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Government is Fostering Borderline Extortion by ACORN

Press Release

For Immediate Release Contact: Debbee Keller
Thursday, October 15, 2009 Phone: 202-225-2331

Bachmann: Government is Fostering  Borderline Extortion by ACORN

Urge a reexamination of Community Reinvestment Act compliance

(Washington, D.C.) U.S. Representative Michele Bachmann (MN-06), a member of the House Financial Services Committee, wrote Sheila Bair, Chairman of the FDIC and Chairman of the Federal Financial Institutions Examination Council (FFIEC), earlier this week to urge a thorough reexamination of the rules governing compliance with the Community Reinvestment Act (CRA).

“Under current rules, many banks make donations to and enter into partnership with ACORN and its affiliates to meet their obligations under the CRA. Millions of dollars flows from these banks into ACORN in what amounts to borderline extortion,” said Bachmann. “There’s more than ample evidence that ACORN employees are incapable of offering reliable, let alone legal financial counseling. The FFIEC should issue clear guidance prohibiting banks from receiving CRA credit for donating to or partnering with ACORN.”

A review of the FFIEC’s CRA website, which displays links to CRA ratings and Performance Evaluations (PEs) conducted by banking examiners reveals a list of banks that have used ACORN partnerships to comply with CRA mandates. For example, Citizens Bank of Massachusetts “offers an affordable mortgage program through ACORN for low-and moderate-income homebuyers with below market rates, expanded ratios, and a low downpayment requirement.” And, just this week, the AP reported that in 2003 JP Morgan Chase gave ACORN a $5 million grant.

“Bank of America, which has been one of ACORN’s biggest corporate contributors, including $2 million to ACORN Housing Corporation in Chicago, recently announced it would terminate its donations to ACORN given the recent headlines,” continued Bachmann. “And, its long past time that the government stop encouraging this flow of money into an organization that has demonstrated a pervasive culture of corruption.”

The full text of the letter is below:

The Honorable Sheila Bair
Federal Deposit Insurance Corporation (FDIC)
1776 F St., NW
Washington, DC 20006

Dear Chairman Bair,

I am writing to you in your capacity as Chairman of the Federal Financial Institutions Examination Council (FFIEC) to request a thorough examination of the role ACORN plays in helping banks satisfy their Community Reinvestment Act (CRA) obligations. As you know, ACORN has earned a reputation with the public for extremely poor systemic controls that have led to persistent unethical behavior and repeated disregard for voter registration and other federal and state laws. Recent videos showing ACORN employees giving advice on how to set up a prostitution ring as a legal enterprise by violating tax and immigration laws and abusing government housing grants have demonstrated ACORN’s flagrant abuse of the public trust and complete disrespect for the law.

In response to such inappropriate behavior, the Census Bureau cut its ties with the organization last month and the IRS announced it would no longer partner with ACORN through its tax assistance program. Congress also took steps toward prohibiting ACORN from accessing federal tax dollars – a policy which I believe should be implemented immediately. However, more can and should be done to curb the illegal activities of ACORN and hold the organization accountable for the unethical behavior it encourages.

As Chairman of the FFIEC, I urge you and your fellow council members to conduct a thorough examination of this issue and prohibit financial institutions from receiving CRA credit by donating to or partnering with ACORN or any of its affiliates. A quick search through the FFIEC’s CRA website, which displays links to CRA Ratings and Performance Evaluations (PE) conducted by banking examiners, shows that many banks across the nation have donated to or partnered with ACORN in an effort to comply with CRA mandates. This includes banks regulated by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).

For example, according to the FDIC’s CRA Ratings database, Citizens Bank of Massachusetts “offers an affordable mortgage program through ACORN for low- and moderate-income homebuyers with below market rates, expanded ratios, and a low downpayment requirement.” Northeast Bank in Minnesota “donated $2,000 to ACORN,” Independence Community Bank “provided grants to the New York City Office of the ACORN Housing Corporation,” and New York Community Bank “participated as a co-sponsor of the Bank Fair hosted by New Jersey ACORN.”

These donations and partnerships are not only in full compliance with current and proposed FFIEC guidance, they are clearly encouraged by CRA. The Federal Register containing Interagency Questions and Answers about CRA and published by the FFIEC states, “Examples of qualified investments include, but are not limited to, investments, grants, deposits, or shares in or to… Not-for-profit organizations serving low- and moderate-income housing or other community development needs, such as counseling for credit, homeownership, home maintenance, and other financial literacy programs.” ACORN Housing’s website proclaims that it “provides one-on-one mortgage loan counseling, first-time homebuyer classes, and helps clients obtain affordable mortgages through [its] unique lending partnerships.”

But in light of the many examples of disregard for the law and public trust, the time has clearly come for a reexamination of the relationship that these rules encourage banks to have with ACORN. ACORN employees are clearly incapable of offering reliable, let alone legal, financial counseling as illustrated by the undercover videos in ACORN offices in five different U.S. cities. For instance, in one video an ACORN counselor in Baltimore suggests that the prostitute asking for advice on opening a brothel refer to herself as a “performing artist” on tax forms and declare more than a dozen underage girls from El Salvador as dependents to receive child tax credits. In another, an ACORN counselor in Brooklyn advises that, “Honesty is not going to get you the house,” and instructs the pimp and prostitute to hide their earnings in a tin can in the backyard. And in Washington, D.C., yet another counselor offers more unsound advice: “You’re not saying what it is that she does; she just provides a service, regardless of what it is… She’s not going to put on there that she’s doing prostitution… when the police ask you, you don’t know where it’s coming from, is what we’re trying to tell you… We’re looking out for you.”

There is no excuse for such unethical behavior and lack of professionalism in an organization which has received more than $53 million in direct taxpayer funding since 1994 and countless millions more through its continuing partnership with banks across the country working to fulfill their federally-mandated CRA obligations. Again, I urge the FFEIC to issue clear guidance that prohibits banks from receiving CRA credit for donating to or partnering with ACORN.

Thank you for your consideration of this request and I look forward to hearing from you. Please don’t hesitate to contact me should you have any questions.

Sincerely,

Michele Bachmann
Member of Congress

cc: The Honorable Ben Bernanke, Chairman, Federal Reserve Board
The Honorable John Dugan, Comptroller, Office of the Comptroller of the Currency
Mr. John E. Bowman, Acting Director, Office of Thrift Supervision

About Tom White

Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog. Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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