[kg_veteran]

Originally Posted by Mavdog

I'm sure that there is no need to explain to you what redlining is....

acorn threstened banks that would not lend in inner city areas, which were predominate minority areas. there is a connection that these areas had lower income residents. these instances of redlining were based on pure discrimination.

Actually, redlining was a term that was coined in the Chicago area and referred to banks that would lend to low income whites but not middle income minorities. In other words, there was clear racial discrimination involved because they would lend money to a less qualified white borrower.

That's not what I'm talking about here. I'm talking about, as Stanley Kurtz put it, "ACORN’s campaign to intimidate banks into making high-risk loans to low-credit customers." From Kurtz:

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. link

did acorn threaten lawsuits if the bank would not lend to unquaified borrowers? that is the argument that you appear to make, and it is not supported by any facts. if you could produce any backup to support your assertion, let's see it.

See above. Also, see the following quotes from City Journal:

Then came the Community Reinvestment Act. Passed in 1977 to prompt banks to lend money in underserved communities, the CRA allowed community groups to file complaints that could hold up or even scuttle bank mergers. As one nonprofit umbrella group observed: "To avoid the possibility of a denied or delayed application, lending institutions have an incentive to make formal agreements with community organizations."


Acorn became among the most successful at exploiting the law, especially after the Clinton administration set up tough new CRA standards. In 1993 Acorn crafted a $55 million, 11-city lending program administered by it and financed by 14 major banks eager to avoid CRA woes. In 1998 Acorn activists disrupted Federal Reserve hearings on the proposed Citicorp merger with Travelers, waving red umbrellas, a corporate symbol of Travelers, and then later protested Citigroup's acquisition of Associates First Capital Corp. Eventually Citigroup signed an agreement to provide mortgages through Acorn counseling centers, including home loans to undocumented aliens in California. In 2000 a U.S. Senate subcommittee estimated that such CRA deals had directed at least $9.5 billion through nonprofits, making the CRA the second-most important funder of social advocacy groups next to the government itself. link

But if the CRA is now unnecessary, ACORN has found a use for it beyond wielding it as a propaganda tool to suggest that “redlining” still exists. ACORN has developed a lucrative niche as an “advisor” to banks seeking regulatory approvals. Thus we have J. P. Morgan & Company, the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN. This act of generosity and civic-mindedness came, interestingly, just as Morgan was asking bank regulators for approval of a merger with Chase Manhattan. Not to be outdone, Chase also decided to grant more than $200,000 to ACORN. link

So, yeah, I think the evidence shows that they extorted banks into both lowering their credit standards and paying them cash not to create legal problems for them related to proposed mergers.

the point that I have made is the lenders became more aggressive in making sub-prime and alt-a mortgages, both to minority and non-minority borrowers, in low income areas and non-low income areas, as they saw the profit margins involved. that is why so many lenders made these loans, these lenders did not make these loans due to pressure from acorn. sub-prime and alt-a mortgages were made in a variety of areas and to a variety of borrowers, borrowers who were low, middle and upper incomes. these designations have to do with credit, not with income strata.

Respectfully, I disagree. As I noted above, you can't remove greed from it entirely, but there were legitimate, non-discriminatory reasons that the banks had their credit standards set at a certain level, and they were, in fact, pressured/blackmailed by ACORN into lowering those standards.

Banks are in the business of making money. If the "sub-prime and alt-a" mortgages were so profitable, I find it hard to believe that anyone would have had to pressure them at all.