Obama, ACORN, and the Smoking Gun

Here’s the story so far on the mortgage crisis.

In the 1970s the Carter Administration passed the Community Reinvestment Act that encouraged banks to lend in low-income areas. In the 1990s the Clinton Administration pressured banks to make sub-prime loans by holding up bank mergers for banks that didn’t pour enough money into low-income areas. In the 2000s Republicans tried to reform all this by reducing the exposure of Fannie Mae and Freddie Mac to sub-prime mortgages but Democrats cold-cocked every attempt at reform.

Now comes the smoking gun. It was ACORN, the left-wing group, through an inside/outside strategy of street pressure and lobbying pressure that was the driving force behind the mortgage mess. And Barack Obama was right in the middle of it in the mid-1990s, according to Stanley Kurtz in National Review.

“You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.”

That’s what the Chicago Sun-Times wrote in April 1995. And how could it be that a dead-beat could get a loan? ACORN would help you batter down the doors of that evil bank.

That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.

So we understand this. Back in the 1990s the celebrated moderate and post-partisan Barack Obama was sluicing money at ACORN’s far-left projects on housing and Bill Ayers far-left projects on education. Ayers, remember, was just someone Obama knew in the neighborhood.

Kurtz tells the whole story. It began with ACORN pressuring the local banks in Chicago. But pretty soon it came up against the reluctance of the banks to hold sub-prime mortgages; they couldn’t get them off their books because Fannie and Freddie wouldn’t buy them.

So ACORN went to Washington to pressure the adminstration and Congress to change the rules on Fannie and Freddie to make them accept sub-prime mortgages. They had modest success with the Bush 41 administration and major success with the Clinton administration. Bigger and bigger the balloon got, until one day, it popped. Oh dear. Must be those evil Republicans, eh, Speaker Pelosi?

So now we know.

Up to now, conventional wisdom on the financial meltdown has relegated ACORN and the CRA to bit parts. The real problem, we’ve been told, lay with Fannie Mae and Freddie Mac. In fact, however, ACORN is at the base of the whole mess. ACORN used CRA and Democratic sympathizers to entangle Fannie and Freddie and the entire financial system in a disastrous disregard of the most basic financial standards. And Barack Obama cut his teeth as an organizer and politician backing up ACORN’s economic madness every step of the way.

No doubt Sen. John McCain (R-AZ) will be mentioning this at the debate tonight in a mild and avuncular way.