A local politician, Mike Hatch, filed a complaint against Capital One on a deceptive-advertising charge. part of its settlement with Capital One on a deceptive-advertising complaint. Hatch’s office agreed to drop its deceptive-advertising case against Capital One Bank that February in exchange for $749,999 — a dollar short of a statutory threshold for automatic deposit of settlement funds into state coffers. Hatch’s office and the defendant were able to pick other recipients for two-thirds of the proceeds: the Minnesota chapters of the Legal Aid Society and the Association of Community Organizations for Reform Now, ACORN. The state got $250,000 to cover its investigative costs. Two weeks later, ACORN endorsed Mike Hatch in his bid for the Minnesota governorship (he lost, this was in 2006).
In a completely different venue, the New York Times outlines how Henry Cisneros, the Clinton administration’s top housing official in the mid-1990s, loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before. Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and Countrywide Financial, joining Fannie Mae chairman James Johnson. Cisneros became a developer after the Clinton administration, and joining with KB (American CityVista), he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He has financed the construction of more than 7,000 houses.
ACORN, and I'm sure many groups like them representing other special interests, are able to game the system from the top-down using their pretext of helping the little guy. But it's a blatant shake-down of corporations. The politicians they support then perpetuate the system. All that money was not just going to Wall Street. A lot was siphoned off by corporate cronies with ties to government at all levels. It is a good thing this game is over, because the policies they are supporting just do not make any sense.
Minnesota Governor Pawlenty recently vetoed an ACORN-sponsored bill that would have imposed a two-year moratorium on foreclosures in Minnesota, and pretty much guaranteed that no mortgage lenders would do any more business in the state. A foreclosure moratorium would mean that lenders holding mortgages in default would be forced to negotiate with borrowers to modify the loans, and ACORN “counselors” would have been right in the middle of these negotiations. No doubt they would have shaken down every mortgage lender in the country for even more money in return for their cooperation. This raises costs of lending, but that cost is spread around, unseen, while ACORN then builds its patronage system, perpetuating itself.