No one disputes that secondary-mortgage giants Freddie Mac and Fannie Mae need reform. But congressional Democrats look at a reform bill moving through the House as an opportunity to crack open a honey pot for their political allies. Led by House Financial Services Committee chairman Barney Frank, they have written into the bill a provision that would pump money into the coffers of radical liberal activists.

The bill, which was recently approved in the House Finance Committee and will likely be up for a vote today, calls for the creation of an “affordable-housing fund” to be financed by Freddie Mac and Fannie Mae. Those responsible for this provision maintain that the fund is intended to direct money toward housing programs that would benefit the poor. During the first year, a Finance Committee press release says, the money would be largely directed toward areas affected by Hurricane Katrina.

True enough. But there is a convenient catch for the Democrats. The money in the fund — expected to total more than a billion dollars over the next five years — would be siphoned through hard-Left activists like ACORN (the Association of Community Organizations for Reform Now).

ACORN is a fringe political group of the “stop being so polite” variety, and it has a history of shady activity. Promoting environmental regulations and government programs is its stock in trade, and it has long advocated such causes as a “living wage”– even while quietly asking to be exempt from California laws that would force it to raise wages for its own workers. A 1994 grant from AmeriCorps to the group’s housing division — the same division that would benefit from the housing fund — was cut off after an investigation determined that the group had engaged in political activity using AmeriCorps recruits.

Throughout the country, the group has run voter drives that the Heritage Foundation says were “aimed at signing up voters most likely to vote against the President.” The election director of St. Louis all but accused the group of fraud. ACORN ran afoul of the law in Kansas, where four of its employees were indicted for turning in false registration information to election officials. And in Ohio, one former ACORN employee traded crack cocaine for fraudulent registration materials.

A variant on the affordable-housing fund was included in a 2005 version of the reform bill, and many Congressional Republicans had harsh words for it at the time. Sensing that it was little more than a money dump for groups friendly to Democrats, Rep. Tom Feeney (R.., Fla.) responded incredulously to the suggestion that it wouldn’t be used for political purposes: “Could you imagine if I had proposed an amendment to give $500 million to the National Rifle Association and said they could not use it to educate school kids on guns?”

Thanks to some tricky maneuvering by Congressman Frank back then, the bill passed in the House, but it stalled in the Senate. There, Sen. Richard Shelby, then the Banking Committee chairman, proposed a version of the bill with the fund removed.

Unfortunately, the White House announced last week that it would support the bill as currently written, even though it opposes the housing fund for its susceptibility to “political influences.” A recent amendment to the legislation by Rep. Roy Blunt makes disbursement of the funds somewhat more transparent, but this is weak remedy. A better approach would be to do away with the fund entirely.

Senator Shelby has yet to take a position on the fund this time around (and the bill has not reached the Senate), but we hope that he and other Republicans in Congress will refuse to support any measure that includes the fund. It doesn’t take much to realize that doling out cash to radical groups like ACORN is, well, nuts.