ACORN Wannabes May Get $4 Billion
By Matthew Vadum
Radical in-your-face pressure groups that are part of President Obama’s political machine may soon reap a $4 billion windfall thanks to a huge cash settlement the administration extracted from lending giant JPMorgan.
The settlement, which weighs in at a total of $13 billion, was unveiled last week by the Justice Department. In it JPMorgan acknowledged what DoJ called “serious misrepresentations to the public” about the mortgage securities transactions.
The $4 billion is supposed to be used to provide relief to underwater homeowners and potential homebuyers.
But there’s a catch.
According to the Department of Justice, if JPMorgan fails to shell out the $4 billion by Dec. 31, 2017, it will be required “to pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.”
Why is the bank coughing up the dough?
“JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors,” the DoJ said. “This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.”
It’s hogwash, of course.
What this all really means is that the bank stands accused of fraud — but that very accusation in itself is a fraud. JPMorgan did what liberal Democrats and some misguided Republicans told it to do.
The whole thing is an example of crass, vicious Marxist scapegoating, a class-warfare scam concocted to distract from the decisive role that boneheaded, destructive left-wing policies pushed by Barack Obama, former Rep. Barney Frank (D-Mass.), former Housing and Urban Development Secretary Andrew Cuomo and their fellow Democrats played in plunging mortgage markets into chaos.
And NeighborWorks, the potential vehicle to distribute the $4 billion, is a government-funded housing organization that is politically aligned with the worst of the left-wing activist groups. These groups already get millions of taxpayer dollars from NeighborWorks which in recent decades has become a major funder of radical, often taxpayer-supported, activism.
Imagine what these awful pro-Obama groups will be able to do with $4 billion.
The Obama administration used the opportunity of announcing the settlement to grandstand against JPMorgan.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder, a conservative-hating, pathologically dishonest racist who may soon face impeachment proceedings in the House of Representatives.
“JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior,” Holder sniffed without mentioning that his comrades strong-armed banks into originating the dubious mortgages that were securitized and sold to the public.
The deal officially resolves “federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, [now-defunct] Bear Stearns and [now-defunct] Washington Mutual prior to Jan. 1, 2009,” DoJ said in a press release.
The Justice Department described the legal compromise, which requires JPMorgan to provide relief to underwater homeowners and potential homebuyers, as “the largest settlement with a single entity in American history.” The civil settlement does not absolve JPMorgan or its employees from any possible criminal charges. In other words, for the bank, it’s not much of a deal at all. In other words, the settlement gives Eric Holder’s radical, lawless Justice Department continuing leverage over JPMorgan.
Few serious economists doubt that the mortgage market debacle and the economic collapse of 2008 were caused by the deliberate weakening of underwriting standards carried out in the name of ending discrimination.
Leftists played both sides during the saga. They called banks racist and demanded more subprime lending for minorities and then when the loans went bad called the banks racist for supposedly targeting on minority borrowers. Through the magic of dysphemism, the once sought after subprime lending was transformed into “predatory lending.”
Activist groups were encouraged to agitate by the Carter-era Community Reinvestment Act, which enshrined in law a kind of lending protection racket. Banking regulators who had come under the influence of groups like ACORN had the power to make trouble for banks that failed to lend enough money to borrowers in so-called underserved communities. Banks that paid enough — whatever that means — got left alone, but banks that didn’t, got their legs broken.
The shaking down of lenders intensified when then-Treasury Secretary Robert Rubin presided over the Clinton administration’s effort to put the CRA on steroids. Banks began to make risky subprime loans and Fannie Mae and Freddie Mac aggregated them for sale in the secondary market as mortgage-backed securities. These practices made it easier for banks to give in to the demands of ACORN and other groups to originate more and more doomed mortgages because they knew they could offload their high-risk debt on quasi-governmental suckers Fannie and Freddie, which were under intense political pressure to service the subprime market.
Like all statist true believers, Janet Yellen, the dismal central banker who is well on her way to becoming the next Federal Reserve chairman, is in denial. Yellen refuses to admit that the crazy policies that left-wingers and crony capitalists support are turning America into Greece. This Keynesian wrecker bemoans the “tendency to conflate the current problems in the subprime market with CRA-motivated lending.”
Even now leftist groups such as Neighborhood Assistance Corp. of America (NACA), National Council of La Raza, Greenlining Institute, Jesse Jackson’s RainbowPUSH Coalition and ACORN’s successor groups brag that they forced banks to underwrite trillions upon trillions of dollars worth of bad loans solely in pursuit of redistributive so-called social justice.
Left-wing pressure groups threatened nasty public relations campaigns against lenders that refused to kneel before their radical economic agenda.
With the new cash boost they’re likely to soon receive, they’ll rage against lenders again, effectively rewarded for their antisocial agitation aimed at bringing down the American capitalist system.