This is a long and complicated story about how Obama backers were behind the mortgage industry meltdown. It hast to start some where, so lets start with a well known Chicago name Penny Pritzker. It starts with a bank failure.

Unfortunately, this wasn't the case for the 1,406 people who lost much of their life savings when Superior Bank of Chicago went belly up in 2001 with over $1 billion in insured and uninsured deposits. This collapse came amid harsh criticism of how Superior's owners promoted sub-prime home mortgages. As part of a settlement, the owners paid $100 million and agreed to pay another $335 million over 15 years at no interest.

The uninsured depositors were dealt another blow recently when the U.S. Supreme Court let stand a lower court decision to put any recovered money toward the debt that the bank owners owe the federal government before the depositors get anything.

But this seven-year-old bank failure has relevance in another way today, since the chair of Superior's board for five years was Penny Pritzker, a member of one of America's richest families and the current Finance Chair for the presidential campaign of Barack Obama, the same candidate who has lashed out against predatory lending.

Though Superior Bank collapsed years before the current sub-prime turmoil that is rocking the world's financial markets - and pushing those millions of homeowners toward foreclosure - some banking experts say the Pritzkers and Superior hold a special place in the history of the sub-prime fiasco.

"The [sub-prime] financial engineering that created the Wall Street meltdown was developed by the Pritzkers and Ernst and Young, working with Merrill Lynch to sell bonds securitized by sub-prime mortgages," Timothy J. Anderson, a whistleblower on financial and bank fraud, told me in an interview.

"The sub-prime mortgages," Anderson said, "were provided to Merrill Lynch, by a nation-wide Pritzker origination system, using Superior as the cash cow, with many millions in FDIC insured deposits. Superior's owners were to sub-prime lending, what Michael Milken was to junk bonds."

In other words, if you traced today's sub-prime crisis back to its origins, you would come upon the role of the Pritzkers and Superior Bank of Chicago.

OK we have a looked at one thief for ∅bama. How about another? James A. "Jim" Johnson,

James A. "Jim" Johnson, born in Benson, now lives on the top floor of the Ritz-Carlton Hotel in Washington, D.C., with views of the Potomac and the Washington Monument. But you'll also find him in the inner circle of many of the nation's power groups.

In the last year, Johnson, who once was a member of an organization known as Friends of Hillary, has become tightly tied to the presidential campaign of Barack Obama. It's Johnson's job to vet potential vice presidential candidates for Obama, a duty he also performed for Walter Mondale, who ended up running with Geraldine Ferraro in 1984, and John Kerry, who ended up with John Edwards, four years ago.

He was a backer of Walter Mondale in 1984.

Following the failed 1984 presidential bid, Johnson went about the business of making money. He joined with diplomat Richard Holbrooke in founding Public Strategies, which gave political advice to business clients. Later, he did similar work with Sherman Lehman in D.C. Holbrooke and Johnson remain together now, as vice chairmen of Perseus, an international merchant bank and private equity fund management company.

In 1990, Johnson went to work for the Federal National Mortgage Association (Fannie Mae) and quickly became its $5 million-a-year chairman. His compensation rose to a reported $21 million by his final year, 1998.

But Johnson did more than make a lot of money at Fannie Mae. He increased his connections -- and his access to power -- by establishing Fannie Mae foundations that spread around millions of dollars. Homeless shelters, colleges, hospitals all benefited from Fannie Mae Foundation money.

Which brings us to the Fannie Mae Foundation. A sweet little set up for handing out cash to a nice little outfit called ACORN among others. Here are a few of the grants to ACORN.

ACORN Housing Corporation - Dallas
Dallas, TX $20,000 approved in 1993
Support of a housing counseling program.

ACORN Housing Corporation - Little Rock
Little Rock, AR $1,000 approved in 1997
Ninth Maxwell Awards of Excellence honorable mention grant for a 9-unit affordable homeownership project using sweat equity.

ACORN Housing Corporation - Washington, DC
Washington, DC $3,386 approved in 1994
Support of computer equipment necessary to operate the Desktop Home Counselor.

ACORN Housing Corporation of Illinois
Chicago, IL $3,386 approved in 1994
Support of the purchase of computer equipment required to operate the Desktop Home Counselor.

ACORN Housing Corporation of Illinois
Chicago, IL $35,000 approved in 1994
Support of the placement of Americorps members with homeownership counseling programs.

ACORN Housing Corporation-National
Chicago, IL $100,000 approved in 2004
General operating support of an organization that helps families of limited means to secure and protect decent housing by providing housing counseling services, building homes, and educating policy makers in Chicago, IL; Phoenix, AZ; and Brooklyn, NY

Help with getting poor people mortgages was only one service ACORN provided. Another was help with elections. I wrote a little about that in Election Fraud Control. Let me quote a little from that piece. The question I'm asking is who you might need to be on the look out for when it comes to voter fraud?

Now who might you want to be on the look out for? A group called ACORN.

Late last month six people hired by ACORN were indicted for their role in filing false voter registration forms involving a 2006 drive to increase Missouri's minimum wage.

Here is something else interesting I'll bet you didn't know about ACORN:

ACORN is a former legal client of Senator Obama's, as the Sun-Times reported in 2006:

In 1995, former Republican Gov. Jim Edgar refused to implement the federal "Motor Voter" law, which Republicans argued could invite fraud and which some Republicans feared could swell the ranks of Democratic voters.

The law mandated people be allowed to register to vote in government offices such as driver's license renewal centers.

Obama sued on behalf of ACORN, the Association of Community Organizations for Reform Now. The League of Women Voters and other public-interest groups joined in.

"He and his client were the ones who filed the original case -- they blazed the trail," said Paul Mollica, who represented the League.

Voter fraud? From a Chicago Machine politician? I'm shocked. Actually I think the Chicago Machine needs to be praised. Jesus brought a few people back from the dead. Jesus himself is reported to have come back from the dead. But the Chicago Machine is special. They bring tens of thousands back from the dead. No wonder they hail ∅bama as The One.

It seems the Obama campaign has rather close ties to ACORN.

JAFFA, Israel - Did Sen. Barack Obama's campaign attempt to hide a paid working relationship with a radical leftist organization that has admitted to major financial improprieties and has been convicted in numerous major voter fraud scandals?

That question is being openly asked by the Republican National Committee after it was disclosed Obama's campaign paid more than $800,000 in services to Citizen Services Inc. (CSI), a nonprofit organization that is an offshoot of the Association of Community Organizations for Reform Now, or ACORN.

That ∅bama. He has such an honest face.

Here is an interesting case of Name That Party.

Milwaukee has discovered some more voter fraud with 10 more voter registration workers are being investigated by Wisconsin authorities. Fittingly, the Milwaukee Journal Sentinel covered the story in its paper on August 29. Unfittingly, the Journal Sentinel forgot one, tiny aspect of the story... that the voter fraud was perpetrated by Democrats. In fact, one of the organizations, ACORN, is intimately linked with Barack Obama.

Milwaukee's top election official said Thursday she plans to seek criminal investigations of 10 more voter registration workers, including two accused of offering gifts to sign up voters.

So, what we have here is an Old Media story about voter fraud where the salient fact that the fraud is being committed by Democrats and Democrat organizations is somehow absent from the story. What a surprise, eh?

Yes it is a surprise. Why would an honest Party like the Democrats do such a thing? I blame it on a few bad apples. ∅bama, that proud community organizer, has been duped. No way he could be involved in such shenanigans.

And ∅bama was not the only one involved. Barney Frank a noted champion of the poor was out in front, attacking the Fannies.

There were many moments of high entertainment during last week's House hearings on Fannie Mae's creative accounting. But our favorite was the Mister Magoo performance given by Barney Frank (D., Massachusetts) after learning that Fannie had handed out $245 million in bonuses over five years. Mr. Frank chided Fannie CEO Frank Raines and CFO Tim Howard, saying, "At the level of compensation you get, we ought to be able to count on you to do your very best without additional incentives."

Here's a case of misplaced moral outrage if we've ever seen one. Mr. Franks is mad about the salaries when he really should be mad at the rigged political game that has made them possible. Fannie's regulator, the Office of Federal Housing Enterprise Oversight, has reported that Fannie has been cooking its books. Add that to the increasing evidence that Fannie has been ignoring its mission to provide affordable housing, and we wonder if Mr. Frank doesn't need an eye checkup.

Ditto for the good liberals in the Congressional Black Caucus. Members of this group are often the loudest defenders of Fannie and her brother, Freddie Mac. Can it be that the annual donations made by the Fannie Mae Foundation to the Caucus have blurred their vision too?

We were reading President Bush's budget the other day (we know, get a life), when we came across an unusual mention of our all-time favorite companies -- Fannie Mae and Freddie Mac. What we found is a tale we think taxpayers and investors should want to hear.

It seems that Fan and Fred, two "government-sponsored enterprises" that hold the majority of all home mortgages in the U.S., have been growing their debt at an annual rate of 25%. They now have about $2.6 trillion in debt outstanding, a big number in any case, but really big considering that taxpayers are on the hook for it. The budgeteers also expressed some anxiety about Fan and Fred's increasing dependence on derivatives.

Hmmm. Where have we heard this before? The more we've since looked at Fan and Fred the more they look like poorly run hedge funds: lots of leverage and snarkily hedged risk. The word Enron ring any bells?

Last year, Fan's debt/equity ratio was about 60 to 1, more than five times the average for commercial banks. Moreover, as mortgage lenders, Fannie's equity can hardly be said to be well-diversified. Risk thus becomes a critical question.

Fan and Fred face two kinds of risk: credit risk from the possibility that mortgage holders will default, and interest-rate risk from the possibility that mortgage holders will prepay, leaving Fan and Fred on the wrong side of the spread, that is, lending at low rates and borrowing at high rates. Of course, giant risk won't lead to giant problems if it's properly hedged.

But Fan and Fred's risk management looks to be rather frisky. Take insurance. Some credit risk can be reduced by buying insurance against default. But lately the siblings have been cutting back on insurance, leaving them with greater exposure to default. Self-insurance may not be a dumb strategy in good economic times, but in a sharp downturn it can look pretty stupid.

Well Barry ∅bama was right in there looking out for the interests of the taxpayers.

Senator Barack Obama and two other prominent Democrats urged federal housing regulators on Tuesday to cut the golden parachutes of the ousted leaders of Fannie Mae and Freddie Mac, another sign that the government bailout of those mortgage giants could reverberate through the presidential campaign.

Mr. Obama, the Democratic presidential nominee, asked that any "inappropriate windfall payments" to the chief executives and senior managers of those agencies be voided, in a letter to Treasury Secretary Henry M. Paulson Jr. and the director of the Federal Housing Finance Agency, the new regulator for Fannie and Freddie.

Together, Daniel H. Mudd of Fannie Mae and Richard F. Syron of Freddie Mac are eligible for as much as $24 million in severance, retirement benefits and deferred compensation.

"Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources," Mr. Obama wrote.

Bob Sikes looks into some of the fun and games. He quotes Jennifer Rubin.

During Obama's time on the Woods Funds ACORN received grants of $45,000 (2000), $30,000 (2001), $45,000 (2001), $30,000 (2002), and $40,000 (2002) from the Woods Fund. (Obama in the early 1990's helped train ACORN organizers and later served as counsel in 1995 for ACORN in a "motor voter" registration lawsuit.) And ACORN certainly appreciated whatever assistance Obama afforded the radical organization over the years.

1. Dodd, Christopher J D-CT $133,900

2. Kerry, John D-MA
$111,000

3. Obama, Barack D-IL
$105,849

4. Clinton, Hillary D-NY
$75,550

5. Kanjorski, Paul E D-PA
$65,500

Let's follow the money some more. Brian Lamb is interviewing Peter Wallison a Resident Fellow of the American Enterprise Institute.

LAMB: Let me show you a piece of paper. This is not very fancy graphics, but there are 70 members of the House Financial Services Committee. Every time you see a line through a name, that means that, in the 2008 cycle - and you can actually turn the pages here, same thing on the other side - the names really don't matter.

But out of the 70 members, 50 of them got (ph) money for their campaigns ...

WALLISON: That's right.

LAMB: ... from Fannie Mae. And, of course, money from Freddie Mac.

But we can add to that, not only do they get tremendous amounts of money all the time in the coffers, they have their PACs give to PACs.

WALLISON: Yes.

LAMB: And the PACs end up serving the members.

WALLISON: Right.

Cross Posted at Power and Control

Welcome Instapundit readers. You might also like Fannie - A Time Line.

Update: 29 Sept 008 1135z

Here are some more articles that will help flesh out the story:

ACORN and vote fraud: ACORN Is Not About Nuts

Especially have a look at the American Thinker article linked at: Barney Frank Frankly Not Frank which also covers the mortgage fraud stuff.