Obama, ACORN And The Bailout

Obviously, there’s more to the breakdown in bailout negotiations than we are being told.  Sure, we know the salient details, but do we really know the pertinent ones?  Does the government seizure of Washington Mutual and it’s subsequent purchase by JP Morgan Chase have anything to do with anything?  What about this week’s earlier change in status of the country’s last two investment banks, Goldman Sachs and Morgan Stanley, to bank holding companies?  And how does the Association of Community Organizations for Reform Now figure into things?

Spero News (whoever they are) says ACORN has been involved in government since the Carter administration:

The Community Reinvestment Act (CRA) was given life during the Carter administration, and empowers four federal financial supervisory agencies to oversee the performance of financial institutions in meeting the credit needs of their entire community, including low- and moderate-income neighborhoods. Whenever an institution wants to make virtually any change in its business operation, such as merging, opening up a new branch, or getting into a new line of business, it must first prove to regulators that it has made ample loans to the government’s preferred borrowers, those in low- and middle-income neighborhoods who normally would not qualify for a loan. Lenders with low ratings can be fined by the government.

The Carter administration used tax dollars to fund numerous “community groups” that helped the government enforce the CRA by filing petitions against banks whose “cooperativeness” didn’t measure up, and sometimes stopping their efforts to expand their operations. Banks responded by giving money to the community groups and by making more loans. One of those organizations was the Association of Community Organizations for Reform Now (ACORN). An active associate of ACORN in the 90s was a young public-interest attorney named Barack Obama.

The Washington Post says ACORN and others are ticked about the bailout:

The Neighborhood Assistance Corp. of America, ACORN, NeighborWorks, the Center for Responsible Lending and the National Community Reinvestment Coalition, to name a few, were screaming about the subprime mess and predatory lending practices before it became prime-time news here and around the world.

These organizations long ago predicted that a crisis in the housing market would result in a staggering increase in foreclosures and cause the largest loss of personal net worth since the Great Depression.

Now these folks are seething because the proposed bailout of financial institutions fails to include any provisions to directly help the people at the center of this crisis. To fund the bailout, $700 billion of Treasury securities would be issued to finance the purchase of troubled mortgage assets.

Basically, these organizations want bankruptcy provisions:

Nonprofit leaders want any bailout bill to include a provision that would give bankruptcy judges the discretion to modify primary mortgages.

“This is an effective way of providing relief to homeowners at no cost to taxpayers,” AARP President Bill Novelli wrote in a letter to the leadership of the Senate Banking Committee and House Financial Services Committee.

If bankruptcy court judges could modify people’s mortgages, this might give homeowners leverage to compel lenders to restructure loans or face a forced modification in bankruptcy, said Bruce Marks, chief executive of the Neighborhood Assistance Corp. of America.

The Chicago Tribune reported on the 23rd that the bankruptcy issue could be a deal-breaker:

An area drawing the most furious lobbying is around Sen. Christopher Dodd’s desire to modify the bankruptcy law to allow courts to reduce homeowners’ mortgage debt, a practice called “cram downs” as in “we’ll let judges cram down the throats of lenders reductions in the housing loans they hold and thus their profits.”

Bankers successfully blocked such provisions from the bankruptcy reform law Congress passed in 2005 and ever since then have resisted consumer advocates’ attempts to get “cram downs” into federal law.

The blogosphere is alive with the news, supposedly mentioned by Lindsey Graham during an appearance on Greta van Sustern’s On the Record, but reported first by Michelle Malkin, that while such provisions may indeed be at the heart of the breakdown, seemingly, ACORN seeks more than that, and the Democrats seem willing to give it:

Just heard from several readers that Lindsay Grahamnesty told Fox that the Mother of All Bailouts includes a reported $100 million more in funding for the left-wing housing entitlement thugs and heavily tax-subsidized fraudsters at ACORN. Under the original bailout proposal, apparently, a large portion of any repayment of the $700 billion would go to Barack Obama’s good friends at ACORN with a smaller allocation to debt repayment. Readers heard him say it was 20 percent.

Stanley Kurtz reported on Obama’s ties to ACORN at the end of May, and No Quarter,  The American Thinker,  The Spero Forum, again, and Michelle Malkin, again, have all documented Obama’s relationship with the group.  The Nation says those ties are the reason they endorsed him.  Yet, just yesterday, MarketWatch reported on oversight hearing testimony regarding ACORN and corruption.

Could those ties be the reason nobody called Barack Obama to come help with the bailout negotiations until McCain, who was called by Democrats and Republicans alike, challenged President Bush to do so?  Exactly what dynamics are at play here?  This seems to cut deeper than any mere stunt, or even normal presidential political one-upsmanship.  Obviously, somebody with more journalistic expertise than I possess is going to have to do some digging and apply some clear, non-partisan analysis to give us a even hint of an answer, since I don’t understand why “cram down” provisions should, would, or could coincide with direct funding for ACORN.

I just hope somebody like that exists.

PUMA

Just Say No Deal