DOBBS: Well one of the groups at the center of this financial crisis is a so-called c

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  1. The Paperboy

    The Paperboy Times Square

    Aug 26, 2008
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    DOBBS: Well one of the groups at the center of this financial crisis is a so-called community activist group known as ACORN. In point of fact, ACORN is a left wing special interest group now under investigation for embezzlement, voter fraud and providing mortgages to illegal aliens among other things.

    The group ACORN lobbied Congress for years to allow more of those risky mortgages that in part led to this crisis. And now, ACORN stands to reap hundreds of millions of dollars from a government bailout of Wall Street. Lisa Sylvester has our report.



    LISA SYLVESTER, CNN CORRESPONDENT (voice-over): ACORN, the Association of Community Organizations for Reform Now rallied in front of the Miami Federal Reserve Bank. The group is pointing fingers at Wall Street for causing the financial meltdown. But critics say this community activist group shares the blame.

    TOM DILORENZO, ECONOMICS PROF., LOYOLA COLLEGE: They've always lobbied Congress to do everything they could to make more and more or force banks to make more and more loans to low and moderate income people, which is a very noble-sounding goal. But unfortunately they have contributed to the financial ruination of thousands of low income families.

    SYLVESTER: It goes back to something known as the Community Reinvestment Act that passed in 1977. The law ordered banks to make loans to low and moderate income people. The Consumer Rights League says ACORN stepped in and used that law to pressure banks to lend to sub prime borrowers, even those who couldn't demonstrate the capability to pay back the loan.

    JAMES TERRY, CONSUMER RIGHTS LEAGUE: Back in the early '90s they would stage protests at banks that, you know, they sued them for red lining. They (INAUDIBLE) engaged them in legal action.

    SYLVESTER: Enter deregulation in the '90's then Fannie Mae and Freddie Mac began purchasing these mortgages and selling them to private investors. And the sub prime market took off. Former Clinton administration official Franklin Raines, who ran Fannie Mae amassed $90 million in six year he ran Fannie. Homeownership was up which pleased groups like ACORN and Wall Street made a ton of money until home prices started falling. But ACORN says it's not to blame. It's all about greed.

    AUSTIN KING, ACORN: When you look at all the bad sub prime loans that were made in the last five years, three out of four of them were made by institutions that are not governed by the CRA, so there's no way you can blame the CRA on 75 percent of the sub prime loans that were made in the last five years.


    SYLVESTER: And ACORN which calls itself the nation's largest grassroots organization of low and moderate income families, has come under fire for other issues. At least five states have opened investigations into its voter registration drive. And ACORN employees have been convicted of voter fraud. Still, this group, as you mentioned, stood to benefit from the bailout deal and part of any profit realized from the sale of troubled assets were to go into a fund and that money would be distributed to low income housing advocacy groups including ACORN, Lou.

    DOBBS: Now think about this, in the midst of this -- you know everyone talking about a clean bill and the Democratic leadership, let's be clear. This is a straightforward deal for ACORN and other groups, left wing groups, set up by the Democratic leadership of Congress. They're not interested in the bailout per se. They want to spread this out and many people believe that this bailout in part is dear to the Democratic leadership because they want to advance a social agenda here as much as much as an economic bailout of Wall Street.

    SYLVESTER: Yeah, Lou, in fact what they did is in prior legislation they actually created these two funds. And now essentially what thy were going to do is try to use this bailout to fund and put money in those funds in order to benefit groups like ACORN and in order to advance some other causes as you mentioned including their voter registration drive, Lou.

    DOBBS: It's -- this is pitiful in the fact that, of course, this Congress is fully supportive of this nonsense is all the more disgusting, so voters right now, all of us as citizens have a lot to be disgusted with on Capitol Hill. Thank you very much, Lisa -- Lisa Sylvester reporting.

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