Glenn Beck repeated discredited falsehoods about the Community Reinvestment Act and President Obama's Chicago house while baselessly suggesting that the Obama administration is aiding a troubled, "politically connected" Chicago-based bank. In fact, the White House has denied any involvement in helping the bank.
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Beck suggested Obama administration is helping bank secure private funding
In describing various alleged tangential connections between ShoreBank and Obama and his administration -- including that one bank official once worked with Obama's mother as well as the father of Treasury Secretary Tim Geithner -- Beck suggested that the bank received new funding from private financial institutions because it is "politically connected" to Obama.
From the May 20 edition of Fox News' Glenn Beck:
BECK: But anyway, so they're in trouble. They're in trouble even though they took stimulus money, not TARP money, not a burden to you. Stimulus money, $35 million, but that's not enough, so they're having [unintelligible] problems. So they need somebody to bail them out because they don't want the government to take over. So who's going to bail them out? Just these -- just one of the biggest investors in the climate exchange, Goldman Sachs. But Goldman Sachs, why would they want -- Goldman Sachs, I thought they were dirty. I thought they were causing all kinds of problems. I thought we had to stop the evil Goldman Sachs. So they're gonna -- they're gonna pony up. They decided they're gonna do that. And oh-oh-oh-oh, and Bank of America, which is weird because this is SEIU, they were just protesting, I -- but I'm sure that was completely unrelated, and they're just gonna -- they're just gonna help -- they're just gonna help what is being described as a politically connected bank. Oh yeah, there's connections here.
White House has denied contacts with bank, involvement in bank's securing of funds
Spokesperson: "White House officials have not met with ShoreBank" or " 'made asks' of financial assistance to other financial institutions for ShoreBank." From a May 20 DailyFinance article:
The White House denies ShoreBank got any improper help.
"White House officials have not met with ShoreBank regarding support measures for their bank, nor has the White House 'made asks' of financial assistance to other financial institutions for ShoreBank," Amy Brundage, a White House spokeswoman, tells DailyFinance. "Questions that come to the White House from institutions regarding the CDFI [Community Development Financial Institution] program are referred to the Treasury Department or to their bank regulator, who are the ones that decide these matters."
Beck falsely claimed CRA "led to all of the things that we're now having to bail banks out for"
In claiming that the founder of ShoreBank was the only banker to testify in favor of the creation of the Community Reinvestment Act in the 1970s, Beck described the CRA as "really kind of a Cloward and Piven kind of scheme that really led to all of the things that we're now having to bail banks out for." From the May 20 edition of Fox News' Glenn Beck:
BECK: Here's Ron. He's the founder. Did you know he was the guy who was testifying for the Community Reinvestment Act -- 1977, Jimmy Carter? It's great, because the Community Reinvestment Act is really kind of a Cloward and Piven kind of scheme that really led to all of the things that we're now having to bail banks out for. But he was the only banker who said, "I want you to know, that's an important deal."
Fact: Experts say CRA did not contribute to financial crisis "in any substantive way"
Bernanke: Experience "runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties." In a November 25, 2008, letter, Federal Reserve chairman Ben Bernanke stated: "Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties."
Experts: Most subprime mortgages not issued by institutions under CRA. In a paper published on the website of the Federal Reserve Bank of San Francisco, Michigan law professor Michael Barr stated that as of 2005: "Only 25 percent of subprime loans were made by banks and thrifts, and the Federal Reserve reports that only six percent of subprime loans were CRA-eligible." Similarly, a 2008 study by a law firm specializing in CRA compliance estimated that in the 15 most populous metropolitan areas, 84.3 percent of subprime loans in 2006 were made by financial institutions not governed by the CRA.
Slate's Gross: "[t]he notion that the Community Reinvestment Act is somehow responsible for poor lending decisions is absurd." In an October 7, 2008, Slate article, Daniel Gross, a business columnist for Newsweek and author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, criticized the notion that affordable housing initiatives caused the financial crisis, writing that "the notion that the Community Reinvestment Act is somehow responsible for poor lending decisions is absurd" and that "lending money to poor people and minorities isn't inherently risky. There's plenty of evidence that in fact it's not that risky at all." Gross further explained, "On the other hand, lending money recklessly to obscenely rich white guys ... can be really risky. In fact, it's even more risky, since they have a lot more borrowing capacity."
Beck's false claim: Didn't Rezko give "an amazing deal on Barack Obama's house?"
Beck tangentally links bank official to Obama via Rezko. From the May 20 edition of Glenn Beck:
BECK: Then we have Howard Stanback. Here's Howie. He's another board member. Hi, Howard. Howard's a good guy. He's a -- wait a minute, he's a former board chairman of the Woods Foundation, which is weird. If I'm not mistaken, Obama and Bill Ayers were also on the board of the Woods Foundation. Isn't -- I gotta check some of these facts out because you'd think -- oh, by the way, he was also employed -- this can't be right. He was also employed by New Kenwood LLC, a real estate development co-owned by Alison Davis and Tony Rezko. Tony Rezko. Didn't he, like, give, like, an amazing deal on Barack Obama's house? This is getting interesting.
Obama received no special deal on his house or adjacent land. As Media Matters for America has repeatedly documented, contrary to Beck's claim that Obama got "an amazing deal" from Rezko on his house, Bloomberg News reported: "The couple who sold Barack Obama his Chicago home said the Illinois senator's $1.65 million bid 'was the best offer' and they didn't cut their asking price because a campaign donor bought their adjacent land, according to e-mails between Obama's presidential campaign and the seller." The Obamas subsequently bought a portion of Rezko's lot, but there is no evidence that they received an "amazing deal" on that purchase. According to documents that were posted on the Obama campaign website, Obama paid Rezko $104,166 for the piece of property in question -- above its appraised value of $40,500, as Media Matters has repeatedly noted.