Congress finally took limited punitive action this week after the revelation on Fox News that employees of Acorn, the nation's biggest community organizing group, were dishing out advice to a pimp and his prostitute on how they could game the system to get subsidized housing loans and evade federal taxes.
Our lawmakers' sudden outrage is all a bit rich--and risible. Even in the halls of Congress it's widely known that the sleaze now surfacing in Acorn offices all across the country was first brewed in the Community Reinvestment Act (CRA) of 1977. The legislation aimed to expand minority home ownership in the inner cities. Under CRA's new rules, banks were forced to go through a costly process of reporting where and to whom they lend money and to show that they don't discriminate or "red line" in minority communities. When banks need approval for mergers or acquisitions, the legislation gives "community groups" the opportunity to lodge complaints against them, alleging suspect lending practices. If there's even the appearance of discrimination, federal bank regulators may put the proposed deals on hold.
The CRA legislation became Acorn's wedge, allowing it to expand its presence in inner city neighborhoods as a community-based housing group. The organization developed a lucrative niche "advising" banks seeking regulatory approvals on how they could comply with CRA and thus avoid complaints by groups like ... Acorn. Major financial institutions like J. P. Morgan & Company and Chase Manhattan, symbols of the capitalist system that Acorn said was the root of all evil, suddenly donated hundreds of thousands of dollars to the self-styled radical organization. If the banks didn't cooperate, there was always the implied threat that Acorn would lodge a complaint. It was a shakedown operation that made Jesse Jackson and Al Sharpton look like amateurs. "The banks knew they are being held up, but they weren't going to fight over this. They just wrote it off as part of the cost of doing business," a banking industry insider once told me.
CRA would have created temptations for abuse of power by even the most scrupulous of community groups. But Acorn has never been anything but unscrupulous in trying to expand its power and reach. In Acorn's worldview, the ends have always justified the means because the ends are nothing less than a utopian transformation of the world. "We are the majority, forged from all the minorities," says the group's official platform. "We will continue our fight ... until we have shared the wealth, until we have won our freedom."
Acorn has preached the socialist gospel since it emerged out of one of the 1960s New Left's most destructive groups, the National Welfare Rights Organization. NWRO founder George Wiley forged an army of tens of thousands of single minority mothers, whom he sent out to disrupt welfare offices through sit-ins and demonstrations demanding an end to the "oppressive" eligibility restrictions that kept down the welfare rolls. He hoped to flood the welfare system with so many clients that it would burst, creating a crisis that would force a radical restructuring of America's unjust capitalist economy.
For a while the tactic succeeded beyond Wiley's wildest dreams. From 1965 to 1974, the number of single-parent households on welfare soared from 4.3 million to 10.8 million, despite mostly flush economic times. By the early 1970s, one person was on the welfare rolls in New York City for every two working in the city's private economy. Yet far from sparking a restructuring of American capitalism, this explosion of the welfare rolls only added to the culture of family disintegration and dependency in inner-city neighborhoods, with rampant illegitimacy, crime, school failure and drug abuse among a fast-growing underclass.
Seeking new worlds to conquer, Wiley sent one of his young lieutenants, Wade Rathke, to Little Rock, Ark., to launch a community-organizing group that called itself Acorn (Association of Community Organizations for Reform Now.) The welfare rights group soon self-destructed, but Acorn grew very fast by exploiting the inner-city underclass that Wiley had helped to create and by cleverly making alliances with other big city progressive groups such as unions and churches.
By the 1990s, local Acorn chapters were well entrenched in inner-city communities through the organization's housing and mortgage services. The overall aim was to build a broad constituency of low-income and working-class people to agitate for social change. At the same time, Acorn began providing the shock troops for the campaigns of local leftist Democratic politicians--as it often did in Barack Obama's Chicago.
Acorn is now exclusively a Democratic Party albatross. The organization’s many abuses of power now coming to light have been enabled by Democratic mayors, governors and congressmen. If Barack Obama wants to effectively refute the charge by some on the right that he has a secret socialist agenda, he has the perfect opportunity. All he has to do is declare that his administration will henceforth act to block taxpayer funds from ever again going to this very openly radical and socialist organization.
Sol Stern is a senior fellow at the Manhattan Institute and a contributing editor to City Journal.
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