Article | Acorn Squash-Community Reinvestment Act

Article | Acorn Squash

Then came the Community Reinvestment Act. Passed in 1977 to prompt banks to lend money in underserved communities, the CRA allowed community groups to file complaints that could hold up or even scuttle bank mergers. As one nonprofit umbrella group observed: "To avoid the possibility of a denied or delayed application, lending institutions have an incentive to make formal agreements with community organizations."

Acorn became among the most successful at exploiting the law, especially after the Clinton administration set up tough new CRA standards. In 1993 Acorn crafted a $55 million, 11-city lending program administered by it and financed by 14 major banks eager to avoid CRA woes. In 1998 Acorn activists disrupted Federal Reserve hearings on the proposed Citicorp merger with Travelers, waving red umbrellas, a corporate symbol of Travelers, and then later protested Citigroup's acquisition of Associates First Capital Corp. Eventually Citigroup signed an agreement to provide mortgages through Acorn counseling centers, including home loans to undocumented aliens in California. In 2000 a U.S. Senate subcommittee estimated that such CRA deals had directed at least $9.5 billion through nonprofits, making the CRA the second-most important funder of social advocacy groups next to the government itself.