GOP uses ACORN to fight law

WASHINGTON (AP) — Conservative Republicans are capitalizing on the troubles of community activist group ACORN — ranging from charges of voter registration fraud to embarrassing videos of its employees — to revive their long-standing fight against a federal law that grades banks on their investments in poor and minority neighborhoods.

The 1977 Community Reinvestment Act was intended to end redlining, a practice in which banks in effect walled off many inner-city neighborhoods from mortgage loans. But some GOP lawmakers say it has outlived its purpose and is being used inappropriately by ACORN to shake down banks for money. They want to repeal the law, scale it back or at least block a Democratic proposal to expand it.

Critics of the law are linking it to ACORN — a subject many Democrats wish would go away — at every opportunity.

“Should we repeal CRA? Absolutely,” said Rep. Jeb Hensarling, R-Texas, a member of the House Financial Services Committee. “Do we have the votes for it today? I seriously doubt that.”

Rep. Ed Royce, R-Calif., also on the committee, has described ACORN’s actions under the law as “legalized extortion,” contending that the law gave ACORN the power to stall or prevent bank mergers or expansions by filing CRA complaints with regulators.

“In order to avoid these filings, financial institutions would either lower their lending requirements to meet the needs of ACORN associates or they would simply pay out funds to one of the many ACORN-affiliated organizations,” Royce wrote in an article posted on his House Web site.

ACORN said that nearly all the money it receives from banks is used to provide advice to first-time home buyers or homeowners who are at risk of losing their homes to foreclosures, and that the money isn’t used for political advocacy.

“The Republicans are attempting to intimidate banks to halt monies that are used to help working families become home buyers or save their homes from foreclosure,” spokesman Brian Kettenring said.

Archived ACORN testimony on the Federal Reserve Board Web site shows ACORN has spoken against bank mergers, contending that banks weren’t living up to the CRA. In at least one case, however, ACORN supported a merger. The group acknowledged in the 1998 testimony that it was unusual for it do so, but said one of the banks involved, NationsBank, was a leader in community reinvestment, and that its partnership with ACORN Housing Corp. had produced at least $236 million in mortgages.

A decade ago, then-Sen. Phil Gramm of Texas unsuccessfully tried to gut the law, describing nonprofits that use the law as “protection rackets.”

Recent troubles at ACORN are giving Republicans ammunition in their renewed campaign against the law. Some employees are accused of voter registration fraud. Its founder was forced out last year amid revelations that he had tried to keep quiet his brother’s embezzlement of nearly $1 million. Two conservative filmmakers disguised as a prostitute and a pimp caught ACORN employees on camera giving them tax and immigration advice and advising them to disguise the source of their income to get housing aid.

Three Republican congressmen have asked 14 banks to provide details on their dealings with ACORN. One of them, Bank of America, said it wouldn’t engage further with ACORN Housing Corp. until ACORN’s issues are resolved.

ACORN, short for the Association of Community Organizations for Reform Now, portrays itself as a successful advocate for tens of thousands of low-income and minority homebuyers. It appointed a former state attorney general to investigate the video scandal.

Republicans describe it as a pro-Democratic group that among other things, is violating the tax-exempt status of some of its affiliates by engaging in partisan political activities.