continues its shady ways, using a vast
network of technically separate but in fact quite interconnected
organizations to evade federal laws on the politicized use of
Perhaps most disturbing of all, the Obama campaign appears to have
little more regard for freedom of speech than Reps. Kennedy or Waters
did when they backed up ACORN's thugs in 1995. The campaign actually
practices ACORN-style tactics, sending out "action wires" that call on
supporters to block Obama critics from radio appearances (a tactic once
applied to me) and demanding legal actions against unfriendly political
As a presidential candidate, Obama promises a massive
national-service program closely allied with the nonprofit sector. He
wants to remove "barriers for smaller nonprofits to participate in
In other words, he plans a massive effort to funnel America's youth
into volunteer work alongside the likes of ACORN. So Obama's favorite
community organizers may soon be training your child.
ACORN's alliance with the Democratic Party is at the root of the current financial meltdown. And Barack Obama has stayed true to ACORN's ways.
Pretty soon, the folks who poured into the Washington Hilton to
shut down Speaker Gingrich in 1995 may no longer need to take over the
microphone. They'll be in charge of it.