ACORN & Center For Responsible Lending: Subprime Culprits

Sharks that feed on banks

During the recent presidential election, an organization called the Association of Community Organizers for Reform Now (ACORN) grabbed more than its share of the headlines. Specifically, there have been allegations that ACORN has been involved in large-scale voter fraud (and here’s a road map).  But let’s focus on some of their even more prominent activities, and how they have had close ties with Self-Help Credit Union and the Center For Responsible Lending (CRL). It could easily be said that ACORN and the CRL have sided against the American taxpayer since day one.

For those of you who don’t know, ACORN is a consumer group that began after the Community Reinvestment Act (CRA) became official in 1977. Their stated goal since the beginning has been to combat redlining. However, what they have achieved over the years is to effectively convince lenders to relax their standards so that they can serve people with poor credit and little or no assets. According to the Wall Street Journal, ACORN and the CRA “laid the foundation for the house of cards built out of subprime loans.”

Lend… or else

According to the organization Rotten Acorn, the CRA “required banks to increase lending in low-income neighborhoods.” However, the terms of this requirement and how it would be enforced were vague. By the time of the  savings and loan bailouts of the 1980s, lenders had to compile records of their borrowers by income, race and gender. It was at this time that Self-Help, Inc. (the predecessor and current affiliate of the Center For Responsible Lending) began to compile stats to support ACORN’s charges of racism and discrimination on the part of lenders.

It was an effective political intimidation tool they had at their disposal, and ACORN and Self-Help used it well. By the early 1990s when the CRA was revised, ACORN could even pressure banks into lending to subprime borrowers. If lenders didn’t comply, ACORN had the authority to use the CRA to block applications for new bank branches, mergers and acquisitions. ACORN could shut down a banks’ expansion if they didn’t agree to cheap loans for high-risk clients who couldn’t likely pay back the mortgage loans they were taking.

“One of the earliest subprime lenders in the nation”

Martin Eakes, founder of Self-Help and president of the Center For Responsible Lending, put it best. “By offering mortgages to borrowers with battered or bad credit, Self-Help was, in fact, one of the earliest subprime lenders in the nation.”  So clearly, ACORN and the Center For Responsible Lending have had a close association over the years. Now they are going after their own government bailout dollars – much like the lenders Fannie Mae and Freddie Mac, which ACORN and the Center For Responsible lending helped bankrupt with their subprime lending pressure. And it’s all happening at the taxpayers’ expense!

If this weren’t enough to cast a shadow of doubt on the motivations of the Center For Responsible Lending, consider their support for an organization (ACORN) with such a checkered history. Furthermore, consider that ACORN has also been closely allied with Herbert Sandler, one of the granddaddies of the subprime debacle and a huge money man and board member for the Center For Responsible Lending. How can we believe that Martin Eakes and the Center For Responsible Lending have anything other than their own political agendas in mind? Clearly, their treatment of credit that created the subprime crisis and contributed largely to America’s current economic depression is irresponsible, to say the least.