BLOG VIEW: If you heard some strange popping noises last week, don't worry – it was only the sound of champagne bottles being uncorked across the mortgage banking industry. The Association of Community Organizations for Reform Now (ACORN) announced that it is shutting down, and its death has been the cause of relief for many home-loan originators.
ACORN was founded in 1970 to address socioeconomic needs in Arkansas, with its viewfinder aimed at everything ranging from the problems facing Vietnam War veterans to ensuring public school students received decent lunches. As time went on, ACORN's influence spread across the country, and its mission became wider.
By the late 1980s, ACORN began to focus a great deal of its time and temper on affordable-housing issues. Yet it preferred to use a stick instead of a carrot to get its way – it specialized in noisy and disruptive tactics that were designed to embarrass lenders that the organization claimed to be in violation of the Community Reinvestment Act of 1977 (CRA). ACORN's mania for its version of CRA enforcement became so intense that members of the organization staged a two-day sit-in in a hearing room at the House of Representatives when attempts were made in Congress to rewrite CRA.
In all fairness, ACORN went forth with good intentions – redlining is both morally repugnant and economically stupid, and affordable housing was given a very low political priority during the bulk of the 1980s.
But not unlike many endeavors built on good intentions, ACORN seriously lost its way. During its peak, 10% of the organization's total funding actually came from the federal government, which easily explained why ACORN's wrath conspicuously focused on the private sector instead of Washington's power elite. ACORN was also part of the movement that stressed quantity rather than quality in residential mortgage origination volume – and that, of course, is one of the main roots of the current crisis.
Many people still blame CRA for causing the mortgage banking meltdown – it wasn't responsible, but the legislation has been forever stained because of the ACORN-related antics surrounding its enforcement.
Furthermore, ACORN seemed to stress accountability in everyone except itself. The organization was dogged for years with accusations of inept financial management and political conflicts of interest, and its actions during the 2008 presidential campaign ruined the already-frayed pretense that it was a nonpartisan organization. Its credibility was further eroded by a number of scandals – most notably, a bizarre September 2009 video shot at ACORN's Baltimore office, where it appeared that the staff was giving dubious financial advice to a pair of conservative activists that were supposedly disguised as a pimp and a prostitute.
By the time March 2010 rolled around, ACORN was literally a shell of its former self: The national organization was teetering on the verge of bankruptcy, and its state chapters had either shut down or broke away to create new independent entities. That was quite a comedown for an organization that, two decades earlier, had the political muscle to force the nation's biggest banks to meet its demands for specific loans to specific neighborhoods.
The rise and fall of ACORN can remind us about the dangers of unfocused social activism. The organization's pet projects – affordable-housing development and the economic revitalization of lower-income neighborhoods – are still unresolved issues, despite all of the noise and commotion. ACORN's adversarial relations with the financial services industry ultimately backfired – many lenders were bruised by the organization's penchant for arm-twisting, and it is easy to assume that ACORN could have achieved its goals with serious economic planning, rather than street theater shakedown tactics.
Actually, I don't think that ACORN's demise is an appropriate cause for champagne toasting. The tragedy of its failure is a textbook lesson on what happens to an organization that mistakes power for process. In the end, no one really wins.
– Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]
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