The Senate says "no" to payday cash for ACORN (Photo: therealbarackobama.wordpress.com)

Is it any surprise? We’ve known for some time that ACORN is a questionable organization. The latest pimp and prostitute video is just the icing on the cake, comments the Hot Air blog. Now the Department of Housing and Urban Development (HUD) is halfway toward being blocked from continuing to give ACORN (Association  of Community Development Organizations for Reform Now) grants for such programs as mortgage counseling services. The Senate voted overwhelmingly – 83 to 7 – to cut funding. All that has to happen now is for the House or Representatives to agree in their vote and for President Obama to sign off. Considering that he may have had connections to ACORN during his community planning days in Illinois, it will be interesting to see how the president reacts when the bill to shut off the lights hits his desk.

ACORN will need private funding to continue operating

Perhaps a bit of payday cash? Seriously, who would consider it a good investment to fund an organization that encourages tax fraud, insurance fraud, voter fraud, defying the police with foreclosed property break-ins and subprime lending? ACORN founder Wade Rathke and cohort Martin Eakes from Self-Help Inc/Self-Help Credit Union couldn’t be pleased with the vote. Perhaps they should have thought about that before they played such a huge role in driving America’s economy into the ground with their strong-arm tactics at the dawn of the subprime mortgage lending debacle.

The Los Angeles Times reports at http://www.latimes.com/news/nationworld/nation/la-na-acorn15-2009sep15,0,3037782.story?track=rss that in addition to the pimp and prostitute video that recently came out of the Baltimore ACORN office, FOX News supposedly has aired videos depicting similar shenanigans in Brooklyn and Washington, D.C. The L.A. Times also indicates that the Census Bureau has washed their hands of ACORN and will not enlist the organization’s assistance in tabulating the 2010 Census. Considering that ACORN’s voter registration efforts have signed up such normal, everyday citizens as Mickey Mouse, can you blame the Census Bureau for running the other way?

The New York Times didn’t even think to assign a reporter

I don’t care if it directs negative publicity in Barack Obama’s direction, this ACORN senate vote story deserves serious attention. As it stands, the New York Times linked to the AP report of the story online – but they didn’t even mention it in their print edition. Any wonder that print journalism is dying? Segregating such a story to its blogs section is a clear sign that the New York Times is just as partisan as any other fish wrap that lines birdcages across this nation. Biased reporting, the availability of free online news (at least for a while longer) and the costs of newspaper production all make for a grim picture. Scores of journalists who have been given the boot need payday cash. They may even need housing assistance, but it doesn’t appear that ACORN will be able to help them any longer.

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“Usury Law & The Christian Right” | Meyers’ Critique

A few months ago, I posted my brief review of the academic paper “Usury Law and the Christian Right: Faith Based Political Power and the Geography of the American Payday Loan Regulation.” I did this because authors Stephen Graves and Christopher Peterson have a lot of interesting things to say about the payday loan industry, much of it unintentionally counter to their intended purpose of showing that payday loans are damaging to the public. In fact, payday loans promote free market competition and are embraced by the very value set – the Christian right – that the authors claim are against the consumer loan product.

A new, more detailed critique of Graves and Peterson’s work has appeared in the blogosphere, written by Lawrence Meyers. Entitled “Usury Law & The Christian Right: A Critique,” Meyers points how Graves and Peterson’s work is “filled with false and misleading statements, faulty premises, empty hypotheses, weak methodology and completely unjustified conclusions.” Meyers even goes for far as to say that he is “flabbergasted that the paper was published in Catholic University’s Law Review.”

No academic objectivity

Clearly, the authors are biased against payday loans. Their use of pejorative language undermines any academic credibility Graves and Peterson might pretend to have on the matter. It is not an objective report. Meyers shows how the authors describe payday loan industry defenders as “apologists” [p.2,7]; that payday loan companies “poured into American neighborhoods like water over a breached dam” [p.25]. Regarding the number of payday loan stores, there is also no attempt at academic objectivity: “For those who are concerned about the social, moral, and even spiritual well being of the lower and moderate income Americans, this is a profound, unprecedented, and troubling change in the American nation.” [p.26]

What is false and what misleads

• “Payday lenders generally supplement revenue from…hefty late payment fees, insufficient funds fees and attorney fees.” [P.6]

Meyers recognizes this a falsehood. Such fees are in fact only allowed in three states. Furthermore, attorney’s fees do not factor into the income of such stores. Attorneys are only reimbursed for the collection of defaulted loans. That is customary, as is the standard business procedure that companies in nearly any service industry use of charging a bounced check fee.

• “Critics…point to a seemingly endless supply of consumer horror stories…” [p.2]

One bad experience attracts much more attention than a dozen good ones. Along similar lines, the media is always on the lookout for that sensational story. If one person borrows more than they can pay and becomes debt-ridden and destitute, it’s much more interesting that many people (myself among them) who have used payday loans successfully.

• “Unfortunately, payday loan borrowers frequently are unable to pay off their loans after the initial loan term.”

Once again, this is incorrect information. Meyers points to SEC filings of six notable public companies which indicate that “94 percent of all payday loans are paid off on time.”

• “The best available nationwide estimate suggests that the average payday loan borrower repays $793 for a $325 loan.”

Meyers shows us that the source Graves and Peterson use here – the Center for Responsible Lending – is very biased against the industry, because an affiliate company owned by CRL chair Martin Eakes (Self-Help Credit Union) is a direct competitor against payday loan companies in the short term loan market.

More accurate figures can be found in the 2008 Annual Investor Report for Advance America. According to their SEC-verified computations, the “aggregate principal amount of cash advances originated was $4,296,493,000.” If the CRL’s estimate of $793 for a $325 loan were true, total revenue would be derived from 2.44 times the amount advanced ($793 divided by $325). Considering the number of payday loans Advance gave in 2008, that actually would make revenue $10,483,442,920. Looks like Graves, Peterson and the Center for Responsible Lending fudged the numbers titanically in their own favor.

Fees and interest actually charged to customers for 2008 was $676,346,000. This amounts to borrowers paying $376 for a $325 loan. Far less than the CRL estimate.n the CRL claims. Meyers confirms that this bears out in public records on file with the SEC.

Meyers’ sources:

http://lwvmilwaukee.org/critique_of_race_matters.pdf
http://www.nytimes.com/2008/12/25/business/25sandler.html

http://www.kivitv.com/Global/story.asp?S=10262229

http://www.reuters.com/article/pressRelease/idUS104573+10-Apr-2009+PRN20090410

The CRL is only as useful as you can throw them

Meyers nails this point on the head. “The authors’ statements, at best, demonstrate ignorance as to where proper data can be culled. At worst, they could be accused of deliberately omitting this information in favor of false data.”

I’ve already alluded to Martin Eakes, CRL and Self-Help Credit Union chair. He is in direct competition with payday loan companies for the short term consumer loan market. To cast even more skepticism on the validity of their statistics, consider that Herbert and Marion Sandler were founders of the CRL, and their work has strong ties with ACORN. ACORN and Self-Help Inc. (Self-Help Credit Union’s parent company) are deeply responsible for the subprime mortgage mess that has all but destroyed America’s economy.

“They claim to be non-partisan, yet they take funding from George Soros and have strong ties with ACORN,” writes Meyers.

CLICK HERE to continue with my look at Meyers’ critique.

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This concludes a four-article series regarding ACORN and its connections in politics, big money and abuse of the taxpayer’s trust. It can be argued that no one entity has brought the American economy to its knees without a cash advance, but ACORN and organizations close to them like Self-Help, Inc (which includes Martin Eakes‘ Self-Help Credit Union and the Center For Responsible Lending) have contributed mightily. If you missed the early parts of this article, here are parts ONE, TWO and THREE.

…Their action convinced state attorneys general to sue Household, which eventually forced the finance corporation to pay $484 million to borrowers. In a separate suit against Household, ACORN walked away with a $150 million settlement.

But what of the Sandlers?

ACORN made their “Robin Hood” play for public affection by bleeding Household’s coffers. But will they do the same to their own allies – Herbert and Marion Sandler – who are as responsible for abusive mortgage lending policies as anyone in the country? They assisted the prosecution before – will ACORN be consistent here or prove themselves to be self-interested grandstanders?

It’s no surprise that ACORN isn’t helping send their (and the Center For Responsible Lending’s) best buddies up the river.

Care to rethink that, Ms. Lewis?

Bertha Lewis declined to comment on Anita MonCrief’s article when asked for direct comment, but her Huffington Post piece clearly outlines ACORN’s position. Bertha Lewis continues ACORN’s battle chant:

ACORN’s campaign is working to put the human faces of foreclosure victims front and center while escalating the campaign tactics to include civil disobedience aimed at keeping people from losing their homes. Everything is on the table: disruption of sales, disruption of banking business, even refusing to be evicted or moving families back into their foreclosed homes.  The urgency of the crisis demands no less.

Wrong, Ms. Lewis. Everything is NOT on the table. I can think of a few skeletons in your organization’s closet that won’t go away. Let’s show those not-so-old bones the light of day and see if ACORN can still claim to be an organization that is truly dedicated to people rather than their own political advancement.

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President Obama has spoken well of the virtues of public service. On the surface of things, it is admirable to sacrifice one’s time and resources to help others in need. However, with the continuing controversy of the HR 1388 “mandatory volunteerism” bill inflaming the public’s sense of what is right for our increasingly socialist government to demand, let us not forget the organizations that are openly brazen in their defiance of America’s laws and the Constitution. The Association for Community Organizations for Reform Now (ACORN) and the Center For Responsible Lending (CRL) are two very visible organizations on the list.

Thanks to the efforts of activists like Anita MonCrief (also a former ACORN employee), the ACORN/CRL axis cannot hide their antics from the public eye entirely.  This is much worse than the CRL fabricating information against payday loans. ACORN, according to MonCrief, feels that denying the evidence stacked against them is enough of a defense. They’re wrong.

“A new level of militancy”

In a February 2008 Huffington Post article, ACORN CEO Bertha Lewis laid out the organization’s plan for its 2009 anti-foreclosure campaign. Her plan to bring a “new level of militancy” to the problem apparently doesn’t take into account their own dealings with Herbert Sandler, the sale of Golden West/World Savings to Wachovia and the resulting mountain of debt (billions of dollars) that came to maturity.

ACORN and Self-Help, Inc. (a forerunner to the Center For Responsible Lending, all part of Martin Eakes‘ own empire) held banks over the fire to get them to loan irresponsibly. Herbert Sandler, former CRL board member, helped steer the American housing market into the toilet with his “pick a pay” mortgage product. How the ACORN/CRL axis could be allowed to continue to operate without a Congressional probe is beyond me. They aren’t even slowing down to avoid attracting attention. MonCrief points to a 2006 memo sent by Zach Polett, Project Vote Executive director and director of ACORN Political Operations.

READ ON to see how ACORN’s gears of power have set into action…

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Does Bill Strong hate the Constitution?

Jack Brammer of Kentucky’s Herald-Leader newspaper reports that Kentucky wants to give current payday loan companies in the state the chance to maintain solid footing. Unfortunately, proposed House Bill 444 now has a protectionist measure that some state lawmakers see as a way to “eliminate new competition.” However, the reality is that they’re asking for a 10-year moratorium on new payday lenders in the state.

The legislation has cleared the Kentucky Senate 32-6, but Gov. Steve Beshear and at least one lawmaker is concerned about whether such a limiting moratorium is unconstitutional.

Then don’t allow it to continue!

Beshear called the original (pre-moratorium) form of the bill “a step in the right direction.” According to Brammer, it would “eliminate 25 to 30 percent of such loans with the enforcement of existing restrictions. State law says consumers may have only two such loans totaling $500 at a time, but there has never been a way to track that information.”

Democratic Sen. Kathy Stein is against House Bill 444 because it would “violate the state and federal Constitutions. It essentially is a restraint on trade. It prevents any other folks who otherwise are qualified to engage in that business. It gives exclusive rights to the folks existing now and I think that violates the Constitution.”

Again, here’s their real purpose

Before the Senate voted, the Kentucky Coalition for Responsible Lending lobbied lawmakers to cap payday loans. This has been proven mathematically to be untenable, yet the group insists upon it. In spite of the fact that it will put stores out of business and people in the unemployment line.

Why don’t they care? Because it’s straight out of the Center For Responsible Lending’s playbook. Let’s put up a huge smokescreen of possibly unconstitutional law changes, but sneak in a cap rates to levels that will put lenders out of business. It’s great for Self-Help Credit Union and similar groups under Martin Eakes‘ control, who will swoop in like vultures with their own products and services. They will put honest people out of work so that they can turn a profit. If they were so interested in healthy, honest competition, they’d make more of a showing in the short-term loan market.

It’s Bill Strong’s fault

Tres Watson of the Community Financial Services Association of America (CFSA) said that the idea of the 10-year moratorium came from Republican Senator Bill Strong, who works in insurance. Oddly enough, Strong’s wife Judy, who runs small payday lending businesses in the area, supports the moratorium. She would certainly be in the minority. Reasonable limits and a statewide lending database are reasonable, but the moratorium is a rider straight out of the mouth of Martin Eakes, as is the untenable cap.

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... is not important to the CRL. It certainly should be to you!

Jay Miller of Crain’s Cleveland Business reports that given the choice, he’d rather be a lemming.

Jump off the cliff like everyone else and buy the Center For Responsible Lending’s (CRL) propaganda, Jay. Or, you might actually take the few seconds necessary to think about cash advance loans and how they really work. I trust you’ll see that when it comes to predatory organizations, you’re barking up the wrong tree.

Legislation that was supposed to “curb high interest-rate payday lending” hasn’t worked, according to Cleveland’s Housing Research and Advocacy Center. Apparently, they found that while the number of lenders decreased after recent legislation, those remaining have found ways to apply their services under different laws.

It is Mr. Miller’s contention that this is in some way illegal. Furthermore, he decries interest rates on the new personal loan products offered in Ohio. Surprising no one, he quotes the theoretical maximum that applies to almost nobody. Once again, these are typically two-week loans. You pay $15-$25 per $100 loaned; you pay up to 25 percent interest, NOT 680 percent annually. There is not “annually” here; it does not apply. Lenders in Ohio are currently charging $26.10 per $100 loaned, so over the two-week term of the loan, that’s a total of 26.1 percent paid. This isn’t difficult math, but the CRL isn’t a “thinking” kind of organization.

Small Loan Act = small loans

Cash advance lenders in Ohio are now licensed under the state’s Mortgage Loan Act or the Small Loan Act. This traditionally regulated second mortgage lenders and finance firms such as Citifinancial, Household Finance and Wells Fargo Financial, writes Miller. However, if the services offered by short-term lenders qualify under the Small Loan Act (they are small loans), why shouldn’t they fall under the domain of said act? What’s your main problem, Mr. Miller?

Miller makes a point of exclaiming that “the new payday lending law restricted lenders from charging more than 28% interest.” Oh, good, then there’s no problem. $26.10 per $100 loaned is a 26.1 percent charge. Again I ask, what is the problem?

Don’t feed the monster

So the Housing Research and Advocacy Center – and how they missed the CRL’s completely twisted view of mortgage lending is beyond me – has made a recommendation. They advise that Ohio’s General Assembly increase cash advance terms to 90 days and shift lenders to the domain of the Ohio Consumer Sales Practices Act.

I say that if the Housing Research and Advocacy wants to be treated like a reputable organization, they should refuse to serve the master whose whips are at their backs. Martin Eakes‘ empire (Self-Help, Inc. and the Center For Responsible Lending) works hard to discredit cash advance lending, largely because it offers competition for some of his own products. Considering his checkered history with subprime lending, nobody should believe anything the CRL, Self-Help or Martin Eakes has to say until he renounces his past publicly, and commits to fixing the carnage he has wrought upon the present. Then and only then will stories like this by Jay Miller in a Cleveland business publication have any real meaning or public interest.

As it stands here, Jay Miller is only feeding the CRL monster.

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This article concludes my study of the Employment Policies Institute’s (EPI) report “Rotten ACORN: America’s Bad Seed.” Click here if you wish to view parts ONE, TWO, THREE, FOUR or FIVE of this article series.

We’ve seen that the Association of Community Organizations for Reform Now (ACORN) speaks out of one side of its mouth about rights of the worker to unionize and earn a living wage. The two-faced organization has very different theories in practice, however. Out of the other side of its mouth comes suppression of all union-like activities by its employees (activities that go against ACORN’s interests) and not only the denial of a living wage, but the denial of minimum wage for its employees. Likely, they also deny easy loans. ACORN boss Wade Rathke is completely unapologetic about this. In fact, he thinks it’s bad business for him to pay employees more, as doing so would “force” him to cut hours and staff.

We also know from past coverage that ACORN has close connections with Martin Eakes and his own empire (Self-Help Credit Union, the Center For Responsible Lending, et al) through the window of the Community Reinvestment Act. If so much money had not already been spent by ACORN, Self-Help and the CRL in lobbying and advertising, one might wonder why the other shoe hasn’t fallen for them. Money has a way of bending the rules us normal Hush Puppies are forced to follow.

Wait, wait, one more thing

Watch your nightly news for more on the ACORN voter fraud scandal. Or better yet, check out a blogger with the inside stuff. I won’t say anything more about that, but I would like to say that ACORN is too dangerous to ignore.

What do I mean by danger? I mean that ACORN places its workers in unsafe conditions, to begin with. According to the EPI, ACORN has expressed a commitment toward ensuring that American workers retain their “fundamental right” to employment “which does not endanger health or safety.” Unfortunately, the rotten nut routinely places its employees in dangerous situations. Female employees have been sexually assaulted and workers who have been forbidden to work in pairs for inner city projects have been robbed at gunpoint. One female ACORN employee who was attacked in the home of a male community member was concerned for both her safety and her job:

The man grabbed my head and kissed me. I pushed him away, contradicting themes dancing in my head. “Protect yourself, get out of here” on the one hand. On the other hand, I needed to get members to join (ACORN). If I didn’t get enough members to join, would I have a job?

Danger to employees, danger to others

That’s a choice that ACORN forced some female employees to make because they refused employees the simple safety precaution of working in pairs. But the danger of ACORN isn’t limited to its employees. They have endangered the health and safety of others as well. According to the EPI, they’ve endangered medical patients. Via Wade Rathke’s union connections (SEIU), ACORN and SEIU fought non-profit hospital labor disagreements in Illinois by busing in “patients” by the vanload simply to harass the healthcare providers on staff in an emergency room. Here’s an account that appeared in Chicago’s The Business Ledger newspaper:

A bus with eight patients and several community organizers, all members of or affiliated with ACORN, pulled up and “demanded” to be seen in Good Samaritan’s ER, according to numerous hospital officials… Lucrecia Balgemann, a Spanish-speaking shift coordinator in the ER the day of the occurrence, said it was clear to her that many of the Spanish-speaking patients were being “coached” by ACORN organizers and were “following a script.”

This must end

This is heinously irresponsible behavior on the part of ACORN. They do not stand for American interests; they support their own at the temple of the almighty dollar. ACORN and associate organizations (Self-Help, Inc. and the Center For Responsible Lending) who implicitly support the rotten nut’s actions against the good people of America should not be allowed to operate as they please in this country. It is simply too dangerous to allow their reign to continue. Wade Rathke and Martin Eakes, for all the good they claim to do, cannot be trusted until they own up to the full measure of their organizations’ misdeeds.

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Recently, David Fellerath asked on Triangulator whether the recent mugging of Center For Responsible Lending  President Martin Eakes was planned. He refers to a North Carolina News & Observer column by Barry Saunders at http://www.newsobserver.com/134/story/1335527.html which ventures the suggestion that Mr. Eakes was not merely in the wrong place at the wrong time.

Considering his position at the head of organizations (Self-Help, Inc. and the Center For Responsible Lending) that have made their share of enemies, it’s not out of the realm of possibility that the mention of Eakes could spark strong feelings. Saunders takes another step by suggesting that those feelings burned hot with violent intent, like an “attack we normally associate with ‘The Sopranos,’” writes Fellerath.

They blocked his escape routes

Based upon crime scene reports, Saunders draws the conclusion that “the four thugs who used (Eakes’) head as a punching bag” coordinated the entire thing, all the way down to where they positioned themselves on the stairs of the parking garage where the beat-down took place. They didn’t want to leave an escape route. “That’s what all street robbers do, right?” said Saunders.

Fellerath points out that “neither Eakes nor Durham police are saying he was targeted because of his work on behalf of poor people and against those lending organizations that prey on the poor. But I am.”

Aspiring for the top of the mountain

Saunders interviewed Eakes, and in that interview, he asked him about his enemies. Here’s Eakes’ reply:

When we first started, the KKK used to threaten us. Then it was the drug dealers who didn’t want us fixing up rundown neighborhoods. After that, we got on the bad side of predatory lenders with usurious rates who didn’t like us providing lending options for poor people. When Martin Luther King Jr. and Gandhi are your heroes, chances are you have enemies.

OK, Mr. Eakes. You certainly have my condolences for the vicious attack you suffered. And I’m all for doing whatever can be done to fix up America’s diseased neighborhoods. But your indictment of “predatory lenders” throws much too wide a net. You place payday loans under the same banner as loan sharks, and the two are simply not equivalent.

Two-week loans, terms outlined up front, a 15 to 25 percent fee paid for the service, and a high percentage of loans paid off on time… drum up as many self-serving statistics you like, you’re simply wrong. Furthermore, your motivation for presenting blatantly incorrect info is to steer consumers toward Self-Help Credit Union’s own short-term loan products. Compete fair or don’t compete at all. Martin Luther King and Gandhi would not approve.

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Time to lead into absurdity… but only if you’ve read parts ONE and TWO first…

An essential part of the plan permits distressed homeowners to seek loan modifications in bankruptcy court, an option now permitted on other types of loans that are far less important to families and the economy. This provision will provide a new avenue for reducing hundreds of thousands of foreclosures without requiring any tax dollars.

How will it not require any tax dollars? I hear too many promises from politicians and those who wish to appease the public without saying anything at all. New programs require money. Taxation is the key way to generate this money. However, what shall we tax? The average person is breaking under the weight of their financial obligations. It’s no wonder people resort to quick loans on occasion.

One thing I think would be great to institute would be a lobbying tax. Lobbying is right and should be allowed on a level playing field. One of the ways to achieve that is through a luxury tax-style lobbying tax, I think. I’m sure it’s not an original idea. Since the Center For Responsible Lending (Eakes’ organization) is documented as having spent more than $1.7 million lobbying for bankruptcy and finance laws between 2004 and 2007, AND even more than that in 2008 alone ($280,000 in Q3 2008, per the Associated Press), they’d be paying some of that luxury tax to fund these programs!

Huh?

What’s happening here?

Equally important, it will provide stronger incentives for loan servicers to offer effective loan modifications outside of court. Allowing homeowners access to the courts means that voluntary private efforts to prevent foreclosures will work better — and, in doing so, will benefit the entire economy. And paired with the comprehensive and well-thought-out modification plan, many fewer families will need to take this course.

I’m confused here. Loan companies will have the incentive to modify unworkable mortgages outside of court, but allowing homeowners access to courts in this matter will aid the foreclosure prevention process? How are both of these true… how do they work together? Please. I welcome your explanation, Mr. Eakes. Or anyone else… please comment below.

Turnabout should NOT be consequence-free

He’s no Oz, he’s Martin Eakes!

We urge Congress to recognize the urgency of the foreclosure epidemic and to act immediately to implement the legislative parts of this plan without watering them down. Fast action is essential. While debate goes on, a new foreclosure occurs every 13 seconds.

“Act immediately, Congress. But pay no attention to the man behind the curtain…”

It is outrageous that Martin Eakes and his organizations (Self-Help, Inc. and the Center For Responsible Lending) are given a free ride on their involvement in the subprime mortgage disaster. That’s what lobbying clout will do for you… now we need the lobbying luxury tax to level the field so the other side can expose how false their “sounds good” rhetoric truly is.

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Wait. CLICK HERE to check out part one of this article – before you get wet. Then see how Martin Eakes wields the obvious:

Previous actions to bail out banks have been necessary to keep the economy afloat, but essentially amounted to bailing out the water in a leaky ship. By addressing the foreclosure crisis directly, the Administration’s housing plan finally begins to plug the holes that cause the problem.

“Bailing the water from a leaky ship” is actually the best thing Eakes has to say in this entire press release. The banking, automobile and Real Estate industries do not deserve bailout money if the same people are allowed to control the organizations. Their hands are dirty; they are complicit in the financial homicide. Repeat offense is what they know, and America can’t afford such a body count any longer.

Turn the tide now

It’s time to change the entire system, says Eakes:

With this plan in place, there will be more options and incentives for servicers and investors to avoid foreclosures that don’t need to happen. That will help families at risk, and it also will help the entire economy by stabilizing the housing market and preventing billions of dollars in spillover effects that occur when the market is weak.

OK, I agree with this as well. The tide of foreclosures must be turned back. Lenders must escape lunar gravity and the laws of mortgage lending physics must change if this country is to survive. This may mean that less people qualify for home loans, but that will open up a need for more low-cost housing that President Obama’s “New Deal” organizational ideas will have to address. But first, please do address the conclusion of this article; CLICK HERE.

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Martin Eakes of the Center For Responsible Lending recently distributed a press release in which he reacts to President Obama’s plan to fix the housing crisis that plagues America. Nothing like damage control for the image after your business was directly involved in causing the subprime mortgage crisis to begin with.

Let’s assume Mr. Eakes is generally contrite about his past dealings in the subprime market that former associate Herbert Sandler knows too well. Unfortunately, he has nothing to say about it in his most recent press release.

Give credit where credit is due

Eakes begins by riding the wave like any good politician:

The housing plan announced today represents a huge step forward for the entire country, and includes responsible and effective actions to reduce the massive foreclosures that triggered today’s economic crisis. It represents an essential and overdue investment in correcting the results of bad lending and poor risk management. And it will benefit households from across the economic spectrum, providing new hope for a future with stronger communities and a stronger economy.

The foreclosures that triggered today’s economic crisis? No, the foreclosures are the effect of the real cause. Mind you, foreclosure in turn serves as a cause themselves which produce a spiderweb of other negative economic effects. But let’s not forget the initial cause of this American Real Estate blast crater. That would be the subprime lending in which ACORN, Self-Help, Inc. (Eakes’ organization) and the Community Reinvestment Act blackmailed banks into participating. That’s bad lending and poor risk management, plain and simple. Racism had nothing to do with it. Racism was their cause celebre; such political correctness destroyed America’s economy and put people out of their homes. Not payday loans, Mr. Eakes. CLICK HERE for more on Martin Eakes in Wonderland…

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Truth? Truth?

Starkman brings his criticism of the Forbes article to a close. If you missed parts one, two or three, check them out.

• “Consumers’ complaints as a seismograph? Does anyone believe that?”

This again refers to Donald Morgan’s work, and again, Mr. Starkman can’t see the forest for the trees. A seismograph indicates seismic activity. The more activity – the more shocks there are – the more the needle moves. Since there were plenty of consumer complaints once payday loans were banned in a few test states, I see that as an indication that the problem is significant enough to prompt significant commentary from the people. The analogy is a good one, and you’re sophisticated enough to understand that, Mr. Starkman.

You can’t handle the truth!

• “The Fed just appointed the CRL’s president (Eakes) to its Consumer Advisory Council, while (Morgan’s) paper is still looking for a publisher.”

The truth is often unpopular. And everybody knows that banks haven’t been able to save themselves to spite their faces… the same holds true for government, for that matter. It’s a comedy of errors.

Care to elaborate, Dean?

• (Regarding Morgan’s assertion that credit unions (like Self-Help!) benefit from payday loan bans): “Oh, please.”

Sounds like a reasoned, research journalistic response to an assertion that is easy to prove. Go to the head of the class, Dean Starkman!

Perhaps they can’t pay?

• “What does the credit union’s high delinquency rate have to do with anything?”

Mr. Starkman, someone with much more experience in large-scale finance than you (Donald Morgan) has shown that Self-Help’s delinquency rate is “seven times that of the typical credit union.” That, according to Terry Kibbe of the Consumer Rights League, has everything to do with showing that Eakes’ is as bad at judging borrower’s ability to repay as anyone else. That has everything to do with the fact that Self-Help/CRL is not the savior they make themselves out to be.

They talk a good game against subprime lending now, but that wasn’t always the case. They were for subprime lending before they were against it. Sounds John Kerryish, I know.

Starkman needs a new premise

• Starkman sees conspiracy in the fact that the Consumer Rights League has the same initials as the Center for Responsible Lending. Furthermore, to him the Consumer Rights League “appears to exist for no other purpose than to attack Eakes and promote the payday lending industry.”

I don’t see it. Did you look at their Web site for more than a few seconds? Issues like ACORN and voting fraud cover the home page. These are legitimate news issues and not attack on Martin Eakes. They certainly aren’t payday loan commercials like you’re claiming. Starkman closes by advising that “if facts can’t be found to support the premise, re-examine the premise.” When will you be doing that for your piece “Eakes!”, sir?

But let’s look at his case against the Forbes article. It’s full of holes. Click here if you missed part one of this story.

• “Payday loans, by the way, are even ranker than subprime mortgage lending, which, despite years of diligent research in sub-basement laboratories, has yet to find a way to charge the working poor 400 percent annual interest rates, as payday lenders do.

The subprime mortgage crisis has hit hundreds of thousands of families in America. It has put hundreds of thousands of people out of their homes, Mr. Starkman. Do not condescend to say that payday loans have had the same effect. It insults the intelligence of your readers. We already know that payday loans are not annual loans, so the 400 percent APR figure you bandy about is a propagandist’s toy. Self-Help, Eakes’ baby and forerunner/forefather to the Center For Responsible Lending, had everything to do with the subprime crisis and America’s economic collapse. Eakes admits this. And since studies have shown that 90 percent of payday loan customers pay on time, that 400 percent APR remains a myth. Try again, Dean.

Payday loans, Goldman Sachs… these two are NOT the same

• “The financial-services industry – from the payday crews to Goldman Sachs – is rightly being blamed for breathtaking corruption that led to the cratering of the U.S. economy and global credit markets.”

Based upon your career history previous to this article, I would conclude that you make a habit of such ridiculous comparisons. But there it is. You are placing payday lenders and Goldman Sachs in the same boat. And of course, you neglect to mention Self-Help, Herbert Sandler or Marvin Eakes‘ role in the subprime meltdown. Payday loans don’t come anywhere close to that kind of damage, they are government-regulated and they inform customers of all fees up front. No surprises. Click here for more of Starkman’s self-satisfied but errant analysis.

Award-winning journalist Dean Starkman should have known better. His journalistic career has been one of distinction. He was worked for high-profile publications like the Washington Post and the Wall Street Journal.  He was even part of an investigative team that won a Pulitzer Prize. But in a 2008 article for the Columbia Journalism Review entitled “Eakes!“, Starkman has written something that quickly (and conveniently) appeared on the self-defense page on the Center For Responsible Lending’s Web site. While I certainly have no evidence of payola here, it raises the question at the very least. I would hope that was not the case, however. People distrust journalists enough as it is.

Starkman presents “Eakes!” as an attack upon an article that ran a mere two days before in Forbes, “Subprime’s Mr. Clean.” The Forbes article refers to Martin Eakes, the founder of Self-Help, Inc. and president of the Center For Responsible Lending (CRL). Essentially, Starkman takes issue with the probe of what he calls a “prescient consumer advocate” in the field of subprime lending. Today, Eakes and the Center For Responsible Lending speaks out against subprime lending, but yesterday, their hands were planted firmly in the pie. Starkman is only aware of what the CRL is doing today, it seems – hurling unfair criticism at payday loans. That much is clear, because he spends almost all of his time spreading anti-payday loan propaganda instead of dealing with the smoking gun that truly puts the poor face on the CRL.

Click here and you’ll begin to see that Starkman’s deconstruction of the Forbes article is off-base…

During the recent presidential election, an organization called the Association of Community Organizers for Reform Now (ACORN) grabbed more than its share of the headlines. Specifically, there have been allegations that ACORN has been involved in large-scale voter fraud (and here’s a road map).  But let’s focus on some of their even more prominent activities, and how they have had close ties with Self-Help Credit Union and the Center For Responsible Lending (CRL). It could easily be said that ACORN and the CRL have sided against the American taxpayer since day one.

For those of you who don’t know, ACORN is a consumer group that began after the Community Reinvestment Act (CRA) became official in 1977. Their stated goal since the beginning has been to combat redlining. However, what they have achieved over the years is to effectively convince lenders to relax their standards so that they can serve people with poor credit and little or no assets. According to the Wall Street Journal, ACORN and the CRA “laid the foundation for the house of cards built out of subprime loans.”

Lend… or else

According to the organization Rotten Acorn, the CRA “required banks to increase lending in low-income neighborhoods.” However, the terms of this requirement and how it would be enforced were vague. By the time of the  savings and loan bailouts of the 1980s, lenders had to compile records of their borrowers by income, race and gender. It was at this time that Self-Help, Inc. (the predecessor and current affiliate of the Center For Responsible Lending) began to compile stats to support ACORN’s charges of racism and discrimination on the part of lenders.

It was an effective political intimidation tool they had at their disposal, and ACORN and Self-Help used it well. By the early 1990s when the CRA was revised, ACORN could even pressure banks into lending to subprime borrowers. If lenders didn’t comply, ACORN had the authority to use the CRA to block applications for new bank branches, mergers and acquisitions. ACORN could shut down a banks’ expansion if they didn’t agree to cheap loans for high-risk clients who couldn’t likely pay back the mortgage loans they were taking.

“One of the earliest subprime lenders in the nation”

Martin Eakes, founder of Self-Help and president of the Center For Responsible Lending, put it best. “By offering mortgages to borrowers with battered or bad credit, Self-Help was, in fact, one of the earliest subprime lenders in the nation.”  So clearly, ACORN and the Center For Responsible Lending have had a close association over the years. Now they are going after their own government bailout dollars – much like the lenders Fannie Mae and Freddie Mac, which ACORN and the Center For Responsible lending helped bankrupt with their subprime lending pressure. And it’s all happening at the taxpayers’ expense!

If this weren’t enough to cast a shadow of doubt on the motivations of the Center For Responsible Lending, consider their support for an organization (ACORN) with such a checkered history. Furthermore, consider that ACORN has also been closely allied with Herbert Sandler, one of the granddaddies of the subprime debacle and a huge money man and board member for the Center For Responsible Lending. How can we believe that Martin Eakes and the Center For Responsible Lending have anything other than their own political agendas in mind? Clearly, their treatment of credit that created the subprime crisis and contributed largely to America’s current economic depression is irresponsible, to say the least.

America has entered an economic depression. Much of the blame for this depression can be placed squarely upon the shoulders of mortgage lenders who chopped their way into the subprime market with a hatchet called optional adjustable-rate mortgages.

These types of loans were incredibly destructive to borrowers because they allowed homeowners to make monthly payments that were so small that they failed to cover the interest of the loan. As a result, borrowers typically were left owing more on their mortgages that they did before making payment. That is the definition of a “cycle of debt.”

The Center For Responsible Lending (CRL) claims to be against this

When you think of an advocate, what comes to mind? A person or group that pleads a cause in your best interests, right? This is exactly what the CRL positions itself to be for consumers. They present themselves as follows:

A nonprofit, nonpartisan research and policy organization dedicated to protecting home ownership and family wealth by working to eliminate abusive financial practices.

Thus, you would expect them to be against such exploitative practices as subprime lending, right? Their press kit brochure even makes it seem as if the CRL would have nothing to do with the “unscrupulous lenders” who used “abusive financial practices” to rope low-wealth homeowners into eating mortgages bigger than their heads.

But it simply isn’t true

The CRL had on its board the figurehead for abusive subprime lending, Herbert Sandler. A recent report by David Morrison of the Credit Union Times (“Sandler Mortgage Lending Controversy Touches CRL”) illustrates just how eager the CRL is to speak out of both sides of its mouth. The New York Times also turned up the heat on the CRL in their look at Sandler and his association with the CRL.

Sandler once sat on the board of the CRL. Various reports indicate that Sandler gave the CRL $20 million by mid-2007. So clearly there is a close association. There’s no way that much money changes hands, otherwise; it cannot be a casually acquaintance-type relationship.

There has been speculation that current CRL chair Martin Eakes was previously opposed to the controversial prepayment penalties written into mortgage contracts, but that Herb Sandler changed his mind. Pressure from the CRL prompted the Times to post a correction to their article about Sandler, Eakes and subprime lending. A telling part of the correction reads as follows:

During the housing boom, they were among those who persuaded Mr. Eakes of the acceptability of some proposed state regulations that would strictly limit, though not ban, prepayment penalties on the small fraction of prime mortgages that had them, including those from World Savings.

Looking at the part I bolded, it is not unreasonable to deduce that Mr. Eakes is not completely opposed to prepayment penalties. Interestingly, Morrison mentions in the aforementioned Credit Union Times article that CRL spokespeople claim that they’ve been against prepayment penalties all along, but that they have “limited their opposition somewhat, as part of a compromise toward legislation mandating tougher public policy on prepayment penalties on subprime loans.”

The elephant in the room

The CRL’s anti-subprime lending brochure makes the statement that the CRL does not support subprime lending. Furthermore, it presents a large number of vaguely cited statistics about subprime lending that, while possibly true, are almost universally not backed up with anything that would enable a free-thinking individual to follow up on their research in order to determine its truthfulness. By not providing a clear line for readers who want to see for themselves, the CRL is sloppy at best, irresponsible at worst.

The close association the Center For Responsible Lending has had with Herbert Sandler and subprime lending is the proverbial elephant in the room. Whenever it moves, it knocks over consumers who lack the experience or sophistication to know that proper research is important before buying rhetoric hook, line and sinker.

With each passing day, payday loans become more popular with consumers in need of a temporary cash bump. And with each passing day, the flames surrounding the Center for Responsible Lending (CRL) grow higher. Witness this recent story from the Credit Union Times‘ David Morrison. He reports in “Sandler Mortgage Lending Controversy Touches CRL” that the CRL is reeling from its association with Herbert Sandler’s subprime mortgage lending mess AND Martin Eakes and Self-Help Credit Union.

The New York Times turned up the heat in a recent piece on the Sandler’s that looked at the roots of America’s current financial crisis. The adjustable rate mortgages the Sandler’s offered definitely played a key role because borrowers were allowed to make payments that didn’t even cover interest. The Sandler’s called this “Pick-A-Pay,” which they offered through World Savings Bank. Once mortgage lending standards went slack, the writing was on the wall.

And that’s where the CRL made its money

Herbert Sandler once sat on the board of the CRL. The National Review reports that Sandler gave the CRL $20 million during mid-2007. Moreover, Sandler is a supporter of Marvin Eakes and Self-Help Credit Union, which fought hard to steal business from no fax payday loan companies via legal sanctions.

There has been speculation that Eakes was previously opposed to the controversial prepayment penalties written into mortgage contracts, but that Herb Sandler changed his mind. Did Sandler ply Mr. Eakes with cash? Whatever the case, critics say these penalties play no small role in keeping consumers trapped in debt. Let it be known, if you didn’t already know, that payday loans do not resemble this deadly weapon in any way, shape or form.

Not surprisingly, CRL spokespeople claim that they’ve been against prepayment penalties all along, but that they have “limited their opposition somewhat, as part of a compromise toward legislation mandating tougher public policy on prepayment penalties on subprime loans.”

Doubletalk, you say!

The CRL is planning to get tough on prepayment lending in subprime loans. Yet planning isn’t executing. Even though subprime loans made up a relatively small percentage of the mortgage loan diaspora, the penalties (and default rates) they carried were massive by comparison with the conventional majority. Sandler did not offer the Credit Union Times comment on the controversy.

There are a number of things about this situation that are truly extraordinary. Regarding payday loans, the Center For Responsible Lending has a lot of gall pointing the finger at these lenders as the culprit for consumer ruin when their own board members are deeply involved in one of the shadiest dealings with consumers in American history. There is massive traction in the arguments against them. May they go down in flames and move on to more honest employment. They could work in payday loan stores, for instance…