Federal affordable-housing mandates were a major factor in the mortgage crisis, fueling the housing bubble and the subsequent collapse of the housing and financial markets, which helped bring down the economy. Even the liberal Village Voice has admitted that. Who drafted those awful mandates? ACORN, reports the Washington Examiner, in “How ACORN Destroyed the Housing Market.”
How did ACORN cause the “housing bubble” and “financial collapse”? ACORN lobbyists drafted “affordable-housing” mandates to pressure the mortgage giants to buy up more risky loans and mortgages from low-income communities, loans that banks in turn were pressured to make by the Community Reinvestment Act, explains The Wall Street Journal.
ACORN also helped spawn the mortgage crisis by promoting “liar loans.” It has a long history of financial fraud, vote fraud, tax evasion, waste, and mismanagement.
Lawmakers and the Obama administration have studiously ignored ACORN’s role in spawning the financial crisis, because many liberal lawmakers have long had close ties to ACORN. ACORN is a left-wing group that launched Obama’s career as a community organizer. (ACORN stands for Association of Community Organizations for Reform Now.) Obama has long-standing ties to ACORN, and an ACORN affiliate received received $800,000 from Obama’s campaign.
In recent months, lawmakers distanced themselves from ACORN, and cut off its federal housing funds, after it was caught on videotape in a child prostitution promotion scandal. (ACORN is now suing the federal government in court, to force it to resume funding ACORN. Earlier, it sued the private citizens who exposed its role in the scandal for $2 million).
However, in the long run, ACORN is likely to continue to benefit from its close ties to liberal lawmakers and the administration. Entities related to ACORN stand to reap millions from Obama’s financial regulation proposals and health-care reform proposals.
Meanwhile, the Obama administration is busy promoting the junky, risky mortgages that fueled the housing bubble, showing that it has learned nothing from history. One result is that the Federal Housing Administration, which is making many such loans, has gone into a “nose dive” and may need a multibillion-dollar taxpayer bailout, reports the Washington Post.
Obama wants to create a bureaucracy called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.” The Community Reinvestment Act was a key contributor to the financial crisis. Yet Obama’s plan would empower the CFPA to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.
But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”
Worse, Obama’s plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney Frank, and it expands the reach of regulations that have been used by left-wing groups to extort pay-offs from banks.
Recently, the administration got rid of the inspector general for Fannie Mae and Freddie Mac, after making Freddie Mac run up $30 billion in losses from the Obama administration’s mortgage bailouts, which bailed out even high-income borrowers who irresponsibly mismanaged their finances. Earlier, Obama fired an inspector general, Gerald Walpin, who uncovered misuse of funds by a prominent Obama backer, smearing the inspector general with allegations that turned out to be false.