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In times of unrest, it's amazing how quickly some people will go to finding some way to scapegoat the least powerful among us. One of the themes reverberating around right wing world is that ACORN and the Community Reinvestment Act are to blame for the sub-prime mess, as this segment on Lou Dobbs echoes here.

It goes back to something known as the Community Reinvestment Act that passed in 1977. The law ordered banks to make loans to low and moderate income people. The Consumer Rights League says ACORN stepped in and used that law to pressure banks to lend to sub prime borrowers, even those who couldn't demonstrate the capability to pay back the loan.

Catch all the barely hidden subtext? It's all these "community organizers" (hmmm....remind me, whose resume has been scoffed at for being a community organizer?) FORCING these poor, hapless banks to lend money to these shiftless low and medium income people, and worse, illegal aliens (Dobbs' personal scapegoat for all things wrong with America). How dare these leftist grassroots groups (tied to the Democratic Party, naturally) cause the ruin of the American financial system with their demands?

It's easy to see how this would appeal to right wingers like Dobbs, Malkin and Savage . Too bad it's not true:

The Community Reinvestment Act caused financial institutions to lend to people who weren't credit worthy. This is crap. The CRA was signed into law in 1977 -- over 20 years before the current crisis. The second problem with this theory is the CRA only applies to banks and thrifts. Most of the mortgage lending during the last boom came from -- mortgage lenders who aren't regulated by CRA. I explained this all in more detail here.

The CRA tried to force banks to keep from redlining neighborhoods to keep minorities out...something I'm sure gets right wingers up in arms. And the charge that ACORN was to personally benefit from the bailout? Lies. It was stricken from the bill the Republicans sabotaged yesterday, as this side-by-side comparison of the various bills shows. Admittedly, ACORN has its problems (though related to voter registration and not home mortgages), but as Rep. Keith Ellison says:

The president told the nation that the crisis is due to "the irresponsible actions of some jeopardizing the financial security of all." There are even lies circulating that blame minorities for the crisis through the Community Reinvestment Act. This is factually wrong -- and repugnantly bigoted. In fact, the root cause of the failures today is the ideological rigidity of the Bush administration, and its conservative friends in Congress and on Wall Street who oppose regulation, oversight and corporate accountability. For eight long years their mantra has been "regulation and oversight is bad" and "the free market is good."

But now, when their policies have failed and the chickens have come home to roost, taxpayers are asked to help them out. We have little choice. We cannot let Wall Street fail, because if we do, Main Street fails as well.

Transcripts below the fold

Well one of the groups at the center of this financial crisis is a so-called community activist group known as ACORN. In point of fact, ACORN is a left wing special interest group now under investigation for embezzlement, voter fraud and providing mortgages to illegal aliens among other things.

The group ACORN lobbied Congress for years to allow more of those risky mortgages that in part led to this crisis. And now, ACORN stands to reap hundreds of millions of dollars from a government bailout of Wall Street. Lisa Sylvester has our report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED GROUP: (INAUDIBLE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): ACORN, the Association of Community Organizations for Reform Now rallied in front of the Miami Federal Reserve Bank. The group is pointing fingers at Wall Street for causing the financial meltdown. But critics say this community activist group shares the blame.

TOM DILORENZO, ECONOMICS PROF., LOYOLA COLLEGE: They've always lobbied Congress to do everything they could to make more and more or force banks to make more and more loans to low and moderate income people, which is a very noble-sounding goal. But unfortunately they have contributed to the financial ruination of thousands of low income families.

SYLVESTER: It goes back to something known as the Community Reinvestment Act that passed in 1977. The law ordered banks to make loans to low and moderate income people. The Consumer Rights League says ACORN stepped in and used that law to pressure banks to lend to sub prime borrowers, even those who couldn't demonstrate the capability to pay back the loan.

JAMES TERRY, CONSUMER RIGHTS LEAGUE: Back in the early '90s they would stage protests at banks that, you know, they sued them for red lining. They (INAUDIBLE) engaged them in legal action.

SYLVESTER: Enter deregulation in the '90's then Fannie Mae and Freddie Mac began purchasing these mortgages and selling them to private investors. And the sub prime market took off. Former Clinton administration official Franklin Raines, who ran Fannie Mae amassed $90 million in six year he ran Fannie. Homeownership was up which pleased groups like ACORN and Wall Street made a ton of money until home prices started falling. But ACORN says it's not to blame. It's all about greed.

AUSTIN KING, ACORN: When you look at all the bad sub prime loans that were made in the last five years, three out of four of them were made by institutions that are not governed by the CRA, so there's no way you can blame the CRA on 75 percent of the sub prime loans that were made in the last five years.

(END VIDEOTAPE)

SYLVESTER: And ACORN which calls itself the nation's largest grassroots organization of low and moderate income families, has come under fire for other issues. At least five states have opened investigations into its voter registration drive. And ACORN employees have been convicted of voter fraud. Still, this group, as you mentioned, stood to benefit from the bailout deal and part of any profit realized from the sale of troubled assets were to go into a fund and that money would be distributed to low income housing advocacy groups including ACORN, Lou.

DOBBS: Now think about this, in the midst of this -- you know everyone talking about a clean bill and the Democratic leadership, let's be clear. This is a straightforward deal for ACORN and other groups, left wing groups, set up by the Democratic leadership of Congress. They're not interested in the bailout per se. They want to spread this out and many people believe that this bailout in part is dear to the Democratic leadership because they want to advance a social agenda here as much as much as an economic bailout of Wall Street.

SYLVESTER: Yeah, Lou, in fact what they did is in prior legislation they actually created these two funds. And now essentially what thy were going to do is try to use this bailout to fund and put money in those funds in order to benefit groups like ACORN and in order to advance some other causes as you mentioned including their voter registration drive, Lou.

DOBBS: It's -- this is pitiful in the fact that, of course, this Congress is fully supportive of this nonsense is all the more disgusting, so voters right now, all of us as citizens have a lot to be disgusted with on Capitol Hill. Thank you very much, Lisa -- Lisa Sylvester reporting.