liar loans

“How ACORN Destroyed the Housing Market”

by Hans Bader on November 16, 2009

in Bailout Watch, Economy, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Sanctimony

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.

The mortgage crisis was also caused by the reckless government-sponsored mortgage giants (”GSEs”) Fannie Mae and Freddie Mac, and by federal affordable-housing mandates.

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.

ACORN Sues Whistleblowers for Exposing Its Wrongdoing in Scandal

by Hans Bader on September 24, 2009

in Deregulate to Stimulate, Healthcare, Legal, Personal Liberty, Politics as Usual, Privacy, Sanctimony

ACORN is now suing the whistleblowers who allegedly filmed it promoting illegal sexual activities for $2 million! And not just them, but also the conservative web site that made the video public! ACORN seeks an injunction to silence them — a classic example of an unconstitutional prior restraint.

That’s a flagrant violation of the First Amendment, but the lawsuit was filed in state court in Baltimore, where the judges are very liberal, so who knows if ACORN’s lawsuit will be dismissed. Even if it is, the lawsuit will cost the whistleblowers thousands of dollars in lawyers’ bills. The Baltimore City prosecutor has already expressed hostility to the whistleblowers who exposed ACORN’s wrongdoing, threatening to prosecute them under a state “privacy” law restricting audiotaping.

(Similar “privacy” laws in Massachusetts have been used to shield kidnappers calling in ransom demands, and police abusing motorists!).

I earlier discussed some of the First Amendment issues here. A commenter at National Review argued that the lawsuit is meritless even if you ignore the First Amendment.

The Supreme Court has held that privacy lawsuits, and lawsuits in general, can’t be based on protected speech, in cases like Bartnicki v. Vopper.  That principle was extended by today’s appeals court ruling in Snyder v. Phelps overturning a Maryland jury’s $5 million damage award for intrusion-upon-seclusion, and an earlier ruling limiting state audiotaping laws in Jean v. Massachusetts State Police (2007).

The IRS just ended its controversial relationship with ACORN, which earlier had its housing funds cut-off by Congress over a recent controversy, and is now embroiled in a tax evasion scandal.

ACORN has long received taxpayer money despite a history of financial fraud and voter registration fraud. ACORN helped spawn the mortgage crisis by promoting “liar loans.”

ACORN is a left-wing group that launched Obama’s career as a community organizer. He has long-standing ties to ACORN, and an ACORN affiliate received received $800,000 from Obama’s campaign. ACORN stands to profit greatly from Obama’s financial-regulation proposals, which would strengthen the Community Reinvestment Act (The Community Reinvestment Act is extremely harmful to banks and prudent lending, pressuring banks to make risky, low-income loans).

ACORN affiliates would also likely profit from Obama’s health-care plan, which contains subsidies for community organizers. (Obama’s health care plan would raise taxes, break promises, increase the deficit, destroy many inexpensive health-care plans, and take away important freedoms.)

Yet Another ACORN Scandal

by Hans Bader on September 23, 2009

in Healthcare, Legal, Politics as Usual, Sanctimony

ACORN, which had its housing funds cut-off by Congress over a recent scandal, is now embroiled in a tax-evasion scandal, reports the Washington Times.

ACORN has long received taxpayer money despite a history of financial fraud and voter registration fraud.  ACORN helped spawn the mortgage crisis by promoting “liar loans.”

ACORN is a left-wing group that launched Obama’s career as a community organizer.  He has long-standing ties to ACORN, and an ACORN affiliate received received $800,000 from Obama’s campaign.

ACORN stands to profit greatly from Obama’s financial-regulation proposals, which would strengthen the Community Reinvestment Act  (The Community Reinvestment Act is extremely harmful to banks and prudent lending, pressuring banks to make risky, low-income loans).  Its affiliates and related entities would also likely profit from Obama’s health-care plan.

Bailouts for Liars, Illegal Aliens, and Undeserved Bonuses

by Hans Bader on March 15, 2009 · 3 comments

in Bailout Watch, Economy, Employment, Labor, Legal, Politics as Usual, Stimulus to Nowhere

Insurance giant AIG, bailed out by taxpayers for $170 billion, is using taxpayer money to pay executives in the division that brought it to the brink of collapse millions of dollars in bonuses! (AIG may have hoped its donations to liberal politicians, such as $103,100 to Sen. Chris Dodd (D-CT) in 2008 alone, would shield it from scrutiny).

The Senate voted down an amendment by Jeff Sessions (R-AL) that would have kept federal stimulus money from hiring illegal aliens, resulting in up to 300,000 jobs being filled by illegal aliens rather than citizens.

In an unrecorded voice vote, the House of Representatives voted down a proposed amendment to keep people who lied on their loan applications from receiving federal bailout money. The vote was unrecorded so that liberal lawmakers in conservative districts (who camouflage themselves as supposedly-conservative “Blue Dog” Democrats) could hide their vote from their constituents. The stimulus package funds groups like ACORN, which helped spawn the mortgage crisis by promoting “liar loans,” and which has an extensive history of financial fraud and vote fraud.

Federal spending commitments for bailouts now exceed $8 trillion, including a “stimulus” package that the Congressional Budget Office admits will actually shrink the economy “in the long run,” and that guts the 1996 welfare reform law (contradicting Obama’s claims in his 2008 campaign ads that he supported welfare reform — even though he had fought to undermine welfare reform while in the Illinois legislature).

Law professor Ronald Rotunda, co-author of a treatise on constitutional law, doubts the constitutionality of the stimulus package’s “bypass” provisions.

Meanwhile, healthy banks that sold shares to the federal government only under pressure from the Treasury Department (which argued that they should accept federal money so that unhealthy banks also taking federal money would not thereby be stigmatized as a result) are being harassed by liberal lawmakers like Barney Frank (D-Mass.) for spending much smaller sums than AIG on deserving managers and employees, and for failing to make risky mortgage loans to people with bad credit.

Money is pouring into the Washington, DC area, as up to 250,000 new bureaucrats will be hired as a result of the explosion in federal spending (Obama has pushed through more spending in his first 60 days in office than Bush spent on the entire Iraq War, and federal deficits are at unprecedented levels, something that not even the proposed massive tax increases will fix).

(By the way, Washington, D.C. now has the highest AIDS rate in America — a rate of more than 3%, higher even than most of Africa, qualifying as a “generalized and severe epidemic.” Congress has plenary power over the District, but neglects its most basic oversight functions, resulting in a thoroughly incompetent D.C. city government).

Meanwhile, the economy faces a “litigation tax” from an explosion in lawsuits, as a result of recent changes in employment law, trial-lawyer earmarks in the stimulus package (such as HIPAA lawsuits), and a proliferation of products liability lawsuits resulting from anticipated anti-preemption bills in Congress, and the Supreme Court’s newfound reluctance (perhaps in response to liberal victories in the 2008 election) to limit runaway lawsuits in state courts.