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Thread: kurtz:ACORN at root of financial mess

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    kurtz:ACORN at root of financial mess

    This is a rush transcript from "America's Election HQ," October 9, 2008.

    HEAHTER NAUERT, HOST: Part of what got us in to this entirely mess is Fannie and Freddie Mac and the fiasco, politicians, of course, all blaming one another. Barack Obama pointing the finger away from himself, but my next guest says that group, ACORN, that we were just talking about a moment ago, a group that has endorsed Obama for president, is at the root of this big financial mess.

    Now, ACORN is the same group that's being investigated for allegations of voter fraud, in states across the country.

    Here to explain this right now is Stanley Kurtz. He's a senior fellow at the Ethics and Public Policy Institute.

    Hi there, Stanley.

    So explain to us the connection between ACORN and the subprime mess that got us into this big economic mess to begin with.

    STANLEY KURTZ, ETHICS & PUBLIC POLICY INSTITUTE: ACORN is a group of very radical community organizers. They have been very strongly supported by Barack Obama, although he sometimes likes to deny that connection. Obama has channeled the funds to ACORN from various foundations he's been on. He's done training for ACORN of their leaders.

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    And what ACORN does is they try to intimidate banks into giving these high-risk loans to low-credit customers. This is what they did for years, especially in the late '80s and early '90s.

    NAUERT: What do mean? What kind of stuff did these ACORN activists do to try to get banks to lend money to people who are in the subprime markets?

    KURTZ: They would flood protestors into the lobbies of banks, scare away customers, they would send protestors to the homes of bankers, they would break into private offices of bankers to scare them, and they would file complaints under something called the Community Reinvestment Act, which is a law that ACORN used to try to force these banks to make these high-risk loans.

    NAUERT: Now, on the other hand, though, some of these banks did want to get into the subprime market, because they could make higher margins that way. What about that?

    KURTZ: In the early '90s, that wasn't happening. The banks were resisting ACORN at that early point. And what happened at that point was that ACORN realized that they would never bring the banks around to these high-risk loans unless it got Fannie and Freddie in on the game, because the banks would say hey, we can only make that so many of these risky loans to you because Fannie and Freddie won't buy them. They have very high credit standards.

    So, ACORN went its Washington lobbyists, who put pressure on its Democratic allies in Congress, and that's how Fannie and Freddie got their credit standards changed and really watered down so tremendously. Then everyone said, oh, we can make a lot of money at this, but what really started the contagion of these bad loans was the pressure from ACORN and Democrats on to Fannie and Freddie.

    NAUERT: Now, we have heard a lot about from the Democrats on the Hill who they didn't fully investigate Fannie and Freddie and lots of people are upset about that. But we haven't really heard this angle at all about ACORN going into the banks and say, lower your standards, give people who can't afford these homes, give them loans," and bring us to this point.

    So what do we do now? ACORN is getting a bunch of money from the federal government under the housing bill that was signed into law by the president and passed by the Democratic Congress last summer.

    KURTZ: Well, I think the outcome of the election is going to make a huge difference as far as that goes. If McCain comes in, I think ACORN is going to get seriously investigated. And if Barack Obama comes in, then they've got one of their best friends in the world as president and I think they're going to be in gravy.

    NAUERT: All right. Stanley Kurtz, we're going to have to leave it there. You've been following the ACORN angle for quite some time, often writing for the "Wall Street Journal". Thanks a lot. And we'll keep an eye out for any of the work you got going on. Thanks a lot.

    KURTZ: Thanks, Heather.

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    Mar 2006
    these "high risk" bond were never fully funded.


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