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"Acorn's a Creature of the CRA"



Steven Malanga (Manhattan Institute) reports at Real Clear Markets:

The Acorn scandal, in which amateur journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group.

Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks with contracts to act as mortgage counselors in low-income areas in return for dropping their protests against the banks. In one particularly lucrative deal, 14 major banks eager to put CRA protests behind them in 1993 signed an agreement to have Acorn administer a $55 million, 11-city lending program. It was precisely such agreements that helped turn Acorn from a network of small local groups into a national player. ...

The collapse of the mortgage market has put a major crimp in these endeavors. The proposed Congressional answer? An expansion of the CRA to nonbanking areas, so as get money flowing again to ACORN and its colleagues -- and noncoincidentally, to the urban political machines in which they constitute such a major force.

P.S. Bret Jacobson (PDF) on ACORN's provision of outsourcing services to unions ("strike support" "monthly retainer", etc.); Sol Stern, Forbes.

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Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Katherine Lazarski
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.