Alan Greenspan: The Roots of the Mortgage Crisis (or, It Wasn't My Fault)

Alan Greenspan defends monetary policy during his reign as Chair of the Fed. He says the Fed's low interest rates did not play a major role in creating the subprime crisis, instead, factors such as the fall of the Berlin Wall were much more important:

The Roots of the Mortgage Crisis, by Alan Greenspan, Commentary, WSJ [Free Link]: On Aug. 9, 2007, and the days immediately following, financial markets in much of the world seized up. ... Over the past five years, risk had become increasingly underpriced as market euphoria, fostered by an unprecedented global growth rate, gained cumulative traction.

The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums.

The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World.

A large segment of the erstwhile Third World, especially China, replicated the successful economic export-oriented model of the so-called Asian Tigers ... to unleash explosive economic growth. ...

The surge in competitive, low-priced exports from developing countries ... flattened labor compensation in developed countries, and reduced the rate of inflation expectations..., including those inflation expectations embedded in global long-term interest rates.

In addition, there has been a pronounced fall in global real interest rates since the early 1990s, which, of necessity, indicated that global saving intentions chronically had exceeded intentions to invest. ... Asset prices accordingly moved dramatically higher. Not only did global share prices recover from the dot-com crash, they moved ever upward. ...

After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own. There was clearly little the world's central banks could do to temper this most recent surge in human euphoria...

I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1% rate set in mid-2003 to counter potential deflation, ... may have contributed to the rise in U.S. home prices. In my judgment, however, the impact on demand for homes financed with ARMs was not major.

Demand in those days was driven by the expectation of rising prices -- the dynamic that fuels most asset-price bubbles. If low adjustable-rate financing had not been available, most of the demand would have been financed with fixed rate, long-term mortgages. ...

I and my colleagues at the Fed believed that the potential threat of corrosive deflation in 2003 was real, even though deflation was not thought to be the most likely projection. We will never know whether the temporary 1% federal-funds rate fended off a deflationary crisis, potentially much more daunting than the current one. But I did fret that maintaining rates too low for too long was problematic. The failure of either the growth of the monetary base, or of M2, to exceed 5% while the fed-funds rate was 1% assuaged my concern that we had added inflationary tinder to the economy.

In mid-2004, as the economy firmed, the Federal Reserve started to reverse the easy monetary policy. I had expected ... a consequent increase in long-term interest rates, which might have helped to dampen the then mounting U.S. housing price surge. It did not happen. We had presumed long-term rates, including mortgage rates, would rise, as had been the case at the beginnings of five previous monetary policy tightening episodes, dating back to 1980. But after an initial surge in the spring of 2004, long-term rates fell back and, despite progressive Federal Reserve tightening through 2005, long-term rates barely moved.

In retrospect, global economic forces, which have been building for decades, appear to have gained effective control of the pricing of longer debt maturities. Simple correlations between short- and long-term interest rates in the U.S. remain significant, but have been declining for over a half-century... More generally, global forces, combined with lower international trade barriers, have diminished the scope of national governments to affect the paths of their economies.

Although central banks appear to have lost control of longer term interest rates, they continue to be dominant in the markets for assets with shorter maturities, where money and near monies are created. Thus central banks retain their ability to contain pressures on the prices of goods and services, that is, on the conventional measures of inflation.

The current credit crisis will come to an end when the overhang of inventories of newly built homes is largely liquidated, and home price deflation comes to an end. ... Very large losses will, no doubt, be taken as a consequence of the crisis. But after a period of protracted adjustment, the U.S. economy, and the world economy more generally, will be able to get back to business.

I don't think Bernanke would fully agree that the Fed has lost control of long-term rates:

Globalization and Monetary Policy, by Ben Bernanke: ...The empirical literature supports the view that U.S. monetary policy retains its ability to influence longer-term rates and other asset prices. Indeed, research on U.S. bond yields across the whole spectrum of maturities finds that all yields respond significantly to unanticipated changes in the Fed’s short-term interest-rate target and that the size and pattern of these responses has not changed much over time (Kuttner, 2001; Andersen and others, 2005; and Faust and others, 2006). Empirical studies also find that U.S. monetary policy actions retain a powerful effect on domestic stock prices. ...

I draw two conclusions... First, the globalization of financial markets has not materially reduced the ability of the Federal Reserve to influence financial conditions in the United States. But, second, globalization has added a dimension of complexity to the analysis of financial conditions and their determinants, which monetary policy makers must take into account.

The Fed did what it needed to do in 2003 to keep the economy moving forward, but that doesn't mean the policy could not have been improved. In any case, the policy, however necessary, had subsequent consequences that Greenspan seems unwilling to take responsibility for. In addition, the role that his laissez faire attitude may have had in blocking regulatory interventions that might have prevented or attenuated the crisis is conveniently omitted from the story Greenspan tells. Was the crisis his fault? I wouldn't go that far. Could he have done more to prevent it or reduce its severity? Here I think the answer is yes.

Update: The WSJ's Economics blog summarizes reaction to Greenspan's column.

Comments

[esb]

There is a phrase that I have been waiting to use for more than a decade.

And now, in reference to the AG op-ed piece, I can.

... self-exculpatory bullshit ...

[kett82]

Wow, I once had some respect for “Easy Al.”

Amazing how all the elder statesmen that were involved with the Bush Administration are now trying to rewrite history. Sorry boys, you were there and you either let it happen or actively brought it about and you have to own that. A mea culpa in the Wall Street Journal after one of biggest wealth transfers/swindles of the middle class in history isn’t going to change that.

By the way, I thought Federal Reserve Chairmen were supposed to not comment on the economy after retiring or at least lay low for awhile? This guy is speaking everywhere.

Ok, that’s my rant for the day…I’ll be quiet now.

Best regards,

[baileyman]

Greenspan has a point, in the global aspect of the bubble. But he has no point claiming he acted appropriately.

[getting older]

I think it might be useful to separate the two functions of a Fed chairman: (1) the setting of interest rates; and (2) the regulation of the financial system.

As to the first, there is a reasonable argument that very low interest rates were necessary in 2002-03 to forestall the threat of deflation, which was quite real. Low rates by themselves do not cause bad loans to be made, nor do high rates necessarily prevent them from being made. Lenders live on margins- borrowing at 1 % and lending at 5 % is functionally the same as borrowing at 4 % and lending at 8 %.

As to the second, the regulation of the financial system, there can be little doubt that Mr Greenspan was derelict in his duties to the point of criminal negligence.

[save_the_rustbelt]

Whatever his errors, Big Al did not cause a general breakdown in integrity in the mortgage system from top to bottom.

[bakho]

"The surge in competitive, low-priced exports from developing countries ... flattened labor compensation in developed countries, and reduced the rate of inflation expectations..., including those inflation expectations embedded in global long-term interest rates."

Isn't this an admission that AG was wrong to raise interest rates in the late 1990s?

There never was a danger that the US could have excess revenue. Had the excess revenue suddenly appeared, it would have been spent on needed social programs or infrastructure or given back as tax rebates at the time they appeared. Is THE problem with the tenure of AG his conflict between overseeing sound monetary policy and his inner Scrooge that tried to undermine government social programs?

[bakho]

STR- Banking has always been attractive for white-collar criminals (that's where the money is). The history of banking in the US is one of the public getting screwed out of their money followed by regulation and reform. Greenspan was primarily concerned with monetary policy and failed to address the need for regulation. Bloomberg prints the French reaction to AG here:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.n.BheticNQ

[bakho]

The other AG lack of regulation banking crisis:

"A primary objective of such a sweeping rescue was to restore the confidence of thrift depositors, some of whom have withdrawn their savings in fear of the system's insolvency. In fact, the Administration secretly feared a long-shot possibility that the drama of its bailout might spark a run on S & L deposits. To prepare for that dire prospect, senior White House officials and Federal Reserve Board Chairman Alan Greenspan met in the Roosevelt Room of the White House the night before Bush's plan was made public. Greenspan agreed that the Fed would stand ready to pump billions of dollars in emergency loans into threatened thrifts."

[Don]

Mea Culpa, Mea Culpa, Mea Maxima Culpa....

All it takes is a quick glance at a chart of commodity prices (or just oil and gold, if you will) since 2003 to understand how incredibly wrong it was to print so much money then. But it's comforting (?) to know that the chief money wizard feels it was just so darned hard to do central banking what with the end of communism and the rise of China. Follow the money--supply that is--and it's pretty easy to see he did all he could to whipsaw the economy's fortunes by sending it conflicting signals on the value of its primary medium of exchange, from at least about 1998 on. But I still can't read anything Greenspan writes w/out scratching my head and thinking, "Huh"?

At least Bernanke didn't get ahead of the curve too much w/ his miserly (to the Street's bankers and traders) quarter point. Commodity prices have fallen some in the last few weeks. Maybe its a start.

[ray]

We do need a scapegoat.

Let's not blame the financial institutions for taking on too much risk, or homeowners/debtors for signing those time-bomb loans.

Why don't you blog about average numb-skull joe or highly paid banking execs who helped us get into the mess we are in now?

It's so easy and convenient to do a hard-hitting blog on Greenspan.

Lazy, just plain lazy.

Thank goodness there's Calculated Risk blog site.

[anne]

http://krugman.blogs.nytimes.com/2007/12/12/the-infallible-greenspan/

December 12, 2007

The infallible Greenspan
By Paul Krugman

I once described * Alan Greenspan as being

"like a man who suggests leaving the barn door ajar, and then - after the horse is gone - delivers a lecture on the importance of keeping your animals properly locked up."

I was talking about Greenspan’s support for the Bush tax cuts, followed by his lectures on fiscal responsibility.

But it also applies to what he’s saying ** now about the subprime crisis.

All that wisdom about an “accident waiting to happen” — an accident for which he, of course, bears no responsibility.

Remember, this is the guy who brushed off Edward Gramlich when he warned about subprime problems; who “frequently argued there could be no housing bubble.” ***

The chutzpah is breathtaking.

* http://www.nytimes.com/2005/08/29/opinion/29krugman.html

** http://online.wsj.com/article/SB119741050259621811.html?mod=opinion_main_commentaries

*** http://online.wsj.com/article/SB119724657737318810.html

[tedb]

Bakho, I couldn't use the link you provided, but I think this is the article you mean: http://tinyurl.com/2s5sug

[Bob]

>> It Wasn't My Fault

This is whats so disgusting about so many cons like Greenspan.

They are incompetent screw ups who can't give enough phony lectures about how poor people are poor cause they aren't responsible.

Meanwhile everything they touch turns to s**t and what comes out of their mouth is "It wasn't my fault"

[dd]

Let's not blame Greenspan for taking down all the regulatory traffic lights that dramatically increased accident probability.

[anne]

Also, just so we remember because I am tired of the forgetting, Alan Greenspan was busily explaining through Washington the economic benefits of invading and occupying Iraq in 2002. What the heck though Paul Wolfowitz tossed even from Defense and the World Bank is working for the State Department now. James Glassman is storming the Middle East for the Administration teaching of basic American decency.

[robertdfeinman]

Here's a guy who drank the mother's milk of Ayn Rand and then tried to apply her wacko ideas in the real world.

Unsurprisingly they didn't work. So, as with all ideologues, there needs to be an explanation. Being an ideologue the explanation can never be that the belief system is faulty, so there must always be some other cause. This is part of a pattern of psychological self defense that such people engage in. Since many ideologies have recently been found wanting we are now having a rash of self serving books.

The neo-cons blame the disasters in the middle east on a) each other, b) liberals, c) Iraqis, d) the military, e) the press, f) the public

The libertarians blame the imbalances in the economy and the lack of infrastructure to support growth on a) each other, b) liberals, c) the press, d) the public, e) congress

Remember that many of these people are still from the Vietnam era when they tried to blame losing the war on street protesters.

It's never their fault. That's why they are ideologues. Faith trumps reality in all cases. Do you really want to try and parse Greenspan's excuses? What's the point, even if you caught him with a smoking gun in his hand he would claim some one else did it.

[Bernard Yomtov]

In my judgment, however, the impact on demand for homes financed with ARMs was not major.

Demand in those days was driven by the expectation of rising prices -- the dynamic that fuels most asset-price bubbles. If low adjustable-rate financing had not been available, most of the demand would have been financed with fixed rate, long-term mortgages.

I don't agree with this. The exact interactions among the availability of ARM's, rising home prices, and panic buying is hard to sort out, but it's clear that they reinforce each other. Buyers who see prices moving out of reach are going to be tempted by a mortgage that seems to let them into the game, and that drives prices further. To argue that much the same thing would have happened with fixed-rate 30-year mortgages just seems wrong.

Another point is that there was low inflation, combined with small or non-existent real wage increases. So workers who might reasonably have expected to meet higher future payments out of increased income ended up unable to do so.

[save_the_rustbelt]

Greenspan translation:

I get credit for all the good stuff.

I get no blame for the bad stuff.

I got a lot of money for my book so phooey to you peasants.

[jamzo]

Was the crisis his fault? I wouldn't go that far. Could he have done more to prevent it or reduce its severity? Here I think the answer is yes.

how about did greenspan aid and abet the financial industry's ARM product initiative? What about did greenspan promote and facilitate the financial industry's ARM product initiative

i think the answer is yes

it took me 20 seconds to find greenspan's ARM footprint

greenspan acted as chief salesman for ARMs

the pied piper of the housing bubble

http://www.usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm

Posted 2/23/2004 11:39 AM Updated 2/24/2004 2:13 AM

Greenspan says ARMs might be better deal
By Sue Kirchhoff and Barbara Hagenbaugh, USA TODAY
WASHINGTON — Federal Reserve Chairman Alan Greenspan said Monday that Americans' preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.
In a standing-room-only speech to the Credit Union National Association meeting here, Greenspan also said U.S. household finances appeared generally sound, despite rising debt levels and bankruptcy filings. Low interest rates and surging home prices have given consumers flexibility to manage debt, he said.

"Overall, the household sector seems to be in good shape," Greenspan said.

Americans have been buying homes and refinancing mortgages at a record pace in the past several years, lured by low interest rates. Most mortgages are fixed rate, so consumers can prepay when rates go down but do not face higher costs if rates rise. Under adjustable-rate mortgages (ARMs), which made up about 28% of mortgages in January, borrowers usually have lower initial rates but face the risk of higher payments if rates in the broader economy rise.

While borrowers can refinance fixed-rate mortgages, Greenspan said homeowners were paying as much as 0.5 to 1.2 percentage points for that right and the protection against a potential rate rise, which could increase annual after-tax payments by several thousand dollars.

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said.

Joseph McKenzie, deputy chief economist at the Federal Housing Finance Board, says buyers like the stability of fixed-rate mortgages, but there is increasing flexibility in products. "There are lots of innovative programs, especially targeting low-income and first-time buyers," he says.

The Mortgage Bankers Association said the average rate for a 30-year fixed mortgage in the week ended Feb. 13 was 5.46%, compared with 3.27% for a one-year ARM. Mark Zandi of Economy.com says that although Greenspan is technically correct, for some borrowers, including those with high debt, fixed-rate mortgages may be a better bet.

[bakho]

Thanks tebd

http://tinyurl.com/2s5sug

is indeed correct.
The rest of the world does not consider AG to be a genius despite the narrative in the US press.

Consider this gem from the FT:

"Mr Greenspan's critics, of course, would say that his reappearance is less a spectral portent of doom than a guilty man slinking back to the scene of his crime - in this case the effects of the liquidity he pumped into the system around the millennium and during a deflation scare in 2003 when he held rates very low to prevent prices going into an uncontrollable fall.

Perhaps, in a plot twist that would owe more to David Lynch than to Charles Dickens, it turns out that Mr Greenspan is haunting himself."

[calmo]

So many good nibbles, I cannot choose...back to the host's post, concluding with

Was the crisis his fault? I wouldn't go that far. Could he have done more to prevent it or reduce its severity? Here I think the answer is yes.

So only a few years ago we (ok the market) [alright, the fabulous and famous 1%, not us...receivers of messages] (but you are getting this one...eventually) referred to Mr Greenspan as The Maestro (Now you non-symphony goers need to know that this refers to the conductor of the orchestra...which is just so illuminating I need to sit down.) [The symphony sounds great without the conductor who is often not as highly trained as those he waves his baton in front of...I've been there on occasions when the conductor has dropped the thing and the orchestra does not come to a crashing halt. Honest.] which is not exactly the same as The Mascot, no...unlike the current POTUS.

Twas the irrational exuberance of itall...and that storm has passed (you haven't bought into the idea that it is merely unfolding now and that the worst is yet to come have you?)(Go back and read the Keynesian quote AG selected and see if it ain't so.) and the thundering hooves of the stampeding public will soon abate. [Please God, Hail Mary and PraiseBetoJesus] If $40B this month is not enough, there'll be more next month.
Amen

[donna]

Hey, cmon, you can't destroy the economy of the U.S. all by yourself.

Greenspan only helped.

[lonesome moderate]

Regarding Greenspan's apparent failures in the regulation of the financial system--didn't he delegate most of these responsibilities to Vice-Chairman Roger Ferguson? I don't say this to exonerate him in any way, but I wonder why I never see Ferguson's name mentioned in any of these discussions.

[James Kroeger]

The crisis was Greenspan's fault, but not for the reasons that many so-called Democrat Economists think. One thing I do not fault AG for is keeping short-term interest rates as low as he did for as long as he did. I do fault him for finally raising rates in 2000. The single greatest sin any central bank can commit is throwing people out of work in order to combat extremely modest levels of measured inflation.

I'm amazed that some 'Democrats' suggest that AG should have increased short-term interest rates in order to nip the asset bubble in the bud. Manipulating short-term rates in order to 'influence' long-term rates is plainly stupid. The Fed could exert the same sort of control over long-term interest rates that it uses to control short-term rates if it were to simply start issuing bonds of longer maturities (even 20-year or 30-year bonds if such a need were to arise). It would sell more of these bonds if it wanted to drive long-term rates higher and sell them if they wanted those rates lower. It is actually possible that none of those working for the Fed have thought of this option?

But why would the Fed want to use this sledgehammer to discourage the flipping of houses when it could have simply put an absolute cap on the number of dollars a bank could lend out during a given time period, at least for certain categories of loans. Don't dry up all long term credit; simply limit the total amount that can occur for a certain period of time. Since much of the frenzy was driven by speculators who would quickly flip houses that they had purchased, why not simply establish a finite limit on the number of times a borrower can finance the purchases of homes in a year?

I don't criticize Alan Greenspan for the same things that others do, but I do think that he failed with his cohort to manage the nation's banking system in a responsible way (i.e., responsible to the average American, not the investor class).

[dug]

The Fed is there to monetize government debt and to socialize the losses of member banks. He did that extremely well so why is he so defensive? Just because he worked for an organization doomed by its design to destroy the standard of living of the masses doesn't mean he should be ashamed of doing his job. He fulfilled his fiduciary duty, something not a lot of people do. I also long had him in the running for world's greatest hypocrite which is quite an honor in itself.

[Ken]

I got through about half of his book so far and all I an say is

Delusional! Maybe its hanging with Rand for too long. Maybe its clinging to a failed ideology. Maybe its the fascination with wealthy Wall Street Bankers. A few months on a couch with a good shrink might be the best thing for andrea and al.

when you make statements like

"The reason the US has a negative savings rate is due to the creation of social safety nets" What? For someone who thinks himself an expert on the global economy he certainly doesnt look at any data from foreign economies!

I've lost alot of respect for this guy. Im beginning to think he is the serial bubble blower so many are accusing him of being

[Acev7]

I think some of you should look at who and what organizations approved/lent on these types of mortgages. Each organization got greedy and tried to outdo each other with riskier programs and better rates. There were billions to be made by lending in such a fashion. In some cases they even used your retirement money to lend on these mortgages. The greed consumed people on both sides of the coin (lenders and buyers). You cannot solely blame Alan for this. We have done this to ourselves and need to take responsibility for it. Including the people who took out a sub-prime loan. No more passing the buck... take responsibility(the losses) and realize it was a stupid thing to do.

I have done mortgages for years and know that taking responsibility is key here. Don't forget AG did not approve of these types of loans. Our lending institutions did. You can blame them but I think their balance sheets are already showing the truths.

[Cybercorrespondent]

A look into Barack Obama and his past might shed some light on the crisis
Barack Obama joined Trinity United Church of Christ more than 20 years ago and considered the church pastor, Rev. Jeremiah Wright as his mentor. Rev. Wright married Obama and his wife Michelle, baptized their two daughters and is credited by Obama for the title of his book, "The Audacity of Hope." In his sermons, Rev. Wright repeated denunciations of the U.S and blurted out statements like “The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing “God Bless America.” No, no, no, God damn America, that's in the Bible for killing innocent people," he said in a 2003 sermon. "God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme."
Looking at Obama’s ties to Rev. Wright, and his connections to a terrorist bomber, William Ayers, both men who would like nothing more than to destroy this country causes many people to second guess Obama’s intentions for change. If you have not heard about William Ayers, you can read about him in the U.S. News, Michael Barone’s column-Obama Needs to Explain His Ties to William Ayers. “In my U.S. News column, I make a brief reference to the unrepentant Weather Underground terrorist bomber William Ayers and his connections to Barack Obama. They were closer than Obama implied when George Stephanopoulos asked him about Ayers in the April 16 debate—the last debate Obama allowed during the primary season. To get an idea of how close they were, check out Tom Maguire's Just One Minute blog and Steve Diamond's Global Labor and Politics. The Obama-Ayers relationship is also mentioned in David Freddoso's The Case Against Barack Obama: The Unlikely Rise and Unexamined Agenda of the Media's Favorite Candidate.”

Lets examine Obama’s connection with an accused political fixer Antoin “Tony” Rezko. The following is on explanation by Brian Ross and Rhonda Schwartz from ABC News. “In sharp contrast to his tough talk about ethics reform in government, Sen. Barack Obama, D-Ill., approached a well-known Illinois political fixer under active federal investigation, Antoin "Tony" Rezko, for "advice" as he sought to find a way to buy a house shortly after being elected to the United States Senate. Rezko had been widely reported to be under investigation by the U.S. attorney and the FBI at the time Obama contacted him and has since been indicted on corruption charges by a federal grand jury in a case that prosecutors say involves bribes, kickbacks and "efforts to illegally obtain millions of dollars."
Because Barack Obama was a dependable ally of subsidized developers in the Legislature, his friend and fund-raiser Rezko depended on him to get things done such as cosponsoring a bill in 2001 allowing developers to pocket half of the proceeds from selling state tax credits to others. Obama admitted that his decision to involve Rezko was “a bone-headed mistake.” What he failed to mention is that he has a closet full of bone-headed mistakes such as Peter Wallsten pointed out in the Los Angeles Times on
January 24, 2008.
“Barack Obama angered fellow Democrats in the Illinois Senate when he voted to strip millions of dollars from a child welfare office on Chicago's West Side. But Obama had a ready explanation: He goofed.

"I was not aware that I had voted no," he said that day in June 2002, asking that the record be changed to reflect that he “intended to vote yes.”
That was not the only misfire for the former civil rights attorney first elected to the state Senate in 1996. During his eight years in state office, Obama cast more than 4,000 votes. Of those, according to transcripts of the proceedings in Springfield, he hit the wrong button at least six times.”

Now comes the big question, what exactly does a community organizer do?
One thing Barack Obama did as a community organizer was pressure banks to make bad loans. In Barack Obama’s youthful community organizing days he joined a group called ACORN. Using the Community Reinvestment Act which was designed to encourage banks to make loans to high-risk borrowers, ACORN started abusing the law by forcing banks to make hundreds of millions of dollars in 'subprime' loans to minorities with bad or no credit. Using charges of racism and threats to use CRA to block business expansions have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.
Other things that ACORN did as community organizers were agitate for higher minimum wages, attempt to thwart school reform, try to unionize welfare recipients who are obliged to work in exchange for benefits and organize voter registration drives. In 2006 for example, their voter registration drive in Washington produced 1,800 new voters of which 1,794 names submitted were fake. The secretary of state called it the “worst case of election fraud in our state’s history.”
If you like to know more, watch these two videos.
http://www.youtube.com/watch?v=nRmB93McZeI
http://www.youtube.com/watch?v=_MGT_cSi7Rs

Cybercorrespondent
http://cybercorrespondent.blogspot.com

[Cybercorrespondent]

Thursday morning I turned on the news and heard that ACORN is under investigation for voter fraud in a number of states. Since I learned not to trust what the media tells us, I decided to have a look what the bloggers had to say. On a sight called A Look Into Barack Obama’s Past - Obamamania - Zimbio website I found the following comment that made me think.
A concerned citizen
Oct-6-08 7:48pm [Edit]
Those two videos paint a very clear picture. As the terrorists have promised, they will destroy this country from with in. …..

http://www.youtube.com/watch?v=puN9X1mVgRA ……..

http://www.youtube.com/watch?v=vjvBEKrGkDI …….

Back to my point. By allowing the voter fraud to go on, makes this great country look like a third world dictatorship. We are supposed to send an example to the rest of the world how honest elections are held and not allow the media to distort the facts. Please people, wake up and tell the media no more. Boycott all the products advertised on publications like the Newsweek, Time magazine and other propaganda machines like the New York Times. Also do the same with CNN and other communist propaganda news sources. Even the Fox News network is starting to sway the viewer decision. After Thursday’s presidential debate, watching Chris Wallace interview a communist from Saint Louis made me sick. Even bad journalists should realize that when you ask a communist or a skin head to give you their views, you can pretty much expect what they are going to say.
I certainly had enough of all of the $%#@Comunism.org
Cybercorrespondent