Sticky: Obama Taking Suspicious Donations

Ξ October 29th, 2008 | → 0 Comments | ∇ 2008 Presidential Race, Main |

Obama Accepting Untraceable Donations

Contributions Reviewed After Deposits

By Matthew Mosk

Washington Post Staff Writer

Wednesday, October 29, 2008; A02

Sen. Barack Obama’s presidential campaign is allowing donors to use largely untraceable prepaid credit cards that could potentially be used to evade limits on how much an individual is legally allowed to give or to mask a contributor’s identity, campaign officials confirmed.

Faced with a huge influx of donations over the Internet, the campaign has also chosen not to use basic security measures to prevent potentially illegal or anonymous contributions from flowing into its accounts, aides acknowledged. Instead, the campaign is scrutinizing its books for improper donations after the money has been deposited.

The Obama organization said its extensive review has ensured that the campaign has refunded any improper contributions, and noted that Federal Election Commission rules do not require front-end screening of donations.

In recent weeks, questionable contributions have created headaches for Obama’s accounting team as it has tried to explain why campaign finance filings have included itemized donations from individuals using fake names, such as Es Esh or Doodad Pro. Those revelations prompted conservative bloggers to further test Obama’s finance vetting by giving money using the kind of prepaid cards that can be bought at a drugstore and cannot be traced to a donor.

The problem with such cards, campaign finance lawyers said, is that they make it impossible to tell whether foreign nationals, donors who have exceeded the limits, government contractors or others who are barred from giving to a federal campaign are making contributions.

“They have opened the floodgates to all this money coming in,” said Sean Cairncross, chief counsel to the Republican National Committee. “I think they’ve made the determination that whatever money they have to refund on the back end doesn’t outweigh the benefit of taking all this money upfront.”

The Obama campaign has shattered presidential fundraising records, in part by capitalizing on the ease of online giving. Of the $150 million the senator from Illinois raised in September, nearly $100 million came in over the Internet.

Lawyers for the Obama operation said yesterday that their “extensive back-end review” has carefully scrubbed contributions to prevent illegal money from entering the operation’s war chest. “I’m pretty sure if I took my error rate and matched it against any other campaign or comparable nonprofit, you’d find we’re doing very well,” said Robert Bauer, a lawyer for the campaign. “I have not seen the McCain compliance staff ascending to heaven on a cloud.”

The Obama team’s disclosures came in response to questions from The Washington Post about the case of Mary T. Biskup, a retired insurance manager from Manchester, Mo., who turned up on Obama’s FEC reports as having donated $174,800 to the campaign. Contributors are limited to giving $2,300 for the general election.

Biskup, who had scores of Obama contributions attributed to her, said in an interview that she never donated to the candidate. “That’s an error,” she said. Moreover, she added, her credit card was never billed for the donations, meaning someone appropriated her name and made the contributions with another card.

When asked whether the campaign takes steps to verify whether a donor’s name matches the name on the credit card used to make a payment, Obama’s campaign replied in an e-mail: “Name-matching is not a standard check conducted or made available in the credit card processing industry. We believe Visa and MasterCard do not even have the ability to do this.

“Instead, the campaign does a rigorous comprehensive analysis of online contributions on the back end of the transaction to determine whether a contribution is legitimate.”

Juan Proaño, whose technology firm handled online contributions for John Edwards’s presidential primary campaign, and for John F. Kerry’s presidential campaign and the Democratic National Committee in 2004, said it is possible to require donors’ names and addresses to match those on their credit card accounts. But, he said, some campaigns are reluctant to impose that extra layer of security.

“Honestly, you want to have the least amount of hurdles in processing contributions quickly,” Proaño said.

 

Sticky: Obama Marxist Desires Exposed

Ξ October 27th, 2008 | → 0 Comments | ∇ 2008 Presidential Race, Main |

 

Obama’s Anti-American Afrocentrist views

Ξ October 15th, 2008 | → 0 Comments | ∇ Main |

Wright 101

Obama funded extremist Afrocentrists who shared Rev. Wright’s anti-Americanism

By Stanley Kurtz

It looks like Jeremiah Wright was just the tip of the iceberg. Not only did Barack Obama savor Wright’s sermons, Obama gave legitimacy — and a whole lot of money — to education programs built around the same extremist anti-American ideology preached by Reverend Wright. And guess what? Bill Ayers is still palling around with the same bitterly anti-American Afrocentric ideologues that he and Obama were promoting a decade ago. All this is revealed by a bit of digging, combined with a careful study of documents from the Chicago Annenberg Challenge, the education foundation Obama and Ayers jointly led in the late 1990s.

John McCain, take note. Obama’s tie to Wright is no longer a purely personal question (if it ever was one) about one man’s choice of his pastor. The fact that Obama funded extremist Afrocentrists who shared Wright’s anti-Americanism means that this is now a matter of public policy, and therefore an entirely legitimate issue in this campaign.

African Village

In the winter of 1996, the Coalition for Improved Education in [Chicago’s] South Shore (CIESS) announced that it had received a $200,000 grant from the Chicago Annenberg Challenge. That made CIESS an “external partner,” i.e. a community organization linked to a network of schools within the Chicago public system. This network, named the “South Shore African Village Collaborative” was thoroughly “Afrocentric” in orientation. CIESS’s job was to use a combination of teacher-training, curriculum advice, and community involvement to improve academic performance in the schools it worked with. CIESS would continue to receive large Annenberg grants throughout the 1990s.

The South Shore African Village Collaborative (SSAVC) was very much a part of the Afrocentric “rites of passage movement,” a fringe education crusade of the 1990s. SSAVC schools featured “African-Centered” curricula built around “rites of passage” ceremonies inspired by the puberty rites found in many African societies. In and of themselves, these ceremonies were harmless. Yet the philosophy that accompanied them was not. On the contrary, it was a carbon-copy of Jeremiah Wright’s worldview.

Rites of Passage

To learn what the rites of passage movement was all about, we can turn to a sympathetic 1992 study published in the Journal of Negro Education by Nsenga Warfield-Coppock. In that article, Warfield-Coppock bemoans the fact that public education in the United States is shaped by “capitalism, competitiveness, racism, sexism and oppression.” According to Warfield-Coppock, these American values “have confused African American people and oriented them toward American definitions of achievement and success and away from traditional African values.” American socialization has “proven to be dysfuntional and genocidal to the African American community,” Warfield-Coppock tells us. The answer is the adolescent rites of passage movement, designed “to provide African American youth with the cultural information and values they would need to counter the potentially detrimental effects of a Euro-centrically oriented society.”

The adolescent rites of passage movement that flowered in the 1990s grew out of the “cultural nationalist” or “Pan-African” thinking popular in radical black circles of the 1960s and 1970s. The attempt to create a virtually separate and intensely anti-American black social world began to take hold in the mid-1980s in small private schools, which carefully guarded the contents of their controversial curricula. Gradually, through external partners like CIESS, the movement spread to a few public schools. Supporters view these programs as “a social and cultural ‘inoculation’ process that facilitates healthy, African-centered development among African American youth and protects them against the ravages of a racist, sexist, capitalist, and oppressive society.”

We know that SSAVC was part of this movement, not only because their Annenberg proposals were filled with Afrocentric themes and references to “rites of passage,” but also because SSAVC’s faculty set up its African-centered curriculum in consultation with some of the most prominent leaders of the “rites of passage movement.” For example, a CIESS teacher conference sponsored a presentation on African-centered curricula by Jacob Carruthers, a particularly controversial Afrocentrist.

Jacob Carruthers

Like other leaders of the rites of passage movement, Carruthers teaches that the true birthplace of world civilization was ancient “Kemet” (Egypt), from which Kemetic philosophy supposedly spread to Africa as a whole. Carruthers and his colleagues believe that the values of Kemetic civilization are far superior to the isolating and oppressive, ancient Greek-based values of European and American civilization. Although academic Egyptologists and anthropologists strongly reject these historical claims, Carruthers dismisses critics as part of a white supremacist conspiracy to hide the truth of African superiority.

Carruthers’s key writings are collected in his book, Intellectual Warfare. Reading it is a wild, anti-American ride. In his book, we learn that Carruthers and his like-minded colleagues have formed an organization called the Association for the Study of Classical African Civilizations (ASCAC), which takes as its mission the need to “dismantle the European intellectual campaign to commit historicide against African peoples.” Carruthers includes “African-Americans” within a group he would define as simply “African.” When forced to describe a black person as “American,” Carruthers uses quotation marks, thus indicating that no black person can be American in any authentic sense. According to Carruthers, “The submission to Western civilization and its most outstanding offspring, American civilization, is, in reality, surrender to white supremacy.”

Carruthers’s goal is to use African-centered education to recreate a separatist universe within America, a kind of state-within-a-state. The rites of passage movement is central to the plan. Carruthers sees enemies on every part of the political spectrum, from conservatives, to liberals, to academic leftists, all of whom reject advocates of Kemetic civilization, like himself, as dangerous and academically irresponsible extremists. Carruthers sees all these groups as deluded captives of white supremacist Eurocentric culture. Therefore the only safe place for Africans living in the United States (i.e. American blacks) is outside the mental boundaries of our ineradicably racist Eurocentric civilization. As Carruthers puts it: “…some of us have chosen to reject the culture of our oppressors and recover our disrupted ancestral culture.” The rites of passage movement is a way to teach young Africans in the United States how to reject America and recover their authentic African heritage.

America as Rape

Carruthers admits that Africans living in America have already been shaped by Western culture, yet compares this Americanization process to rape: “We may not be able to get our virginity back after the rape, but we do not have to marry the rapist….” In other words, American blacks (i.e. Africans) may have been forcibly exposed to American culture, but that doesn’t mean they need to accept it. The better option, says Carruthers, is to separate out and relearn the wisdom of Africa’s original Kemetic culture, embodied in the teachings of the ancient wise man, Ptahhotep (an historical figure traditionally identified as the author of a Fifth Dynasty wisdom book). Anything less than re-Africanization threatens the mental, and even physical, genocide of Africans living in an ineradicably white supremacist United States.

Carruthers is a defender of Leonard Jeffries, professor in the department of black studies at City College in Harlem, infamous for his black supremacist and anti-Semitic views. Jeffries sees whites as oppressive and violent “ice people,” in contrast to peaceful and mutually supportive black “sun people.” The divergence says Jeffries, is attributable to differing levels of melanin in the skin. Jeffries also blames Jews for financing the slave trade. Carruthers defends Jeffries and excoriates the prestigious black academics Carruthers views as traitorous for denouncing their African brother, Jeffries. Carruthers’s vision of the superior and peaceful Kemetic philosophy of Ptahhotep triumphing over Greco-Euro-American-white culture obviously parallels Jeffries’ opposition between ice people and sun people.

More of Carruthers’s education philosophy can be found in his newsletter, The Kemetic Voice. In 1997, for example, at the same time Carruthers was advising SSAVC on how to set up an African-centered curriculum, he praised the decision of New Orleans’ School Board to remove the name of George Washington from an elementary school. Apparently, some officials in New Orleans had decided that nobody who held slaves should have a school named after him. Carruthers touted the name-change as proof that his African-centered perspective was finally having an effect on public policy. At the demise of George Washington School, Carruthers crowed: “These events remind us of how vast the gulf is that separates the Defenders of Western Civilization from the Champions of African Civilization.”

According to Chicago Annenberg Challenge records, Carruthers’s training session on African-centered curricula for SSAVC teachers was a huge hit: “As a consciousness raising session, it received rave reviews, and has prepared the way for the curriculum readiness survey….” These teacher-training workshops were directly funded by the Chicago Annenberg Challenge. Another sure sign of the ideological cast of SSAVC’s curriculum can be found in Annenberg documents noting that SSAVC students are taught the wisdom of Ptahhotep. Carruthers’s concerns about “menticide” and “genocide” at the hand of America’s white supremacist system seem to be echoed in an SSAVC document that says: “Our children need to understand the historical context of our struggles for liberation from those forces that seek to destroy us.”

When Jeremiah Wright turned toward African-centered thinking in the late 1980s and early 1990s (the period when, attracted by Wright’s African themes, Barack Obama first became a church member), many prominent thinkers from Carruthers’s Association for the Study of Classical African Civilizations were invited to speak at Trinity United Church of Christ, Carruthers himself included. We hear echoes of Carruthers’s work in Wright’s distinction between “right brained” Africans and “left brained” Europeans, in Wright’s fears of U.S. government-sponsored genocide against American blacks, and in Wright’s embittered attacks on America’s indelibly white-supremacist history. In Wright’s Trumpet Newsmagazine, as in Carruthers’s own writings, blacks are often referred to as “Africans living in the diaspora” rather than as Americans.

Asa Hilliard

Chicago Annenberg Challenge records also indicate that SSAVC educators invited Asa Hilliard, a pioneer of African-centered curricula and a close colleague of Carruthers, to offer a keynote address at yet another Annenberg-funded teacher training session. Hilliard’s ties to Wright run still deeper than Carruthers’s. A close Wright mentor and friend, Hilliard died in 2007 while on a trip to Kemet (Egypt) with Wright and members of Wright’s congregation. Hillard was scheduled to deliver several lectures to the congregants, and to speak at a meeting of the Association for the Study of Classical African Civilization, which he co-founded with Carruthers and other “African-centered” scholars. On that last trip, Hilliard accepted an appointment to the board of Wright’s new elementary school, Kwame Nkrumah Academy. Speaking of the need for such a school, Wright had earlier said, “We need to educate our children to the reality of white supremacy.” (For more on Wright’s Afrocentric school, see “Jeremiah Wright’s ‘Trumpet.’”)

Wright delivered the eulogy at Hilliard’s memorial service, with prominent members of ASCAC in the audience. To commemorate Hilliard, a special, two-cover double issue of Wright’s Trumpet Newsmagazine was published, with a picture of Hilliard on one side, and a picture of Louis Farrakhan on the other (in celebration of a 2007 award Farrakhan received from Wright). In short, the ties between Wright and Hilliard could hardly have been closer. Clearly, then, Wright’s own educational philosophy was mirrored at the Annenberg-funded SSAVC, which sought out Hilliard’s and Carruthers’s counsel to construct its curriculum.

Perhaps inadvertently, Wright’s eulogy for Hilliard actually established the fringe nature of his favorite African-centered scholars. In his tribute, Wright stressed how intensely “white Egyptologists recoiled at the very notion of everything Asa taught.” As Wright himself made plain, it seems virtually impossible to find respectable scholars of any political stripe who approve of the extremist anti-American version of Afrocentrism promoted by Hilliard and Carruthers.

Ayers’s Pals

An important exception to the rule is Bill Ayers himself, who not only worked with Obama to fund groups like this at the Chicago Annenberg Challenge, but who is still “palling around” with the same folks. Discretely waiting until after the election, Bill Ayers and his wife, and fellow former terrorist, Bernardine Dohrn plan to release a book in 2009 entitled Race Course Against White Supremacy. The book will be published by Third World Press, a press set up by Carruthers and other members of the ASCAC. Representatives of that press were prominently present for Wright’s eulogy at Asa Hilliard’s memorial service. Less than a decade ago, therefore, when it came to education issues, Barack Obama, Bill Ayers, and Jeremiah Wright were pretty much on the same page.

Obama’s Knowledge

Given the precedent of his earlier responses on Ayers and Wright, Obama might be inclined to deny personal knowledge of the educational philosophy he was so generously funding. Such a denial would not be convincing. For one thing, we have evidence that in 1995, the same year Obama assumed control of the Chicago Annenberg Challenge, he publicly rejected “the unrealistic politics of integrationist assimilation,” a stance that clearly resonates with both Wright and Carruthers. (See “No Liberation.”)

And as noted, Wright had invited Carruthers, Hilliard, and like-minded thinkers to address his Trinity congregants. Wright likes to tick off his connections to these prominent Afrocentrists in sermons, and Obama would surely have heard of them. Reading over SSAVC’s Annenberg proposals, Obama could hardly be ignorant of what they were about. And if by some chance Obama overlooked Hilliard’s or Carruthers’s names, SSAVC’s proposals are filled with references to “rites of passage” and “Ptahhotep,” dead giveaways for the anti-American and separatist ideological concoction favored by SSAVC.

We know that Obama did read the proposals. Annenberg documents show him commenting on proposal quality. And especially after 1995, when concerns over self-dealing and conflicts of interest forced the Ayers-headed “Collaborative” to distance itself from monetary issues, all funding decisions fell to Obama and the board. Significantly, there was dissent within the board. One business leader and experienced grant-smith characterized the quality of most Annenberg proposals as “awful.” (See “The Chicago Annenberg Challenge: The First Three Years,” p. 19.) Yet Obama and his very small and divided board kept the money flowing to ideologically extremist groups like the South Shore African Village Collaborative, instead of organizations focused on traditional educational achievement.

As if the content of SSAVC documents wasn’t warning enough, their proposals consistently misspelled “rites of passage” as “rights of passage,” hardly an encouraging sign from a group meant to improve children’s reading skills. The Chicago Annenberg Challenge’s own evaluators acknowledged that Annenberg-aided schools showed no improvement in achievement scores. Evaluators attributed that failure, in part, to the fact that many of Annenberg’s “external partners” had little educational expertise. A group that puts its efforts into Kwanzaa celebrations and half-baked history certainly fits that bill, and goes a long way toward explaining how Ayers and Obama managed to waste upwards of $150 million without improving student achievement.

However he may seek to deny it, all evidence points to the fact that, from his position as board chair of the Chicago Annenberg Challenge, Barack Obama knowingly and persistently funded an educational project that shared the extremist and anti-American philosophy of Jeremiah Wright. The Wright affair was no fluke. It’s time for McCain to say so.

— Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center.

 

Obama’s 95% Illusion

Ξ October 14th, 2008 | → 0 Comments | ∇ Main |

Obama’s 95% Illusion

It depends on what the meaning of ‘tax cut’ is.

One of Barack Obama’s most potent campaign claims is that he’ll cut taxes for no less than 95% of “working families.” He’s even promising to cut taxes enough that the government’s tax share of GDP will be no more than 18.2% — which is lower than it is today.

It’s a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he’s also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of “tax cut.”

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:

- A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.

- A $4,000 tax credit for college tuition.

- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).

- A “savings” tax credit of 50% up to $1,000.

- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.

- A child care credit of 50% up to $6,000 of expenses a year.

- A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.

Here’s the political catch. All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.

The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as “tax credits,” the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.

The political left defends “refundability” on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.

It is also true that John McCain proposes a refundable tax credit — his $5,000 to help individuals buy health insurance. We’ve written before that we prefer a tax deduction for individual health care, rather than a credit. But the big difference with Mr. Obama is that Mr. McCain’s proposal replaces the tax subsidy for employer-sponsored health insurance that individuals don’t now receive if they buy on their own. It merely changes the nature of the tax subsidy; it doesn’t create a new one.

There’s another catch: Because Mr. Obama’s tax credits are phased out as incomes rise, they impose a huge “marginal” tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.

Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of “making work pay,” but in practice they can be a disincentive to working harder, especially if you’re a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery — among many — of the McCain campaign is why it has allowed Mr. Obama’s 95% illusion to go unanswered.

 

Marxist Obama Wants to “Spread the Wealth”

Ξ October 14th, 2008 | → 1 Comments | ∇ Main |

“It’s not that I want to punish your success. I just want to make sure that everybody that is behind you, that they have a chance for success too. I think that when you spread the wealth around it’s good for everybody.” — Barack Obama

 

ACORN & Obama – Planting Seeds of Disaster

Ξ October 8th, 2008 | → 0 Comments | ∇ Main |

Planting Seeds of Disaster

ACORN, Barack Obama, and the Democratic Party

By Stanley Kurtz

‘You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.

Militant ACORN

At the time, however, that 1995 Chicago newspaper article represented something of a triumph for Barack Obama. That same year, as a director at Chicago’s Woods Fund, Obama was successfully pushing for a major expansion of assistance to ACORN, and sending still more money ACORN’s way from his post as board chair of the Chicago Annenberg Challenge. Through both funding and personal-leadership training, Obama supported ACORN. And ACORN, far more than we’ve recognized up to now, had a major role in precipitating the subprime crisis.

I’ve already told the story of Obama’s close ties to ACORN leader Madeline Talbott, who personally led Chicago ACORN’s campaign to intimidate banks into making high-risk loans to low-credit customers. Using provisions of a 1977 law called the Community Reinvestment Act (CRA), Chicago ACORN was able to delay and halt the efforts of banks to merge or expand until they had agreed to lower their credit standards — and to fill ACORN’s coffers to finance “counseling” operations like the one touted in that Sun-Times article. This much we’ve known. Yet these local, CRA-based pressure-campaigns fit into a broader, more disturbing, and still under-appreciated national picture. Far more than we’ve recognized, ACORN’s local, CRA-enabled pressure tactics served to entangle the financial system as a whole in the subprime mess. ACORN was no side-show. On the contrary, using CRA and ties to sympathetic congressional Democrats, ACORN succeeded in drawing Fannie Mae and Freddie Mac into the very policies that led to the current disaster.

In one of the first book-length scholarly studies of ACORN, Organizing Urban America, Rutgers University political scientist Heidi Swarts describes this group, so dear to Barack Obama, as “oppositional outlaws.” Swarts, a strong supporter of ACORN, has no qualms about stating that its members think of themselves as “militants unafraid to confront the powers that be.” “This identity as a uniquely militant organization,” says Swarts, “is reinforced by contentious action.” ACORN protesters will break into private offices, show up at a banker’s home to intimidate his family or pour protesters into bank lobbies to scare away customers, all in an effort to force a lowering of credit standards for poor and minority customers. According to Swarts, long-term ACORN organizers “tend to see the organization as a solitary vanguard of principled leftists…the only truly radical community organization.”

ACORN’s Inside Strategy

Yet ACORN’s entirely deserved reputation for militance is balanced by its less-well-known “inside strategy.” ACORN has long employed Washington-based lobbyists who understand very well how the legislative game is played. ACORN’s national lobbyists may encourage and benefit from the militant tactics of their base, but in the halls of congress they play the game with smooth sophistication. The untold story of ACORN’s central role in the financial meltdown is about the one-two punch to the banking system administered by this outside/inside strategy.

Critics of the notion that CRA had a major impact on the subprime crisis ask how a law passed in 1977 could have caused a crisis in 2008? The answer has a lot to do with ACORN — and the critical years of 1990-1995. While the 1977 Community Reinvestment Act did call on banks to increase lending in poor and minority neighborhoods, its exact requirements were vague, and therefore open to a good deal of regulatory interpretation. Banks merger or expansion plans were rarely held up under CRA until the late 1980s, when ACORN perfected its technique of filing CRA complaints in tandem with the sort of intimidation tactics perfected by that original “community organizer” (and Obama idol), Saul Alinsky.

At first, ACORN’s anti-bank actions were relatively few in number. However, under a provision of the 1989 savings and loan bailout pushed by liberal Democratic legislators, like Massachusetts Congressman Joseph P. Kennedy, lenders were required to compile public records of mortgage applicants by race, gender, and income. Although the statistics produced by these studies were presented in highly misleading ways, groups like ACORN were able to use them to embarrass banks into lowering credit standards. At the same time, a wave of banking mergers in the early 1990’s provided an opening for ACORN to use CRA to force lending changes. Any merger could be blocked under CRA, and once ACORN began systematically filing protests over minority lending, a formerly toothless set of regulations began to bite.

ACORN’s efforts to undermine credit standards in the late 1980s taught it a valuable lesson. However much pressure ACORN put on banks to lower credit standards, tough requirements in the “secondary market” run by Fannie Mae and Freddie Mac served as a barrier to change. Fannie Mae and Freddie Mac buy up mortgages en masse, bundle them, and sell them to investors on the world market. Back then, Fannie and Freddie refused to buy loans that failed to meet high credit standards. If, for example, a local bank buckled to ACORN pressure and agreed to offer poor or minority applicants a 5-percent down-payment rate, instead of the normal 10-20 percent, Fannie and Freddie would refuse to buy up those mortgages. That would leave all the risk of these shaky loans with the local bank. So again and again, local banks would tell ACORN that, because of standards imposed by Fannie and Freddie, they could lower their credit standards by only a little.

So the eighties taught ACORN that a high-pressure, Alinskyite outside strategy wouldn’t be enough. Their Washington lobbyists would have to bring inside pressure on the government to undercut credit standards at Fannie Mae and Freddie Mac. Only then would local banks consider making loans available to customers with bad credit histories, low wages, virtually nothing in the bank, and even bankruptcies on record.

Democrats and ACORN

As early as 1987, ACORN began pressuring Fannie and Freddie to review their standards, with modest results. By 1989, ACORN had lured Fannie Mae into the first of many “pilot projects” designed to help local banks lower credit standards. But it was all small potatoes until the serious pressure began in early 1991. At that point, Democratic Senator Allan Dixon convened a Senate subcommittee hearing at which an ACORN representative gave key testimony. It’s probably not a coincidence that Dixon, like Obama, was an Illinois Democrat, since Chicago has long been a stronghold of ACORN influence.

Dixon gave credibility to ACORN’s accusations of loan bias, although these claims of racism were disputed by Missouri Republican, Christopher Bond. ACORN’s spokesman strenuously complained that his organization’s efforts to relax local credit standards were being blocked by requirements set by the secondary market. Dixon responded by pressing Fannie and Freddie to do more to relax those standards — and by promising to introduce legislation that would ensure it. At this early stage, Fannie and Freddie walked a fine line between promising to do more, while protesting any wholesale reduction of credit requirements.

By July of 1991, ACORN’s legislative campaign began to bear fruit. As the Chicago Tribune put it, “Housing activists have been pushing hard to improve housing for the poor by extracting greater financial support from the country’s two highly profitable secondary mortgage-market companies. Thanks to the help of sympathetic lawmakers, it appeared…that they may succeed.” The Tribune went on to explain that House Democrat Henry Gonzales had announced that Fannie and Freddie had agreed to commit $3.5 billion to low-income housing in 1992 and 1993, in addition to a just-announced $10 billion “affordable housing loan program” by Fannie Mae. The article emphasizes ACORN pressure and notes that Fannie and Freddie had been fighting against the plan as recently as a week before agreement was reached. Fannie and Freddie gave in only to stave off even more restrictive legislation floated by congressional Democrats.

A mere month later, ACORN Housing Corporation president, George Butts made news by complaining to a House Banking subcommittee that ACORN’s efforts to pressure banks using CRA were still being hamstrung by Fannie and Freddie. Butts also demanded still more data on the race, gender, and income of loan applicants. Many news reports over the ensuing months point to ACORN as the key source of pressure on congress for a further reduction of credit standards at Fannie Mae and Freddie Mac. As a result of this pressure, ACORN was eventually permitted to redraft many of Fannie Mae and Freddie Mac’s loan guideline.

Clinton and ACORN

ACORN’s progress through 1992 depended on its Democratic allies. Whatever ACORN managed to squeeze out of the George H. W. Bush administration came under congressional pressure. With the advent of the Clinton administration, however, ACORN’s fortunes took a positive turn. Clinton Housing Secretary Henry Cisnersos pledged to meet monthly with ACORN representatives. For ACORN, those meetings bore fruit.

Another factor working in ACORN’s favor was that its increasing success with local banks turned those banks into allies in the battle with Fannie and Freddie. Precisely because ACORN’s local pressure tactics were working, banks themselves now wanted Fannie and Freddie to loosen their standards still further, so as to buy up still more of the high-risk loans they’d made at ACORN’s insistence. So by the 1993, a grand alliance of ACORN, national Democrats, and local bankers looking for someone to lessen the risks imposed on them by CRA and ACORN were uniting to pressure Fannie and Freddie to loosen credit standards still further.

At this point, both ACORN and the Clinton administration were working together to impose large numerical targets or “set asides” (really a sort of poor and minority loan quota system) on Fannie and Freddie. ACORN called for at least half of Fannie and Freddie loans to go to low-income customers. At first the Clinton administration offered a set-aside of 30 percent. But eventually ACORN got what it wanted. In early 1994, the Clinton administration floated plans for committing $1 trillion in loans to low- and moderate-income home-buyers, which would amount to about half of Fannie Mae’s business by the end of the decade. Wall Street Analysts attributed Fannie Mae’s willingness to go along with the change to the need to protect itself against still more severe “congressional attack.” News reports also highlighted praise for the change from ACORN’s head lobbyist, Deepak Bhargava.

This sweeping debasement of credit standards was touted by Fannie Mae’s chairman, chief executive officer, and now prominent Obama adviser James A. Johnson. This is also the period when Fannie Mae ramped up its pilot programs and local partnerships with ACORN, all of which became precedents and models for the pattern of risky subprime mortgages at the root of today’s crisis. During these years, Obama’s Chicago ACORN ally, Madeline Talbott, was at the forefront of participation in those pilot programs, and her activities were consistently supported by Obama through both foundation funding and personal leadership training for her top organizers.

Finally, in June of 1995, President Clinton, Vice President Gore, and Secretary Cisneros announced the administration’s comprehensive new strategy for raising home-ownership in America to an all-time high. Representatives from ACORN were guests of honor at the ceremony. In his remarks, Clinton emphasized that: “Our homeownership strategy will not cost the taxpayers one extra cent. It will not require legislation.” Clinton meant that informal partnerships between Fannie and Freddie and groups like ACORN would make mortgages available to customers “who have historically been excluded from homeownership.”

Disaster

In the end of course, Clinton’s plan cost taxpayers an almost unimaginable amount of money. And it was just around the time of his 1995 announcement that the Chicago papers started encouraging bad-credit customers with “dog-food” wages, little money in the bank, and even histories of bankruptcy to apply for home loans with the help of ACORN. At both the local and national levels, then, ACORN served as the critical catalyst, levering pressure created by the Community Reinvestment Act and pull with Democratic politicians to force Fannie Mae and Freddie Mac into a pattern of high-risk loans.

Up to now, conventional wisdom on the financial meltdown has relegated ACORN and the CRA to bit parts. The real problem, we’ve been told, lay with Fannie Mae and Freddie Mac. In fact, however, ACORN is at the base of the whole mess. ACORN used CRA and Democratic sympathizers to entangle Fannie and Freddie and the entire financial system in a disastrous disregard of the most basic financial standards. And Barack Obama cut his teeth as an organizer and politician backing up ACORN’s economic madness every step of the way.

— Stanley Kurtz is a senior fellow at the Ethics and Public Policy Institute.