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ACORN Is Right, Lou Dobbs Is Wrong

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In this video clip, Lou Dobbs of CNN tries to blame the community group ACORN, for which I used to work, for the crimes of Wall Street and of predatory lenders, not to mention Congress:
http://afterdowningstreet.org/node/36465

Dobbs seems to oppose the proposed bailout, and ACORN favors modifying it to include relief for homeowners (which could include business for ACORN Housing Corporation helping renegotiate loans). So, I agree with Dobbs, not ACORN. I want the bill voted down in anything remotely resembling the form it was in on Monday.

But the bulk of Dobbs' reporting is absolutely crazy. He tries to depict ACORN as a criminal operation because the Republican Justice Department has leveled accusations of "voter fraud" against it. Dobbs doesn't mention that it was David Iglesias' refusal to play along with this scam that got him fired, something for which the former Attorney General of the United States and honored guest of CNN Alberto Gonzales is under investigation: http://bradblog.com/?p=4372

And Dobbs focuses on the claim that by promoting the Community Reinvestment Act, ACORN has promoted predatory lending. Dobbs gives a few seconds to a spokesperson from ACORN who points out that three-quarters of subprime loans have had nothing to do with the Community Reinvestment Act, but the point is lost in the blizzard of BS coming out of Dobbs' immigrant-hating, ignorance-spewing mouth.

When I worked for ACORN we spent more time and money and energy on blocking predatory lending than on anything else. Here's something I wrote about that work:

Flame-Broiled Shark: How Predatory Lending Victims Fought Back and Won

Published in "The Wealth Inequality Reader" by Dollars and Sense and United for a Fair Economy

If someone told you that a bunch of low-income people, most of them African-American or Latino, most of them women, most of them elderly, had been victimized by a predatory mortgage lender that stripped them of much of their equity or of their entire homes, you might not be surprised. But if I told you that these women and men had gotten together and after three years of work brought the nation's largest high-cost lender to its knees, forced it to sell out to a foreign company, and won back a half a billion dollars of what had been taken from them -- one of the largest consumer settlements ever -- you'd probably ask me what country this had happened in. Surely it couldn't have been in the United States of the Second Gilded Age, the land of unbridled corporate power and radical government activism on behalf of the rich and the greedy.

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And yet it was. These victims of predatory lending identified the problem and named it "predatory lending" in the late 1990s, and their campaign to reform Household International (also known as Household Finance and as Beneficial) played out from 2001 to 2003, concluding with a settlement that includes a ban on badmouthing the company. That's part of why more people haven't heard about this. The families who fought back and defeated Household are barred from bragging about it or teaching the lessons they learned, because that would require recounting the damage that Household did to homes and neighborhoods. These families are members of ACORN, the Association of Community Organizations for Reform Now. I was ACORN's communications coordinator during much of the Household campaign but left before it ended. No one has asked me not to tell this story.

In low-income minority neighborhoods in the United States, what little wealth there is, is in home equity. Home equity makes up 74.9 percent of the net wealth for Hispanics in the bottom two income quintiles (0-40 percent), and 78.7 percent of the net wealth for African-Americans in the second income quintile (20-40 percent). There have been gains in minority home ownership over the past few decades, in part as a result of the work by community groups like ACORN and National People's Action to force banks to make loans in these communities. But the home ownership is fragile and not protected by additional savings. Lenders in the past decade have focused on stripping away equity, and community groups have been forced to focus on keeping out loans that are worse than no loans at all.

Most high-cost loans are refinance loans. Too often they are marketed aggressively and deceptively, including through live-checks in the mail that result in very high-cost loans that the lender will be only too happy to refinance into a new mortgage. Often these loans are made with excessive, sometimes variable, interest rates, outrageously high fees, and fees financed into the loans so that the borrower pays interest on them and often is not told about them. They are made with bogus products built in, on which the borrower also pays interest. Hidden balloon payments force repeated refinancings for additional fees each time. Mandatory arbitration clauses attempt to prevent borrowers from taking lenders to court. The practice of loaning more than the value of a home traps borrowers in loans they cannot refinance with a responsible lender. Consolidation of additional debts further decreases equity, placing the home at greater risk. Quiet omission of taxes and insurance from a mortgage that previously included those charges results in a crisis when the yearly bills arrive.

Predatory lenders turn the usual logic of lending upside down. They make their money by intentionally making loans that the borrowers will be unable to repay. They charge fees for each refinancing until finally seizing the house. Fannie Mae has estimated that as many as half of all borrowers in subprime (high-cost) loans could have qualified for a lower cost mortgage. High-cost loans are not just made to people with poor credit. They're often made, rather, to people who have poor banking services in their neighborhoods. After HSBC bought Household, it announced that 46 percent of Household's real estate-backed loans had been made to borrowers with 'A' credit. Household made no 'A' loans.

ACORN members don't take abuse of their neighborhoods lying down, and Household was a leading cause of the rows of vacant houses appearing in ACORN neighborhoods in the 1990s. ACORN launched a campaign to reform Household that included numerous strategies. One, an old ACORN stand-by, was direct action. Repeatedly, ACORN members in numerous cities around the country simultaneously protested in Household offices to demand reform. At the same time, ACORN was working to pass anti-predatory lending legislation in local and state governments and Congress. ACORN members made sure that in each case the victims testifying were victims of Household and that Household's abuses were highlighted. When ACORN released major reports on predatory lending, the examples included were always from Household.

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ACORN also worked with the Coalition for Responsible Wealth to advance a shareholder resolution that would have tied Household's executives' compensation to ending its predatory lending. In 2001 Household held its shareholders meeting in an out-of-the-way suburb of Tampa, Florida. A crowd of ACORN members was there with shark suits and shark balloons to protest. The resolution won 5 percent. Over the next year, ACORN pressured state pension funds and other shareholders. Household held its 2002 meeting an hour and a half from the nearest airport in rural Kentucky. ACORN members made the trip by car from all over the country. The protest may have been the biggest thing the town of London, Ken., had seen in years. The resolution won 30 percent.

As a result of ACORN agitation, various local and state governments threatened to divest from Household. ACORN also put pressure on stores like Best Buy that used Household credit cards. At the same time, ACORN Housing Corporation was assisting many Household victims in either refinancing out of their Household loans or at least canceling some of the rip-off services built into their loans, such as credit insurance. And ACORN was getting the word out through local ethnic media to stay away from Household.

ACORN wrote up numerous accounts of Household predatory loans and took them to the attorney generals in state after state urging investigations. ACORN similarly pressured federal regulators to act. And ACORN assisted borrowers in filing a number of class-action suits against Household targeting those of its practices that were clearly illegal even under existing law. ACORN let Wall Street analysts know what Household stood to lose from these law suits, as well as from various reforms that Household periodically announced in its attempt to hold off the pressure from ACORN.

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http://davidswanson.org
David Swanson is the author of "When the World Outlawed War," "War Is A Lie" and "Daybreak: Undoing the Imperial Presidency and Forming a More Perfect Union." He blogs at http://davidswanson.org and http://warisacrime.org and works for the online (more...)
 

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