Bailed Out Citigroup Won’t Rule Out Giving More Money to ACORN

January 7, 2010 - 5:21 PM
Citigroup, which received $45 billion in tax dollars from the federal bank bailout, will not rule out giving more money to ACORN, the liberal community organizing group under investigation in several states for alleged voter registration fraud.

Currency. (Wikipedia Commons)

(CNSNews.com) – Citigroup, which received $45 billion in tax dollars from the federal bank bailout, will not rule out giving more money to ACORN, the liberal community organizing group under investigation in several states for alleged voter registration fraud.
 
Citigroup was one of the three major recipients of money from the Troubled Assets Relief Program (TARP) to give money to the Association of Community Organizers for Reform Now (ACORN) and its affiliates. The other TARP recipients were Bank of America, which also received $45 billion in loans from the federal government and J.P. Morgan Chase, which got $25 billion. 
 
However, both Bank of America and J.P. Morgan Chase stopped funding the ACORN Institute last fall, according to the National Legal and Policy Center (NLPC), a government watchdog group that has monitored what TARP recipients are giving to the ACORN Institute. (The ACORN Institute is one of ACORN’s affiliates and, according to its Web site, “operates a countrywide network of ACORN Centers which provide free tax preparation, benefits enrollment, and foreclosure prevention services.”) 
 
The 2008 tax return of the Citi Foundation, the non-profit arm of Citigroup, shows that it gave $500,000 to the ACORN Institute in 2006, 2007, and 2008, for a total of $1.5 million, according to the NLPC. Citigroup decided in late October 2009 to suspend giving to the organization pending an internal investigation by ACORN.
 
A torrent of defunding came after hidden-camera videos showed ACORN workers in several different offices around the country apparently giving tax advice to two people, posing as a pimp and a prostitute, who said they planned to open a prostitution business.
 
The public pressure from the videos prompted ACORN to conduct an internal investigation. The findings of the internal probe were released on Dec. 7, 2009, and concluded that the organization did nothing illegal. But Citigroup still has not determined how to handle the matter.
 
“Just for the time being, we are still basically continuing to review materials as far as the internal audit or investigation is concerned. I don’t really have any comment beyond that at this stage,” Citigroup spokeswoman Andrea Hurst told CNSNews.com.
 
Citigroup repaid $20 million to the federal government in December, out of the total $45 billion it received through TARP. But the Treasury Department reportedly postponed selling off its 34 percent stake in the bank because Citigroup’s stock price was too low. In an http://www.cybercastnewsservice.org/cns/webuploads/CitigroupACORNletter 1-7-10.pdf">Oct. 29, 2009 letter to the NLPC, Citigroup’s Vice President of Global Community Relations Natalie Abatemarco wrote, “We too are deeply concerned about the recent media reports regarding ACORN and, because of these reports, have suspended our charitable financial support and program relationships with ACORN, and we are awaiting the results of the independent audit of ACORN activities now underway.”
 
It was also during last fall that Congress voted to cut direct federal funding to the organization, after the hidden-camera videos became public through the online journalism site, BigGovernment.com.
 
Peter Flaherty, president of the NLPC, said he hoped that shunning ACORN by the big banks was not simply a temporary measure. He also expressed concern that, despite congressional action to cut off funds, ACORN could continue getting tax dollars indirectly through TARP money.
 
“It appears the big TARP recipients have backed off their support of ACORN,” Flaherty told CNSNews.com. “But I’m very concerned it will be reinstated after the negative publicity subsides.”
 
The internal ACORN report that focused narrowly on the undercover videos was done by former Massachusetts Attorney General Scott Harshberger, who called for the organization to take nine steps to strengthen its management and oversight structures.
 
The Harshbarger report states: “While some of the advice and counsel given by ACORN employees and volunteers was clearly inappropriate and unprofessional, we did not find a pattern of intentional, illegal conduct by ACORN staff; in fact, there is no evidence that action, illegal or otherwise, was taken by any ACORN employee on behalf of the videographers.”

Steve Kest, executive director of ACORN, right, and ACORN member Hugh Alleyne listen to a question during a news conference in Washington, D.C., Wednesday, Oct. 29, 2008. (AP photo)

Flaherty is concerned that the report will be used as a rationale for funding the organization again.
 
“The Harshbarger report is a whitewash and limited in scope,” Flaherty said. “So, we are fearful that Citigroup will reinstate support based on this whitewash.”
 
Bank of America and J.P. Morgan are the only other TARP recipients Flaherty knows that gave money to ACORN. However, as broad as TARP is, he said, there could be smaller financial institutions that contributed to the group. Bank of America repaid the government its $45 billion last month.
 
The NLPC’s review of the Bank of America Charitable Foundation’s tax returns for 2006, 2007, and 2008 found that the bank gave $3.6 million in grants to ACORN Housing Corp., another ACORN affiliate, over that period. The charitable foundation is the non-profit arm of Bank of America.
  
But Bank of America has suspended grants to ACORN Housing Corp., and taken references to ACORN off its Web site, Flaherty said.
 
A Bank of America spokesman could not be reached for comment this week despite phone calls and e-mails from CNSNews.com.
 
However, a Bank of America official told The Wall Street Journal (Sept. 28, 2009) that the bank “suspended current commitments” to ACORN Housing and “will not enter into any further agreements with Acorn or any of its affiliates,” pending assessments by the bank of the organization's operations. Further, the bank’s statement said, “Bank of America takes recent allegations made against Acorn and Acorn Housing Corporation employees very seriously.”
 
The J.P. Morgan Foundation, the bank’s charitable arm, gave $5 million to ACORN’s housing affiliate over the last five years, The Washington Examiner reported last fall. J.P. Morgan’s relationship with ACORN expired, and the bank decided not to renew it, Flaherty said.
 
In a Sept. 22, 2009 letter to the NLPC, J.P. Morgan Chase Executive Specialist Diane Castillo said, “In the past, our funding has supported work that ACORN Housing Corp., a subsidiary of ACORN, has done to provide homebuyer education, foreclosure counseling, and financial literacy services in economically disadvantaged neighborhoods across the country.”
 
The letter continues, “None of our funding has ever been directed to support the voter registration network which is under such heavy scrutiny currently. Please be advised the commitment ended in 2008.”
 
In the Continuing Appropriations Resolution for 2010, Congress included a provision in October that bars federal funds to ACORN and its “affiliates, subsidiaries or allied organizations.”
 
Section 163 of the bill said, “None of the funds made available by this joint resolution or any prior Act may be provided to the Association of Community Organizations for Reform Now (ACORN), or any of its affiliates, subsidiaries, or allied organizations.”
 
President Barack Obama signed the resolution, but a Justice Department opinion in November cleared the way for funds from the Department of Housing and Urban Development to continue going to the organization.
 
In December, U.S. District Judge Nina Gershon of the Eastern District of New York granted a preliminary injunction to stop Congress from singling out ACORN for punishment without proper investigation or due process. Her opinion said that cutting federal funds would lead to “irreparable harm” to ACORN.
 
The federal government has awarded at least $53 million to ACORN and its affiliates since 1994, according to an analysis by the House Republican staff.