ACORN Blasts Obama for Choice of Fund Manager in Toxic Asset Program

President Obama's long-term relationship with the community group ACORN is showing its first sign of strain, as the group is opposing a participant in one of the administration's economic recovery programs.

The Association of Community Organizations for Reform Now is objecting to the Treasury Department's selection of billionaire investor Wilbur Ross to be one of nine fund managers for the Public-Private Investment Program for toxic assets, or PPIP.

Ross, whose firm is now a subsidiary of Invesco, plans to commit about $1 billion to the government's program, with the money split between purchases of loans and mortgage-backed securities.

ACORN, though, called Ross a "home wrecker" because his mortgage company, American Home Mortgage Servicing, had not joined Obama's "Making Home Affordable" program, which aims to prevent 4 million foreclosures by modifying mortgages to affordable terms.

"Given that the administration has invested a lot of political capital and TARP funds into the creation of "Making Home Affordable," we were shocked to see that one of the last holdouts, "Home Wrecker" Wilbur Ross, has been selected by Treasury to manage this effort designed to clean up banks' balance sheets," ACORN CEO Bertha Lewis said in a statement.

"This is disappointing in the extreme, and calls into question Treasury's commitment to preventing foreclosures when it entrusts public funds to a corporate titan who has refused to do the bare minimum in foreclosure prevention by joining the administration's program."

ACORN said if Ross doesn't join the administration's program, the Treasury Department should "yank his sweetheart deal."

"American homeowners and taxpayers demand nothing less than all hands on deck to save the American dream and rescue the economy," Lewis said. "Wilbur Ross has so far refused to do his part. That must change, now."

But Ross disputed ACORN's claim, saying that his company had been working with Fannie Mae and the Treasury Department for months on joining Obama's housing program before the goal was reached on Friday.

"We were quite stunned to find this sort of accusation because we're the farthest thing from being a home wrecker," Ross told, adding that if ACORN officials had spoken to his company, they would have known he endorsed Obama's housing program.

Ross noted that his company has completed more than 64,000 loan modifications in the past year, with 86 percent of borrowers reaping a payment reduction.

His spokeswoman, Christine Sullivan added in an e-mail,"We share President Obama's goal of helping struggling homeowners who want to stay in their homes. Since his announcement of the program in early March, we have had a dedicated team of associates working out implementation details.

"They have been addressing the changes to our computer system, work flows, training and processes -- all necessary steps to implementing the guidelines smoothly for our borrowers," she said.

The Treasury Department did not return messages seeking verification.

The Obama administration launched PPIP in February as part of the $700 billion Troubled Asset Relief Program, or TARP.

The program is designed to use federal and privately raised funds to remove as much as $40 billion in distressed assets from the balance sheets of financial institutions.

That's far below the potential $1 trillion in assets that the government originally hoped to take off the banks' books through purchases of soured securities and a separate program that would have dealt with bad loans.

The program's goals have been scaled back, partly because many banks' financial situations have improved in recent weeks, reducing their need to sell the troubled securities.

Treasury said in a statement that it would invest up to $30 billion in the program, matched by $10 billion from the private sector.

Critics have assailed the program for making taxpayers cover all the risk involved.

"It seems to me the Obama administration would be making sure any company receiving this assistance from taxpayers would do the bare minimum by participating" in the housing program, said Austin King, director of ACORN'S financial justice center.

King acknowledged the awkward situation that the group found itself in by criticizing Obama, whom ACORN has vigorously supported.

"I think this is the first time the administration has done something this flagrant in terms of the foreclosure crisis that we had to say something public," he said. But he added that the problem is easy to fix.

"This is a very easy program to join," he said referring to Obama's housing program. "This is just a simple case of American taxpayers expecting something in return for their generosity."

Ross said ACORN's criticism had nothing to do with his company joining Obama's housing program.

"This is not a case where ACORN forced someone to do something," he said, adding, "I think ACORN is very well-intentioned. It's just unfortunate they didn't have their facts straight in this particular case."