A Failed Philosophy

This country can’t afford another four years of this failed philosophy

Says Barack Obama. Indeed, I agree with Barack Obama. And after examining his record it is clear he must not be elected President if we are to have a chance of changing the system that contributed to the housing crisis.

To understand the contributing aspect to this problem, it is necessary to investigate how Obama has been a participant in various aspects of the operating philosophy that participated in the housing meltdown. To begin with, Obama heralds his credentials as a former community organizer. Since this term is largely nebulous and he has not done much to explain in detail his activities or provide a clear definition of this title it is important for us to define it.

Community Organizer: One who facilitates a connection between activist interest groups and public/private pools of cash

Obama has made vague references to his days as a community organizer, referring to moments working with churches or in particular some incident about helping people deal with the closing of a southside Chicago steel mill. What he tends to not mention much is the work he has done with the activist urban mobilization organization ACORN. Among its many community organizing activities, ACORN offers through the ACORN Housing Corporation, first time homeowner mortgage counseling and foreclosure prevention assistance, and low income housing development.

ACORN is not an organization free from controversy. ACORN members have been indicted and convicted of fraudulent voter registration in Missouri, Wisconsin, Colorado, and other states. Obama has provided legal defense work for ACORN Illinois chapter and counts on ACORN organization for voter mobilization. One main activity of ACORN's is in channeling mortgage lending funds to its low income constituents. As is detailed in this fascinating and indispensable article, ACORN and other community activist groups secured billions of dollars in loans for their marginal credit constituents. The main contributing aspect that directed this money to community activist groups had to do with the stepped up enforcement, under the Clinton administration, of a banking law called the Community Reinvestment Act. This law graded and scored the urban and low-income lending practices of various banks - how well they provided mortgages to marginal clients in urban and redeveloping neighborhoods.

the Clinton Treasury Department's 1995 regulations made getting a satisfactory CRA rating much harder. The new regulations de-emphasized subjective assessment measures in favor of strictly numerical ones. Bank examiners would use federal home-loan data, broken down by neighborhood, income group, and race, to rate banks on performance. There would be no more A's for effort. Only results—specific loans, specific levels of service—would count. Where and to whom have home loans been made? Have banks invested in all neighborhoods within their assessment area? Do they operate branches in those neighborhoods?

The effect of this stepped up enforcement of the CRA encouraged community activist groups, such as ACORN, to swarm mortgage lending banks with inquiries and challenges measured under the CRA. With mortgage lending banks at the mercy of federal backed mortgage entities Freddie Mac and Fannie Mae, a poor rating under CRA could potential shut off the spigot to federal mortgage guarantees and repurchasing. Banks became increasingly beholden to the lending demands of community activist interest groups and their lending approvals to marginal clients increased dramatically - lest the bank risk receiving a poor CRA rating under the new Clinton era enforcement regime.

Obama's links to ACORN cast much needed light on what Obama's "community organizing" entailed. However, this is not his only potential link to the present housing crisis. As Obama's own dubious fact check shows, Obama has been heavily involved in public and quasi public housing matters in the Chicago regions throughout various stages of his career. One particular aspect not given much press is over Obama's linkages to public-private partnerships tasked with low income housing development in Chicago. A senior member of Obama's presidential campaign Valerie Jarrett, as well as his long-time financier (and convicted felon) Tony Rezco, and other major contributors to Obama's campaigns were involved in using government subsidies for low-income housing developments throughout Chicago. Some of these projects were built to sub-standard conditions and many units now are in violation of city code, including some units that have been condemned. What this indicates is that up the chain, Obama has aligned himself with groups involved in enlarging the constituency of marginal and risky mortgage holders through an increased access to government backed loans. Additional to this, Obama has also aligned himself with individuals and groups (including providing legal representation) taking government funds to subsidize the construction of low-income urban housing developments. As has been shown, Obama's ties to the housing issue are more than minimal.

But it goes further. The resignation of James Johnson from Obama's vice presidential candidate advisory committee proved to be a minor embarrassment for Obama earlier this summer. James Johnson, before serving on Obama's staff, was the CEO of Fannie Mae. Now in the light of the government bailout of Fannie Mae and Freddie Mac, Obama's ties to the quasi-government mortgage backer must be re-examined. During Obama's short time as US Senator, he has managed to collect the second largest total of campaign contributions from Fannie Mae and Freddie Mac's employees and Political Action Committee. Even more illuminating are the grants awarded by Fannie Mae to Illinois community activist groups including ACORN.

From the bottom of the food chain to the top, Obama has closely associated himself with the activist pressure groups who have strained the nation's government-backed mortgage lending financial system through an abuse of the CRA. Furthermore, political friends and allies receive favorably subsidy from government grants in pursuit of public/private development projects in urban areas. And at the top Obama has cultivated relationships with the very senior officials who oversee the entire mortgage lending financial system. While I do not suggest that Obama caused the mortgage meltdown, what I do highlight is Obama's advocacy for a system that is presently in place and that has precipitated in no small measure to the mortgage financial collapse. Obama speaks of changing the system that caused this but he has shown to be very active in support of the system that caused this - in support of the grassroots community organizations that added billions in risky mortgage holdings to the financial roles; in support of housing developers who trawl for public cash in building out housing units that await dwellers with risky finances, and has cultivated deep ties with the very heights of the system that guarantee it all and awash it with cash.

Isn't it worth your time to tear yourself away from Palin's hacked email for one minute and devote just a few seconds to examining the record and actions of Barack Obama? Does he really represent change? Or is it more clear that what he will bring to Washington is ever more government. A government built on a system of wealth transfer to activist interest groups and other mobilized entities. Is this a system we really want to enhance any further? Since Obama knows nothing else but a system based on the nexus of cash handouts to the politically mobilized, it suggests that what Obama will bring to Washington, if elected, is more of the same rotten same.

Again, I repeat Community Organizer: One who facilitates a connection between activist interest groups and public/private pools of cash
We do not need to elect a Community Organizer in Chief. I cannot think of anything more disastrous at this time in our history.