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Twisted Minds, Part I


Right wing crooks and liars have pulled off one of the most stunning assaults on progressive organizing in decades. I’m speaking specifically about the forced dissolution of ACORN and the manufactured public anger at the organization’s “scandals.”  The assault on ACORN, however, is symbolic of a larger social problem, namely the effort by conservatives and “free marketers” to blame the housing collapse and economic crisis on progressive community activists and “big government.”  This campaign is particularly menacing at a time when corporatist voices are leading the effort to kill meaningful financial reform of Wall Street.

 

Conservatives’ contempt for ACORN arises from the fact that the group historically organized poor and minority communities to demand increased social welfare services and government regulation of abusive business practices.  Some of the most visible attacks on the group reach back to the 2008 election, when a small minority of ACORN’s canvassers were accused of “voter fraud” by registering false names such as “Brad Pitt” or “Mickey Mouse.”  A search of the Lexis Nexis academic database shows that this “scandal” received widespread coverage, as ACORN was referenced in more than 300 programs (nearly seven a day) on Fox, MSNBC, and CNN combined in the month and a half run-up to the election.

 

Contrary to conservative claims, there’s nothing surprising about poor ACORN canvassers artificially boosting their registration rolls in order to earn more money.  Furthermore, false registrations are not evidence of “voter fraud,” short of conclusive evidence that someone claiming to be Mickey Mouse actually showed up at the polls to vote.  These simple points, however, didn’t stop Republican presidential and vice presidential candidates John McCain and Sarah Palin from attacking ACORN for “destroying the fabric of democracy” and for “steal[ing]” the 2008 election. 

 

Also left out of the conservative attack on ACORN was the fact that the bogus registrations were only identified because ACORN itself alerted state authorities of the forms, flagging any that were deemed suspicious.  While some might argue that ACORN should have filtered out the fake registrations, state laws required ACORN to submit the forms for review, so as to avoid charges of tampering.  If there’s an electoral scandal involving ACORN, it centers on state governments’ refusal to automatically register all voting age adults.  This should have been the main concern of conservatives attacking ACORN – but these individuals were motivated by partisan, rather than democratic considerations.

 

Fast forward to late 2009, and we see the return of paranoid right wing ACORN conspiracies in the form of the James O’Keefe “pimps and hoes” video, later demonstrated to be a fraud, concocted by a Republican operative who’s now in jail for illegally tapping the phone lines of Democratic congresswoman Mary Landrieu.  A brief review of the pretend scandal surrounding the pimps and hoes video – discussed regularly in conservative and centrist-liberal media alike – is in order.  O’Keefe originally gained notoriety after allegedly posing as a pimp when visiting local ACORN offices in Baltimore, Washington, Brooklyn, and San Bernardino.  Tapes supposedly showed local ACORN representatives advising O’Keefe on how to avoid taxes and set up local brothels using migrant women from El Salvador. 

 

In reality, the O’Keefe expose was little more than a hoax, fabricated through selective editing and deception.  Subsequent reporting uncovered a number of disturbing facts.  O’Keefe apparently never dressed up as a pimp when visiting ACORN offices, despite the implication in his “expose” and surrounding reporting that he publicly represented himself as one.  Rather, he dressed up in casual business attire, posing as a respectable member of the community.  O’Keefe appears never to have actually represented himself as a pimp in his exchanges, as footages suggests that he instead sought advice from ACORN representatives about how to file income taxes for his dancer girlfriend.  In another exchange with ACORN reps, O’Keefe reportedly sought advice on how to buy a house in order to shield child prostitutes from their pimp.  Despite allegations of ACORN’s criminal conduct, it was the organization itself (the Philadelphia branch) that contacted law enforcement after O’Keefe approached them with his various prostitute scenarios.  Finally, the unedited videos from the O’Keefe ACORN exchanges were never actually made public.  Rather, the videos, although endlessly paraded by the press, were heavily edited, with voiceovers during key sections of O’Keefe’s exchanges, effectively making it impossible to verify any of O’Keefe’s claims about ACORN’s support for his pimp games (see: http://www.youtube.com/watch?v=9UOL9Jh61S8).

 

The discrediting of the above ACORN “scandals” hasn’t stopped conservative fanatics from manufacturing new crises.  In the run up to the April 15th Tea Party rallies, Fox warned that ACORN was “preparing to crash some of the tea parties,” despite the repeated claims of organization reps that the dealings of the Tea Party were of no interest to them.  A search of Lexis Nexis finds that ACORN is referenced in more than 330 programs on Fox between September of 2009 (when the “pimp video” surfaced) and May 1, 2010 (in the aftermath of the Tea Party claims).  This amounts to more than 40 programs on average per month, or more than one every day.

 

Probably the most disturbing conspiracy theory concocted by Fox and other far right media outlets depicts ACORN and community activists – allied with “socialist” and “big government” Democrats – as single handedly creating the 2008 housing bubble and economic collapse.  Sean Hannity, for example, interviewed Jerome Corsi, author of Obamanation, who claimed that ACORN was guilty of “extort[ing] banks in the subprime area.”  Glenn Beck attacked ACORN in his May 4th program for “transforming the structure of our country.”  The group, Beck warned, is “receiving untold billions in your money despite massive voter registration fraud and corruption.”  Most ominously, Beck warned of ACORN’s role in orchestrating the subprime mortgage collapse in late 2009:

 

A year ago, we had the problem with the banks, because people took out too many bad loans.  But this is the home and the car that we couldn’t afford that we were promised by the people in Washington that you could.  ‘Don’t worry, you can have it all. You can have this house.  Why live in [a] crappy house, you should live here with two of these cars, wouldn’t that be great?’  Well, who told us that?  These people [‘the government’] and the ACORN people, OK?  They pressured banks to make loans to people who could not afford them, and then the whole thing melted down, because the bank said to these people, ‘No, no, these people cannot afford this home…’ 

 

In light of the banks’ alleged resistance to granting sub-prime loans, Beck concludes that ‘special interest’ protests from ACORN were enough to bring Wall Street to its knees, forcing them to loan to sub-prime customers who they otherwise would have turned away.  Rush Limbaugh voiced his support for the ACORN-subprime conspiracy, arguing: “What got us here.  Well, you can say ‘white guilt’ got us here, political correctness got us here…Democrats’ desire to socialize the country got us here.”  Limbaugh went on to link the Democrats’ “socialism” to ACORN’s activities: “ACORN went out and put their own pressure on these banks and lending institutions, political correctness pressure…to spread this misery [presumably referring to the recession] far and wide under the terms and definitions of things like affordable housing.”  Attacks on ACORN for causing the economic crisis have appeared in other rightwing media, including the National Review, Free Republic, Biggovernment.com, Townhall.com, and right wing radio. 

 

More sophisticated versions of the “ACORN-Big Government Caused the Crisis” propaganda are made by right wing economists like Thomas Sowell, employed by the Hoover Institution and writing for the Wall Street Journal, Forbes, and Fortune.  In his book, The Housing Boom and Bust, Sowell paints a picture of big government, pressured by community activist groups like ACORN, as the primary culprit behind the housing collapse and recession.  Sowell argues that the housing bubble is in large part a product of local government efforts to preserve open land, thereby limiting the area in cities open for development: “it has been precisely where there was massive government intervention in the form of severe building restrictions (as personified by environmental groups seeking to protect open land from development) that housing prices have skyrocketed.”  Such an argument, however, fails to explain why in cities like Chicago, the areas hardest hit following the housing collapse (including the suburbs like Plainfield, Joliet, Aurora, Algonquin, and others) were characterized by incredible sprawl and weak land use restrictions.  This is the opposite of what one would expect if a government mandated lack of land availability was a major cause of the bubble and collapse.

 

Sowell also blames ACORN for having “blocked drive up lanes and made business impossible for banks until they surrendered to demands that they make billions in loans they wouldn’t otherwise have made.”  Sowell fingers “lax lending standards used to meet ‘affordable housing quotas’” aimed at minorities and the poor, and pushed by the Department of Housing and Urban Development, Fannie Mae, Freddie Mac, and Congress, as the “key to the American mortgage crisis.”  Sowell highlights how Congress pushed the Federal Housing Authority to provide zero money down mortgages following the passage of the American Dream Down Payment Act of 2002, while the 1977 Community Reinvestment Act (strengthened in the mid 1990s) “forced banks into [unsustainable] quota lending and lower loan approval standards.” 

 

The CRA was strengthened by Congress, and aimed at enabling increased homeownership for minorities and the poor, who have been disproportionately denied home loans throughout American history.  Sowell, however, rejects the idea that discrimination exists, assuming, without presentation of evidence, that “the idea that lenders would be offended by receiving monthly mortgage payment checks in the mail from blacks should at least give us pause to assess whether or not that seems plausible.”  Responding to statistical studies conclusively demonstrating that blacks and the poor are disproportionately more likely to be denied home loans, Sowell argues that “many in the media and in politics treat statistical differences in [loan request] outcomes as evidence of differences in the way people are treated – rather than being a result of those people’s own track records.”

 

Such language is coded conservative-speak racism for “blacks are individually inferior and are more likely to have personality defects that prevent them from succeeding in getting loans.”  Furthermore, Sowell’s assumption that banks don’t discriminate against poor blacks is not substantiated by empirical evidence.  In Black Wealth/White Wealth: A New Perspective on Racial Inequality, Melvin Oliver and Thomas Shapiro discuss the empirical record demonstrating that race exercises an independent affect on assessments of individuals’ creditworthiness, even after controlling for the low incomes, greater debt burdens, and poor credit histories of the disadvantaged. 

 

There’s little indication that Sowell and other revisionist “historians” bothered to engage in available evidence regarding the Community Reinvestment Act (CRA) and the economic collapse.  Sowell’s book contains not a single endnote, despite his admission that he used a “research team” to write it.  Other conservatives mentioned above provide little outside of right wing polemics to substantiate their speculation.  The narrative forwarded by Sowell and others is blatantly contradicted by the historical record, as documented below:

 

- Sowell consistently refers to Fannie Mae and Freddie Mac as “government sponsored entities” (GSEs), the implication being that the housing crisis was enabled and encouraged by the national government.  It’s hard to disagree with the claim that Fannie and Freddie bear major responsibility for pushing subprime loans, and most would agree that the groups’ financial backing from the federal government served as an implicit guarantee to Wall Street investors and banks that the federal government would step in to bail them out should there be a housing collapse.   Indeed, this is exactly what happened in 2008.  However, this is only part of the story. Fannie and Freddie are no doubt creatures of government intervention, but to refer to them as an active part of the national government is misleading at best, and manipulative at worst, considering that during the housing boom these organizations were privately controlled and operated for profit, bundling mortgage backed securities and selling them to investors and firms in the secondary mortgage market.  Fannie and Freddie are primarily creatures of the private market, and one cannot simply blame “the government” for GSE business dealings while at the same time exempting the private sector.  Furthermore, Freddie and Fannie’s dealing in subprime mortgages actually declined from 2002 through 2007 (the period covering most of the bubble growth), when other institutions were increasingly making use of subprime mortgages.  Blaming the government for creating the subprime bubble, then, is outlandish in light of the private sector’s leadership in this area.

 

- Revised CRA regulations from the 1990s contained no requirements that banking institutions engage in subprime loans.  Furthermore, no one at ACORN forced Fannie Mae or Freddie Mac to deal in subprime mortgages, nor did anyone at ACORN mandate that Wall Street deal in toxic derivatives, which are unregulated by the government and responsible in great part for the 2008 financial crisis.  ACORN exercises no formal authority over lenders or Wall Street firms either, outside of the very limited public activist campaigns it led that encouraged increased lending to minorities and the poor.

 

- Despite conservatives framing of CRA rules as causing the housing bubble, the Clinton administration’s successful revisions to CRA regulations for mortgage lenders (which were aimed at eliminating racist redlining practices) were put into effect in 1995, a full four to five years before the housing bubble first emerged.  Conservatives are at a loss to explain why it took so long for the market to respond to CRA rules, assuming these rules were the main cause of the collapse.

 

- Sowell argues that “subprime borrowers were disproportionately minority and lower income,” neglecting to mention that subprime loans are the not the same thing as CRA loans.  A 2008 study from the Traiger and Hinckley law firm (which provides financial counsel for financial institutions providing CRA regulated mortgages) found that CRA regulated firms were significantly less likely to issue subprime loans than firms not subject to CRA restrictions.  Mortgage companies that were unrestricted by CRA regulations engaged in subprime loans at twice the rate of banks covered by CRA rules.  Just one in four subprime loans were made by financial institutions that were restricted by CRA regulations during the housing boom.  The vast majority of subprime loans, then, were given by institutions operating under no constraints from the CRA.  Economists from the Federal Reserve and Federal Deposit Insurance Corporation, including Ben Bernanke himself, conclude upon review of available empirical evidence that the CRA in no way caused the subprime mortgage crisis.

 

- Further examination demonstrates that the growth of CRA loans did not coincide with the growth of the subprime market.  CRA related loans reached their peak in the mid 1990s, and “largely came to an end by 2001,” according to a study by Harvard’s New America Foundation.  CRA regulations were greatly weakened by late 2004, when the Bush administration exempted small and middle sized banks from the strictest CRA rules.  In short, CRA based loans were becoming less and less common at the time that the subprime market continued to grow by leaps and bounds.  Finally, foreclosure rates have been far higher for subprime borrowers, when compared to those who received loans as a result of CRA regulations, according to a study by the University of North Carolina at Chapel Hill.  Recent evidence suggests that, as of November 2009, 55 percent of home mortgages were underwater, none of which were subject to CRA regulations.

 

- Housing markets hit hardest by the 2008 to 2009 collapse were often quite affluent, rather than disproportionately poor and minority, although one would expect them to be dominated by the poor if CRA low-income regulations were the main cause of the bubble and crash.  In the Chicago metropolitan area, for example, Kane and Will counties experienced the largest growth in foreclosures from 2008 to 2009, despite the fact that the counties were 79 and 80 percent white respectively, and boasted median family incomes of $81,000 and $66,000, respectively.  Such incomes are rather high compared to the family median income of $42,000 for the city of Chicago and $50,000 for the entire United States.  Chicago data is extremely relevant when examining the housing collapse, considering that Illinois was one of the most overvalued markets during the creation of the housing bubble.

 

The conservative attack on “big government” and progressive activism has had a major effect on public opinion.  As of October 2008, an ABC-Washington Post poll found that 40 percent of Americans felt that “the Obama campaign’s association with the community group ACORN” was a “legitimate issue” in the presidential election.  This large segment of the public was apparently unaware of the manufactured nature of the attacks being made on ACORN, which for all intents and purposes, should have been a non-story.  A Rasmussen poll from September 2009 found that 51 percent of Americans felt that Congress should cut off all federal funding for ACORN, in light of the pimp video “scandal” disseminated by center-left and conservative corporate media.  Similarly, 67 percent of Americans reported having an unfavorable view of the community organization.  Disturbingly, 57 percent of voters surveyed felt that “criminal investigations of ACORN are primarily the result of illegal behavior on the organization’s part,” despite the fact that no employees were ever charged with a crime and no evidence of illegal activity was ever demonstrated or found through state or local inquiries in California or New York.

 

Media coverage clearly had a significant impact on encouraging opposition to ACORN, as 80 percent of those who followed the pimp video “scandal” “very closely” felt that all federal aid should be cut off.  The mediated scandals against ACORN have had the effects conservatives hoped for; by March of 2010, half of ACORN’s 30 state chapters had been closed down, with the organization declaring that the remaining branches would also disband as a result of the media’s attack and declining revenues.  Most disturbing about ACORN’s demise is the open admission from conservatives like Bill O’Reilly that their opposition springs from their contempt for the poor.  O’Reilly condemns ACORN as a “quasi-socialist organization” and for pursuing a “Robin Hood” strategy of “take[ing] from the rich [and] give[ing] to the poor.”  As O’Reilly lucidly asked on his program, “should the government have the right to take my money and give it to people who are poor?”

 

The campaign to rewrite the history of the economic crisis carries with it dire implications.  On one level, it demonstrates the viciousness of right wing reactionaries, who are willing to fabricate stories and blatantly lie to the public to get what they want and destroy their political enemies, no matter the cost.  On another level, this conservative campaign will make it increasingly difficult to pursue meaningful financial regulations of Wall Street, especially if the public is convinced that progressive activists lobbying for system-wide reform are themselves responsible for the economic crisis.  If “big government” created the recession – rather than deregulation and unconstrained corporate power, then why support further government intervention in “efficiently” functioning “free markets?”  A progressive counter narrative is desperately needed at a time when Wall Street friendly financial “reforms” are being proposed by leading Democrats in Congress.  Without a real social movement for change, little is likely to materialize in terms of promoting progressive regulation of Wall Street.

 

 

Anthony DiMaggio taught U.S. and Global Politics at Illinois State University prior to becoming a casualty of this year’s Illinois budget cuts.  He is now an independent researcher and the author of When Media Goes to War (Monthly Review Press, 2010) and Mass Media, Mass Propaganda (Lexington Books, 2008).  He can be reached at: [email protected]

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