I’m usually grateful for Thomas DiLorenzo’s take on policy and government overreach, but I think he oversimplifies ACORN’s now decades-old relationship with the nation’s bankers.
Extortion? A shake-down? Yes, to some extent and in some ways. But we must keep in mind that the banks quickly realized that there were buckets of short-term money to be booked doing precisely what ACORN wanted — throwing loans around without regard to long-term credit-worthiness of borrowers. Doing so paralyzed regulators who were put in uncomfortable position of getting exactly what they had asked for — more credit for those without any ability to repay it. With both ACORN’s street-theater crews and bank lobbyists on the offense for a permissive credit environment, it turned out to be impossible for the feds to impose any notion of traditional standards of risk on the banks.
Bankers were getting rich, ACORN rolling in millions of contracts with banks to “serve” the under-served, politicians of all stripes were getting cash and energy from both sides, consumers leveraged modest incomes into $500K homes — there was no incentive to do anything else.
Once it became clear — by 2007 certainly — that a decade or more of willy-nilly lending was unsustainable, regulators were trapped in the too-big-to-fail box.
In short, ACORN and various other frankly Marxist activist groups were a big part, perhaps even a necessary condition, of the financial meltdown. However, the failure of American corporate governance and ethics played at least as big a role.
