Rep. Michele Bachmann (R-Minn.) explained to Glenn Beck on his TV show last night how the radical left-wing activist group ACORN uses the Community Reinvestment Act (CRA) to shake down banks.
The federal government, in effect, threatens banks into lending money to risky mortgage borrowers, Bachmann said. The CRA allowed groups such as ACORN to use the law to push banks into doing things they didn’t want to do.
CRA helped to change the way U.S. financial institutions operate. It didn’t cover all mortgages, but the law opened the door for community organizers to weaken lending standards. ACORN pressed hard for the legislation that forced them to take on riskier borrowers. To seek a race-based kind of social justice, CRA prohibited banks from restricting loans to more affluent, creditworthy markets, a business practice now known by the epithet “redlining.” The statute gave federal bureaucrats discretionary authority to make trouble for banks that failed to lend enough money to “underserved” minority communities.
After CRA took effect, ACORN and groups with similar goals entered the shakedown business. At one ACORN conference, Jesse Jackson urged an aggressive approach: “Why did Jesse James rob banks? Because that’s where the money was.” This megaphone-assisted panhandling intensified when the Clinton administration put the CRA on steroids. CRA allowed activists to blackmail lenders into handing out mortgages to people with little regard for their ability to keep up payments. Banks felt the heat from community organizers and CRA examiners and instead of fighting, they made loans they shouldn’t have made, and they paid out millions of dollars in protection money to ACORN and its brethren.
If banks refused to play ball with ACORN, they risked receiving a failing CRA report card from government bureaucrats. Said Bachmann:
We’ve uncovered data of banks all across the country that made these gifts of money to ACORN — equipment gifts — or partnered with ACORN in order to get a good rating so they’d get out from under the radar screen of the federal government; in other words, so they don’t get their interstate branch banks shut down or so that they could expand.
Now ACORN has joined forces with other leftist groups in an effort to expand the CRA. As an added bonus, ACORN will be able to receive federal funds next month when the current congressional ban on funding ACORN expires. (The ban is included in the continuing resolution that is funding the federal government pending passage of the fiscal 2010 spending legislation.)