Saturday, September 19, 2009

Fox and the Hen House

I have argued before that the financial crisis played out as if the fox were not only caught robbing the hen house but had been given an award for rescuing the chicken.

Now that may be ending.

It seems that the ACORN scandal may be giving people a reason to take a second look at the financial crisis. The reason the financial institutions failed had nothing to do with breaching the Glass Stengal "Chinese Wall" between investment banking and commercial banking. It had everything to do with the bad housing loans that were made to people that could not pay those loans back. What caused evil bankers to suddenly start making loans to people that could not pay back. they were told to stop being so "evil." they were told to stop "red lining" to stop having such high standards for making loans. They were told to start making more loans and they found that with Freddie and Fannie they found that they could sell the loans to the people that insisted they make them--the government.

ACORN's role in this was probably peripheral but it was almost certainly bad. All of the sudden the idea that the bad loans that went out might have had something to do with the role played by ACORN in pressuring banks to make them and in doing the paper work that originated them does not seem so far fetched. The noble community organizer story is no longer serviceable as a shield for the left.

New development: don't worry acorn, help is on the way. the public employment union has decided to endorse ACORN and denounce the organization's attackers'.

The story could be even larger. the president brought the census into the whitehouse for the first time in history. They then decide that ACORN will be one of the prime subcontractors. Gee, what could go wrong? Most of the arguments about ACORN had been rather esoteric until now, but this is something anyone can understand. whatever one may think of the organizaiton, the idea of turning over the census to these people strikes most people as being absure.

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