Recap: Radical funder George Soros’s $1 million gift to Media Matters, a left-wing character assassination machine, underwrites its campaign to stigmatize conservative ideas. For weeks Eric Boehlert of Media Matters attacked Glenn Beck because a disturbed viewer plotted to shoot up the offices of the left-wing Tides Foundation. The shooter, Byron Williams, failed, but in December when a fan of Media Matters, the late Florida school board shooter Clay Duke, wreaked havoc, Boehlert and Media Matters remained silent.

Soros is also bankrolling a documentary that celebrates left-wing terrorists who plotted to napalm Republicans at the 2008 GOP convention in Minnesota. Even worse, you too are bankrolling the film through your taxes.

A trailer for the left-wing film Better This World suggests that it depicts David Guy McKay and Bradley Neil Crowder as idealistic activists who, according to the official blurb, “set out to prove the strength of their political convictions to themselves and their mentor.” In fact McKay and Crowder are convicted domestic terrorists who manufactured instruments of death calculated to inflict maximum pain and bodily harm on people whose political views they disagreed with.

You can be sure that if it was right-wing terrorists who were plotting to attack the Democratic National Convention, whoever foiled the conspiracy would be immortalized in film, literature and song as a savior of democracy.

“If you flip the equation around and it had been a group of conservatives threatening to use force to prevent those on the Left from meeting, everyone would expect the government to infiltrate them and they would also expect the FBI to stop them and charge them with crimes,” said Brandon Darby, who helped the FBI thwart the planned attack. (Darby’s essay on political violence appeared on Big Government over the past weekend. Read it here.)

The movie, which is expected to be released this year, attacks Darby, a true American hero who undermined the conspiracy by alerting the FBI. Filmmakers Katie Galloway and Kelly Duane de la Vega twist the facts to argue that Darby, a former revolutionary activist, manipulated McKay and Crowder into becoming would-be mass murderers.

It’s an easily disproved lie. During sentencing, U.S. District Judge Michael Davis went out of his way to make a specific legal finding that McKay obstructed justice by falsely accusing Darby of inducing him to manufacture the incendiary devices.

McKay and Crowder had made homemade riot shields and were ready to use them in St. Paul to help demonstrators block streets near the Xcel Energy Center. The goal was to shut down the democratic process by preventing GOP delegates from participating in the convention. The shields were discovered and confiscated.

During a search of a residence, police found gas masks, slingshots, helmets, knee pads and eight Molotov cocktails consisting of bottles filled with gasoline with attached wicks made from tampons. “They mixed gasoline with oil so it would stick to clothing and skin and burn longer,” Darby said.

Thanks to Darby’s cooperation with the FBI, the two aspiring bomb throwers are now languishing in prison. McKay entered a “guilty” plea and was sentenced in May 2009 to 48 months in prison plus three years of supervised release for possession of an unregistered “firearm,” illegal manufacture of a firearm and possession of a firearm with no serial number. A week before, Crowder cut a deal with prosecutors and was sentenced to 24 months in prison for possession of an unregistered firearm. McKay received the stiffer sentence in part because he fabricated the tall tale about Darby’s involvement in the plot.

Of course, it should surprise no one that Hollywood loves this kind of story with its anti-American overtones. HBO gave a grant to the filmmakers to produce their pro-terrorist propaganda. So did the Soros-funded Sundance Institute. After Soros’s foundation, the Open Society Institute (OSI), gave Sundance’s Documentary Film Program $4.6 million in 2002, it gave the institute another $5 million in 2009.

Taxpayers also underwrite Sundance’s adventures in social justice indoctrination. According to nonprofit tax returns (known as IRS Form 990s), the Sundance Institute has taken in $11,240,081 in government grants since 1997. It is unclear which governments made the grants because the 990 forms lump all the grant-making governments together.

The federal government has given $1,350,000 to the institute since 2000, according to USAspending.gov. All but $5,000 of the money was from the National Endowment for the Arts. (The $5,000 grant was from the State Department.) It’s not clear if the $1,350,000 is part of the $11 million-plus figure for all government grants.

Upon receiving the most recent OSI grant, Sundance founder Robert Redford obediently genuflected before Soros. “Sundance Institute has supported documentary storytellers since its beginning,” said Redford. “The recognition of that history by George Soros and the Open Society Institute, and the continuation of our relationship over time, speaks to our shared belief that culture—in this case documentary film—is having a profound impact in shaping progressive change.”

Soros himself has acknowledged he is interested in the movies because “[d]ocumentary films raise awareness and inspire action.” He hails cinema for its power to manipulate audiences. OSI has been underwriting “social justice” documentaries since 1996. In 2001 Soros let Redford’s Sundance Institute take over management of his Soros Documentary Fund, which has since rechristened the Soros/Sundance Documentary Fund. (See Foundation Watch, March 2008).

In 2005 Soros acquired 2.6 million shares of the huge diversified media company Time Warner. In 2006 his companies, Soros Strategic Partners and Dune Capital Management, paid $900 million to buy the DreamWorks SKG film library from Viacom, a move that gave Soros the DVD and rebroadcasting rights to films such as Saving Private Ryan (1998), Gladiator (2000), and American Beauty (1999). As James Hirsen noted, the transaction gives Soros “some highly desirable film rights at a time when the marketing and distribution model is changing to video on demand, video iPods and other forms of digital distribution.” But more importantly, it gives Soros “a presence in Hollywood where likeminded libs are ready, willing and able to collaborate in cinematic social engineering.”

Soros is also venturing into media overseas. In 2008 Soros Fund Management plunked down $100 million for 3% of India’s Reliance Entertainment, a $3 billion conglomerate that aims to provide Internet-based TV programs in India. Reliance also churns out movies and owns movie houses, radio stations and social networking websites in the country with one of the fastest growing economies in the world. When in the 1980s Soros set up offices in Eastern Europe for OSI, he helped to finance publishers, independent TV and radio outlets, and political parties.

As writer Rondi Adamson observed, “most of the documentaries that receive Sundance funding are highly critical of some aspect of American life, capitalism or Western culture. The projects generally share Soros’s worldview that America is a troubling if not sinister influence in the world, that the War on Terror is a fraud and terrorists are misunderstood freedom fighters, and that markets are fundamentally unjust.”

The 2009 Sundance Film Festival screened the documentary Disturbing the Universe. The recently deceased Communist historian Howard Zinn described the movie about radical anti-American lawyer William Kunstler as “a wonderful, inspiring film.”

Putting America in its Place
Undermining America and promoting radicalism is what Soros is all about.

Soros seems to want Communist China to become a superpower, throwing its weight around on the world stage. Weeks before President Obama’s visit to China a year ago the Financial Times asked Soros, “What sort of a financial deal should Obama be seeking to strike when he travels to China next month?” He replied:

I think this would be time because you really need to bring China into the creation of a new world order, a financial world order. They are kind of reluctant members of the IMF. They play along, but they don’t make much of a contribution because it’s not their institution. Their share is not commensurate, their voting rights are not commensurate to their weight, so I think you need a new world order that China has to be part of the process of creating it and they have to buy in. [emphasis added]

In November 2010 Soros praised China effusively. “Today China has not only a more vigorous economy, but actually a better functioning government than the United States,” he said.

It’s all in a day’s work for George Soros. And now he’s trying to control the media in America.

(The full article appears in the January 2011 issue of Organization Trends, a monthly publication of Capital Research Center.)

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Recap: Radical philanthropist George Soros gave $1 million to Media Matters for America, a well-funded slander shop that roots out “conservative misinformation.” It’s all part of his campaign to suppress conservative ideas that stand in the way of pushing America even farther to the left.

The left has been hyperventilating about Beck ever since he moved from CNN to Fox News in early 2009 and quickly became the Obama administration’s most vociferous high-profile critic. In particular, liberals could not abide Beck righteously fulminating against the shadowy Tides Foundation, a pass-through entity that allows wealthy individuals to give to radical causes anonymously.
Eric Boehlert, a so-called senior fellow at Media Matters, seized an opportunity when a deranged would-be shooter named Byron Williams jumped into the headlines last year. After a shootout with the California Highway Patrol, Williams said he had been on his way to shoot up the San Francisco offices of Tides in hopes of sparking a revolution. Williams was never actually much of a threat to Tides. When police pulled him over on a Sunday when the Tides offices were closed, the inept insurrectionist was drunk.

Media Matters argued that Beck had blood on his hands because Williams claimed Beck’s program was one of his favorite TV shows. Boehlert blogged that Beck “has routinely smeared the low-profile entity [i.e. Tides] for being staffed by ‘thugs’ and ‘bullies’ and involved in ‘the nasty of the nastiest,’ like indoctrinating schoolchildren and creating a ‘mass organization to seize power.’” Williams “wasn’t able to open fire inside the offices of the Tides Foundation, an organization ‘nobody knew’ about until Glenn Beck started targeting it.”

Aside from the rhetorical flourishes, Beck had provided a more or less accurate picture of the Tides Foundation, its sister groups, and many of its grant recipients.

As Trevor Loudon wrote in the October 2010 Foundation Watch, “The Tides Foundation and Tides Center are the radical left’s best kept secret. Together they provide tens of millions of dollars annually to some of the most extreme, destructive charities in America. Their money has gone to an assortment of questionable groups including ACORN, Media Matters for America, and the Center for Constitutional Rights.” (The Center was profiled in the September 2006 Organization Trends.)

According to David Horowitz’s online encyclopedia of the left, DiscoverTheNetworks.org, the Tides family of foundations has also funded the violent anarchist group known as the Ruckus Society, United for Peace and Justice (a group headed by pro-Castro activist Leslie Cagan), the Council for American-Islamic Relations (CAIR), three of whose executives have been indicted for terrorism-related activities, and the National Lawyers Guild.

NLG “began as a Communist front organization and remains proud of its lineage,” the encyclopedia notes. At a 2003 NLG convention Lynne Stewart said in a keynote address: “And modern heroes, dare I mention? Ho and Mao and Lenin, Fidel and Nelson Mandela and John Brown, Ché Guevara … Our quests like theirs are to shake the very foundations of the continents.” Stewart was later convicted of providing “material support” to her client sheik Omar Abdel Rahman, whose terrorist group bombed the World Trade Center in 1993, killing six people and injuring upwards of a thousand.

Stewart, incidentally, has made no secret of her views. “I don’t believe in anarchist violence but in directed violence,” the New York Times quoted her saying in 1995. “That would be violence directed at the institutions which perpetuate capitalism, racism, sexism, and at the people who are the appointed guardians of those institutions and accompanied by popular support.”

For expressing his informed opinion about Tides, Beck was described by Boehlert as something approaching a murderer. As John Sexton notes after the Byron Williams incident Boehlert viciously attacked Beck for weeks, logic and truth be damned:

Eric Boehlert, Senior Fellow at Media Matters, made much of the Beck connection saying that Beck had come close to having a “body count.” In addition to Media Matters, Boehlert’s article was picked up by major liberal sites including Current TV, Huff Post, Salon, Alternet and Truthout. But it was distributed much more widely by blogs. A Google search for the title of his piece, in quotes, yields 57,000 results. The left ate it up like cotton candy.

And Boehlert inspired others in the media to follow his lead. Just a few days after his piece made the rounds, Dana Milbank at the Washington Post (who was about to publish a book on Beck which relied heavily on Media Matters) did what amounted to a sloppy rewrite of Boehlert’s piece.

And that was really just the beginning. Over succeeding weeks, Media Matters put up dozens of stories (1,600 search results) about Byron Williams, all of them mentioning Glenn Beck. Boehlert himself returned to the topic several months later using the same extended network of liberal sites. He once again blamed the shootings on Beck.

Is turnabout fair play? In December a crazed shooter cited Media Matters as one of his inspirations.

Clay Duke, the late Florida school board shooter (who killed himself Dec. 14 after threatening officials during a school board meeting), listed Media Matters on his Facebook page as one of his favorite websites. Therefore, according to Boehlert’s reasoning, Media Matters should share some of the blame for Duke’s violent acts.

Did Boehlert’s rants push Clay Duke to act? According to Boehlert’s own logic, Media Matters has blood on its hands. Stretch Boehlert’s bizarre reasoning a little further and George Soros becomes an accomplice after the fact for funding Media Matters.

That’s crazy but it’s the kind of tortured logic that passes for thinking at Media Matters.

(Look on Big Government tomorrow for Part 3. This article is excerpted from the January 2011 issue of Organization Trends, a monthly publication of Capital Research Center.)

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Like the protagonist in the classic Orson Welles movie Citizen Kane, Soros can never have enough power. But unlike Charles Foster Kane, the haughty, imperious fictional media mogul, Soros views himself as much more than a mere leader. With a straight face he told reporters, “It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” (The Independent – UK, June 3, 1993)

Although markets have helped make him a billionaire several times over, Soros has declared war on capitalism. He blames markets and something he calls “market fundamentalism”— and not the suffocating regulations and high taxes his funding of left-wing groups promotes – for the current economic slowdown. “The entire edifice of global financial markets has been erected on the false premise that markets can be left to their own devices, we must find a new paradigm and rebuild from the ground up.”

“The system we have now has actually broken down, only we haven’t quite recognized it and so you need to create a new one and this is the time to do it,” Soros told the Financial Times in 2009. In an interview with Der Spiegel the previous year Soros said European-style socialism “is exactly what we need now. I am against market fundamentalism. I think this propaganda that government involvement is always bad has been very successful – but also very harmful to our society.”

Only in the twisted messianic fantasies of this octogenarian billionaire whose demeanor is that of a James Bond villain could such phantom armies of marauding free market fundamentalists wreak havoc on America. Perhaps these were the same laissez-faire legionnaires who brought us Sarbanes-Oxley, Fannie Mae and Freddie Mac, government bailouts of private industry, farm subsidies, ethanol mandates, smart growth, and the disastrous Community Reinvestment Act in recent decades.

One thing’s for certain: Soros’s answers to the nation’s problems almost invariably involve more regulation and more government intervention in the marketplace. If a policy increases the power of the state and diminishes the power of the individual, Soros is for it.

Because Soros is a lightning rod for criticism, recipients of his money often lie about taking it or perform an elaborate dance of legalistic hairsplitting to conceal the fact he is funding them. For example, Paul Steiger, editor-in-chief of the left-leaning investigative journalism website Pro Publica, denied his organization accepted funding from Soros.

In criticizing an Investor’s Business Daily editorial, Steiger wrote (Dec. 24, 2009):

An unmitigated canard quoted in the editorial – one that has a goofy way of creeping into discourse from a variety of people who dislike something we have written – is that George Soros, the global billionaire, is behind our coverage. Soros has never given us a penny, and even if he had, none of our funders know in advance what we are going to write about, nor do they have any role in deciding what stories we do or don’t do.

In fact Pro Publica’s website contradicts Steiger, openly acknowledging Soros’s Open Society Foundations as a donor.

(Surprisingly, the liberal-dominated “No Labels” group founded last month to combat what it calls the “hyper-partisanship [that] is destroying our politics and paralyzing our ability to govern,” does not appear to be connected to Soros. The new 501c4 advocacy organization has a particularly vapid slogan: “Not Left. Not Right. Forward.”)

Glenn Beck, Threat to the Republic?
Not content to rest on his laurels, Soros has been buying up media properties for years in order to drive home his message to the American public that they are too materialistic, too wasteful, too selfish, and too stupid to decide for themselves how to run their own lives.

But controlling segments of the media is not enough for him. Now he’s openly funding the fake media watchdog, Media Matters for America, founded by the formerly conservative journalist David Brock. The writers at Brock’s well-funded slander shop assiduously monitor Rush Limbaugh’s broadcasts, seethe over Andrew Breitbart’s latest expose, turn purple over Bill O’Reilly’s latest on-air editorial, and analyze every last semi-colon in Charles Krauthammer’s latest column in search of that rarest of unicorns, the beast known as “conservative misinformation.”

Soros’s donation to Media Matters suggests that intimidating journalists who dare to question his vision is now a top priority for Soros. Come down on the wrong side of an issue and risk being labeled ignorant or evil by the smear website. Say that tax cuts lead to economic prosperity, and you’re attacked. Criticize illegal immigration, and you’re attacked. Say affirmative action is racist and discriminatory, and you’re attacked.

“They are vicious. They only understand one thing: attack, attack, attack,” said GOP pollster Frank Luntz. David Folkenflik, media reporter for liberal National Public Radio, was similarly unimpressed by Media Matters. “They’re looking at every dangling participle, every dependent clause, every semicolon, every quotation to see if there’s some way it unfairly frames a cause, a party, a candidate that they may have some feelings for.”

Media Matters relies heavily on personal attacks, rather than substantive or fact-based arguments. It settles scores. Large swaths of the site are dedicated to skewering specific media personalities such as Rush Limbaugh, Glenn Beck, G. Gordon Liddy and Brock’s former friend Laura Ingraham. What results is not even-handed analysis of what they say or write, but personal scrutiny, including minute parsing and microscopic analysis of every comment and its presumed meaning.

Today, Media Matters is one of the loudest voices in the liberal media echo chamber as it feeds hard-line left-wing media critiques to liberal blogs, sympathetic and lazy reporters, and pundits in an attempt to silence non-compliant journalists and muscle right-leaning media figures out of the public debate entirely.

Even before the donation, Soros and Brock already worked closely together. Before the last presidential election they collaborated on a project called Progressive Media USA that vowed to spend $40 million trashing GOP presidential candidate John McCain. Media Matters exists to help protect Democrats and harm Republicans. Even the New York Times describes the organization as “highly partisan.”

As if on cue, Media Matters, and now Soros, believe Fox News is the greatest threat to the American republic. Both Soros and Brock had always denied that the billionaire funded Media Matters—and there was no definitive evidence of such a connection— but recently Soros proclaimed himself a new donor to the organization. Said Soros

Despite repeated assertions to the contrary by various Fox News commentators, I have not to date been a funder of Media Matters. However, in view of recent evidence suggesting that the incendiary rhetoric of Fox News hosts may incite violence, I have now decided to support the organization. Media Matters is one of the few groups that attempts to hold Fox News accountable for the false and misleading information they so often broadcast. I am supporting Media Matters in an effort to more widely publicize the challenge Fox News poses to civil and informed discourse in our democracy.

In accepting a cool million from Soros, Brock promptly denounced Fox News host Glenn Beck as Public Enemy Number One.

From the moment in early 2009 that Roger Ailes enlisted Glenn Beck to the Fox News Channel’s new agenda – a battle to overturn the 2008 election results that Ailes likened to the “The Alamo” – Fox has transformed itself into a 24-7 GOP attack machine, dividing Americans through fear-mongering and falsehoods and undermining the legitimacy of our government for partisan political ends. Worse still, in recent months, Fox has allowed Glenn Beck’s show to become an out-of-control vehicle for the potential incitement of domestic terrorism. No American should be quiet about these developments – the degradation of our media and the reckless endangerment of innocent lives. George Soros, a philanthropist of the highest integrity, unfortunately knows first-hand what it’s like to be grotesquely caricatured and flatly lied about on Fox. Media Matters is grateful that he has decided to lend his voice and support our goal of greater journalistic accuracy and accountability. We are especially pleased that in this moment of hidden right-wing billionaire money corrupting our democracy, Mr. Soros, upon deciding to support our efforts, quickly and transparently has made that support public.

Only in the topsy-turvy world that Brock and other leftists occupy could holding governments accountable be considered antisocial behavior. Whatever happened to the journalists’ mantra that it was their purpose to comfort the afflicted and afflict the comfortable? What about speaking truth to power?

(Look on Big Government tomorrow for Part 2. This article is excerpted from the January 2011 issue of Organization Trends, a monthly publication of Capital Research Center.)

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Investigators must have felt it was necessary to urge the funding cutoff because the federal government’s prohibition on funding ACORN isn’t a permanent ban. It exists at the whim of lawmakers and runs out at the end of this month. This is the finding of an analysis by Capital Research Center (which has been tracking ACORN since 1998).

Investigators may also have wanted to remind the public that ACORN is still alive. Reports of ACORN’s demise continue to be churned out by misinformed journalists who  amplify the zombie group’s lies. In recent days the Washington Post incorrectly described ACORN as “a dead NGO,” and Slate said ACORN has “stopped existing.” More on this in a moment.

The Sept. 21 report from the Department of Housing and Urban Development’s Inspector General found that ACORN Housing, which changed its name earlier this year to Affordable Housing Centers of America (AHC), may have concealed fraud by destroying or failing to produce records.

ACORN violated federal rules on how grants are to be used. The group charged the government salary costs for employees after they were terminated, the report said, and violated federal procurement standards.

The report suggested ACORN corruptly funneled taxpayer dollars to its affiliates and engaged in money laundering. ACORN has taken in more than $19 million in housing counseling grants since 1995 from HUD. NeighborWorks, a congressionally chartered nonprofit, gave ACORN $25.9 million. ACORN Housing has received more than $27.3 million from other federal and non-federal sources, the report said.

The report urged HUD to force ACORN Housing to improve its record-keeping and recommended the ACORN affiliate be placed on “inactive” status while it “initiates corrective actions to address the exceptions and recommendations in this report.”

“Any organization that applies for and accepts taxpayer dollars has a responsibility to act consistently with federal law,” said Rep. Darrell Issa (R-Calif.). “It doesn’t matter if it’s ten dollars or ten thousand dollars, there is no acceptable amount of abuse or mismanagement that the federal government should tolerate when it comes to the taxpayer’s dollars.”

Issa is ranking minority member on the House Oversight and Government Reform Committee. He is expected to become chairman if Republicans win control of the House in November.

Many Americans –and some lawmakers— seem to believe Congress cut off ACORN permanently, but this belief appears to be unfounded.

This confusion about ACORN can probably be blamed in part on the quirks of parliamentary procedure and the complexity of the appropriations process. The legal language prohibiting the funding is contained in spending legislation that covers only the federal government’s current fiscal year which ends this Sept. 30. The House and the Senate first passed legislation banning funding for ACORN in fall 2009 after undercover videos showed ACORN Housing employees offering activists James O’Keefe and Hannah Giles “how to” advice on establishing a brothel, defrauding the government and banks, and evading other laws.

Mass media news reports rarely explain details of spending bills, such as when the fiscal year they cover comes to an end. But the fact that the funding ban is not permanent was noticed by ACORN lawyers and Judge Roger J. Miner of the U.S. Court of Appeals for the Second Circuit. Miner wrote the court’s opinion in August that overturned Judge Nina Gershon’s perverse ruling that the funding ban was an unconstitutional “bill of attainder” that punished ACORN without a trial.

Public Law 111-68, signed by President Obama on Oct. 1, 2009, is formally known as “An Act making appropriations for the Legislative Branch for the fiscal year ending September 30, 2010, and for other purposes.” [emphasis added] Section 163 of the Act reads: “None of the funds made available by this joint resolution or any prior Act may be provided to the Association of Community Organizations for Reform Now (ACORN), or any of its affiliates, subsidiaries, or allied organizations.”

Similar de-funding language was included in other spending bills signed into law by President Obama that followed in the weeks after. All those bills covered federal spending only for the fiscal year ending Sept. 30, 2010. (See Section 427 of Public Law 111-88; Division A – Section 418, Division B – Section 534, and Division E – Section 511 of Public Law 111-117; Section 8124 of Public Law 111-118.)

Plans to extend the funding ban are in the works in Congress. Section 417 of the Transportation-HUD appropriations bill for fiscal 2011 (S.3644) would prohibit funding of ACORN in the fiscal year that begins Oct. 1, 2010. It’s very unlikely that the bill will become law by Oct. 1 but Congress may also extend the funding ban in new stopgap spending legislation – though there’s no guarantee that will happen.

Then there’s lazy reporting that may have also added to public confusion.

Most reporters uncritically accepted ACORN’s false claim to have shut down earlier this year despite abundant evidence to the contrary. ACORN said it dissolved its national structure on April Fool’s Day, yet the group continues to operate out of its headquarters in Brooklyn. Two weeks after the alleged shutdown Chief Organizer Bertha Lewis sent out a fundraising letter boasting that “ACORN is alive because you are alive and still fighting for justice.” Lawyer Arthur Z. Schwartz is still representing ACORN. He sent a letter June 9 to the Government Accountability Office (GAO) demanding changes to a report on his client.

Both ACORN operative Nathan Henderson-James and ACORN hagiographer John Atlas have admitted the shuttering of the ACORN network is a sham. Issa’s investigators also reported that Lewis has been busy consolidating and hoarding ACORN’s assets. ACORN reportedly has $10 million in property and $20 million in cash in 800 bank accounts. Like grifters who adopt new aliases in order to keep duping victims, ACORN chapters in 13 states and the District of Columbia have incorporated themselves under new names. Many of the “new” re-branded groups have the same employees and board members and addresses as the old ACORN chapters.

That’s a lot of activity for a group that’s dead.

In fact, donors may find it easier to channel funds in the direction of liberal activists who describe themselves as community organizers now that the sullied name has been dropped, they suggest.

Shortly after ACORN’s leadership announced that it was dissolving on April 1, national and state affiliates repackaged themselves under generic sounding descriptions. ACORN Housing, for example, became known as the Affordable Housing Centers of America.

“Anyone who celebrates the demise of ACORN has celebrated prematurely because they are not going away,” Anita MonCrief, a former Project Vote/ACORN employee, said in an interview. “The network is repositioning itself so it can receive new donations.”

ACORN, which stands for the Association of Community Activists for Reform Now, has received over $53 million in federal funds since 1994, federal records show. Although the U.S. Supreme Court turned away a legal challenge to last year’s congressional ban on public funding, there does not appear to be any concerted effort on the part of lawmakers to have it reimposed.

Moreover, it is worth noting that only four Democrats joined with Rep. Michele Bachmann (R-Minn.) to oppose an amendment that would allow organizations with a criminal history to receive funding. The amendment was submitted as part of a mortgage bill several months before the videotape scandals broke.

“There’s a real boldness on the part of Democrats who want to keep funding ACORN,” Rep. Bachmann said. “They are incredulous about the possibility of losing their majority and they know which side their bread gets buttered on and ACORN is their friend.”

Even so, only a small-percentage of ACORN’s overall financial support comes from the government, MonCrief, explains. “The rest of the money comes from left-leaning foundations and there is no indication these funding sources will dry up,” she said. “There are also individual donors and you also have to include organized labor.”

MonCrief indentified Wellspring Advisors, Vanguard Charitable Endowment, the Rockefeller Fund and the Tides Foundation as the major conduits for facilitating anonymous donations.

“If someone wanted to contribute directly to ACORN without having their name attached to it they could give a  check to Wellspring Advisors, they can give to Vanguard Charitable Endowment, they can give to Tides Foundation,” she said. “There are so many ways ACORN can obtain money through these anonymous donors  and some are connected to the Rockefeller  Fund.  So long as there is an agenda they are going to make sure that money is funneled to them anyway they can.”

Wellspring Advisors is the critical component in this equation, she emphasized.

“Donors were able to give anonymously to Wellspring so the money would not be traced back to where it was coming from and Wellspring would then cut a check from Vanguard,” MonCrief continued. “That’s one way it happened.”

Sandy Newman, who founded Project Vote, operated as a conduit between Wellspring and the ACORN affiliate, MonCrief points out on her blog.

“ It’s interesting that Wellspring is one of Project Vote’s major donors and Sandy Newman steers other money in Project Vote’s direction,” she wrote. “Newman founded Project Vote along with Zach Polett, who was also head of ACORN Political Operations. ACORN voter registration drives are intentionally partisan undertakings with the intent to replace elected officials with ACORN friendly candidates. This is once again the “wink, wink” approach to doing business. It all seems so legal on the surface.”

Other former insiders such as Ronald Sykes, who served as treasurer for the Washington D.C. ACORN affiliate, have raised questions about Citizens Consulting Inc (CCI), which was the major accounting arm for the national group and its allied organizations. A report from the House Oversight Committee concluded that CCI was largely responsible for misappropriating and comingling funds.

“Money was funneled through Wellspring, from there it went into various bank accounts controlled by CCI,” MonCrief said. “CCI had dozens and dozens of accounts. Some were Project Vote and some were ACORN.”

MonCrief, who testified against ACORN in 2008 as part of a voter registration fraud case in Pennsylvania, said the Project Vote affiliate was closely interlinked with the national organization’s operations.

“It is laughable to say Project Vote was in any way separate because it functioned as one cohesive arm with ACORN,” MonCrief explained. “Project Vote could not exist without this support because it doesn’t have the field capacity to run voter registration programs.”

ACORN remains the subject of voter registration fraud investigations in at least 14 states and MonCrief  anticipates that the same network will find a way to remain active in the 2010 midterm elections and beyond. The political operatives that continue to stand behind the renamed affiliates are very shrewd in the sense that they will target areas where elections are close and where they have sympathetic local election officials, MonCrief warned.

Despite the publicity that followed various criminal investigations, there is much about ACORN that remains hidden from public view, Matthew Vadum, a senior analyst and editor with the Capital Research Center (CRC) suggests.

“We really don’t know how much ACORN has received from its aggressive corporate shakedown efforts,” Vadum observed. “The renamed network could remain well-funded thanks to liberal foundations and high dollar donors such as Herb and Marion Sandler.”

An intrepid researcher and investigator, Vadum has kept careful tabs on the rebranded ACORN entities. Most recently, he reported on the lobbying efforts of the rebranded D.C. affiliate.

As public attention dissipates and the ACORN name fades, foundations that pulled back in the wake of negative press attention last year may find they have more flexibility and dexterity to re-establish their support. This would be a significant development as ACORN drew in millions of dollars from foundations in the span of just a few years.

The lead ACORN organization registered in Arkansas and New Orleans has received $3 million from the Marguerite Casey Foundation, $821,000 from the Robin Hood Foundation, $595,000 from the Edna McConnell Clark Foundation and $65,000 from the Annie E. Casey Foundation, according to CRC.

Other foundations have contributed to ACORN’s affiliates.

Project Vote has received $4,047,500 from the Rockefeller Family Fund, $1,460,801 from the Tides Foundation, and $2,643,100 from the Vanguard Charitable Endowment Program, financial records show. ACORN’s American Institute for Social Justice (AISJ) has received almost $30 million in foundation grants, since 2000, according to CRC.

Other generous benefactors to AISJ include the Marguerite Casey Foundation, which donated $5,125,000 and the Bill and Melinda Gates Foundation which donated $4,130,000, CRC research shows.

In previous reports for CRC, Vadum has also called attention to the Woods Fund of Chicago, where President Barack Obama and former Weather Underground leader William Ayers sat as board members. The Woods Fund has donated about $190,000 to the ACORN network, according to financial records.

The corporate shakedown efforts, which have also been lucrative for ACORN, were largely funded by the Service Employees International Union (SEIU), according to the testimony MonCrief delivered in Pa.

One of the most aggressive and successful joint SEIU-ACORN nationwide campaigns known as “Muscle for Money” targets corporations and top officers who resist union demands, MonCrief has explained.

Even in the teeth of ongoing scandals, ACORN and its affiliates received over $1 million from organized labor in 2009 including over $220,000 from the Change to Win coalition, U.S. Department of Labor financial disclosure forms show.

The 2009 LM-2 disclosure forms show that SEIU Local 32 donated $25,400 to the national ACORN organization, Local Union 1 donated $32,791 to the ACORN Community labor Training Center and the national SEIU donated $37,878 to the ACORN Labor Partnership.

All told, organized labor has contributed over $10 million to ACORN, since 2005 with SEIU contributing about $8.7 million of this sum, according to Labor Department records.

In 2009 gubernatorial races, ACORN was active in attempting to swing the New Jersey election in cooperation with SEIU, according to other press reports. However, the network was less visible in Virginia where Republican Bob McDonnell won by a large margin.

As it turns out, Gov. Chris Christie’s margin of victory over the Democratic incumbent in N.J. was large enough to avoid a recount.  But there is a lesson here for Republican operatives in that community organizers who were supposedly setback by on-going scandals still found expression where they could most be effective; in close-competitive races where it is possible to maximize the influence of organized labor.

Ever since he saved the lives of who-knows-how-many Americans by thwarting the planned fire-bombing of the 2008 Republican convention by left-wing terrorists, Brandon Darby’s been a target.

Left-wing activists have tried to destroy Darby in the court of public opinion. It’s standard operating procedure when you become an informant and turn against the terrorist left, he says.

Darby and I sat down with G. Gordon Liddy on the “G. Gordon Liddy Show.”

Darby summed up the left’s pursuit of him this way:

The Federal Bureau of Investigation, they have a program called the human source program, and I’m sure you’ve very aware of the informant program. And these are men and women, some of them have been in trouble and are trying to avoid charges but the vast majority are simply men and women like you and me who have discovered something or realized something bad, they brought information to the FBI and then in order to serve their country they decide to work undercover with the FBI on that matter and when they do so and their name becomes public, defense attorneys and the left have a tendency to completely try to destroy their character before they testify as to what they know and the information they hold.

And this is something that has happened throughout time and it’s something that’s happening right now and when that occurs those informants, for lack of a better term, usually end up changing their name, they usually end up very depressed or sad and they question what they’ve done because they’re attacked so heavily by the New York Times and by the other mainstream media establishment and that’s what I went through. I went through that.

Immediately every good thing I’d ever done in my life was taken away in the media, they tried to. I was a womanizer. I was a violent, gun-toting, womanizing FBI evil G-man who was trying to oppress the freedoms of others and…agent provocateur…I was accused of, still am being accused of being –this is the strangest thing— a joint Mossad-CIA-FBI hit man or operative having been trained at Quantico so I mean I’ve had these really bizarre attacks but that’s what they do.

They show up at places I go. They try to poster and threaten businesses, cafes that I go to for serving me and they do these kinds of things and initially it put me in a really bad funk. It was horrible, it was absolutely horrible to have somebody, to have the entire peace movement of the United States attacking me with the help of the mainstream media and ultimately threatening me.

So it was horrible, the threats were horrible, a lot of it was horrible, but thankfully I received a phone call from a man who had heard about me named Andrew Breitbart who I think is a wonderful, patriotic American doing a good job –he has a number of websites— and he called me and he really encouraged me to say my story and to speak out so that others can be helped and right at that time I received an email, because I have a public email account, and I received an email from a former informant who had changed his name, moved to another city, and he said, Mr. Darby I just want to thank you because hearing about you and the way that you’re handling this and the pride you’re showing and what you’ve done has really encouraged me to move back to my city and just to stand up to it, stand up for what I’ve done. And that meant a lot to me and so that’s one of the things that I really try to do now is advocate for other human sources and other people who’ve testified and tried to keep our country safe.

I really try to advocate for them and provide them a resource to say, hey, no matter what they do, don’t put your head down, don’t be afraid of these people. Just make sure you stay fit and strong, eat a lot of meat, have protein and muscle mass and make sure you can defend yourself. But definitely don’t put your head down and feel ashamed that you served your country regardless of what the mainstream media and what Hollywood and what defense attorneys and the ACLU says about you.

If you’d like to listen to the complete interview… [MP3 file for you to extract is at http://www.capitalresearch.org/podcast/mp3/p1272571258.mp3 or you can get it from http://feeds.radioamerica.org/loudwater/ggl/000001960_000_000000006.mp3 ]

I profiled Darby in “Radical Awakening: From America Hater to Hero.” The article appears in the April 2010 issue of Townhall magazine and was posted here at BigGovernment with Townhall’s kind permission.

Tomorrow BigGovernment will feature an op-ed by Darby, on the danger that the radical left continues to pose to America.

Much has already been written about the possibly criminal conduct of Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), who relentlessly gamed the political system to clear the way for their friends at government-sponsored Fannie Mae and Freddie Mac to make billions at the expense of taxpayers, but very little has been written about the role that their liberal friends and allies in the private and nonprofit sectors played in bringing the U.S. economy to its knees.

Funded by huckster John Paulson and predatory lending kingpins Herb & Marion Sandler (who also gave generously to ACORN through the years), the inappropriately named Center for Responsible Lending (CRL) laid the foundation for the current financial crisis.

The media seems barely to have noticed that CRL’s puppet, Eric Stein, is now leading the Obama administration’s push to Sovietize the American banking system. Stein, who is now the U.S. Treasury’s deputy secretary for consumer protection, was previously a vice president at CRL.

This means that Stein, who helped create the subprime crisis by pushing people to borrow money they couldn’t afford to repay, is now in charge of cleaning up the mess he created.

Posted below with the permission of my employer, Capital Research Center, the following article by journalist Sean Higgins appears in the March 2010 issue of our monthly newsletter, Organization Trends. -MV

* * * * *

Summary: The Center for Responsible Lending presents itself as a tireless advocate of poor and downtrodden borrowers facing a credit industry of greedy banks, payday lenders and other financial predators. Yet a review of CRL’s advocacy paints a different picture of the organization. It is intimately tied to some of the worst actors in the lending business and its advocacy has too often hurt, not helped, the very people it claims to defend.

The California financiers Herbert and Marion Sandler must have had a rude shock when they saw themselves depicted in an October 2008 comedy routine on “Saturday Night Live,” the popular late night television show also known as “SNL.”

Presented as a mock C-SPAN broadcast, the sketch brutally parodied the politicians who orchestrated the bailout legislation that fall.

President George W. Bush, House Speaker Nancy Pelosi (D-Calif.) and Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, all took their licks, as did homeowners delinquent on their mortgages. In the comedy skit an actress playing Pelosi introduces actors playing Herb and Marion Sandler, the co-founders of the Golden West financial empire. Played by the comedian Darrell Hammond, “Herbert” explains the couple’s plight: “My wife and I had a company which aggressively marketed subprime mortgages, and then bundled them into securities to sell to banks such as Wachovia. Today our portfolio is worth almost nothing, though at one point it was worth close to $19 billion.”

Pelosi says that’s horrible and asks if the Sandlers were able to sell their portfolio for anything.

“Yes, for $24 billion,” Herbert replies.

“So … you’re not so to speak actual victims?” Pelosi asks.

“Oh no, that would be Wachovia bank,” Herbert chuckles.

“Actually we’ve done quite well. We’re very happy,” chimes in Casey Wilson, who plays Marion.

“We were sort of wondering why you asked us to come today,” Herbert says. As he speaks a C-SPAN caption bearing the toxic mortgage king and queen’s names appears on the screen, with the words: “People who should be shot.”

The audience roared with laughter. As Herbert and Marion begin walking away, they thank Pelosi and Barney Frank (played by Fred Armisen) for “helping block congressional oversight of our corrupt activities.” Marion and Pelosi exchange pecks on the cheek.

The SNL sketch was notable for its sharp parody of everyone involved in the financial meltdown. But the surprise was the poke at the Sandlers, little-known by the general public but major players in the elite world of liberal philanthropy. The Sandlers’ leftist activist grantmaking often exceeds that of George Soros himself, but they have worked hard to create an image of themselves as persons deeply concerned about how to make mortgage financing available to low-income persons. The couple helped create the Center for Responsible Lending (CRL), a leading liberal advocacy group that attacks the lending practices of banks and payday lenders. Over the years the Sandlers have contributed at least $20 million to CRL. The Sandlers did not appreciate the publicity.

They had journalism pundit Paul Steiger call NBC to complain that the sketch was unfair.

Steiger is editor-in-chief of ProPublica, a journalism nonprofit that produces left-leaning investigative reports (pro-ACORN, anti-Palin) that it promotes to major media outlets. Herb Sandler just happens to be the chairman of ProPublica, and it’s been reported that the Sandlers have committed $10 million to fund its activities. (ProPublica was profiled by Cheryl K. Chumley in the May 2009  Foundation Watch.)

Shortly afterwards SNL producer Lorne Michaels apologized and had the “should be shot” caption edited out of the program’s video clip, which has since been expunged from the NBC website. NBC folded, but the irony is that the SNL sketch got it right. The Sandlers actions did contribute in significant ways to the housing meltdown.

But don’t expect nonprofit groups that are recipients of the Sandlers’ philanthropy to make an issue of it.

Groups like the Center for Responsible Lending claim to be dedicated to fighting the very predatory actions that the Sandlers practiced and that SNL skit parodied. That’s hardly surprising. CRL wants to be seen as a liberal nonprofi t that does good deeds. But as we shall see, its agenda is one-sided, its outrage is selective, its advocacy is often counterproductive, and its ties to the financial world make many of its actions suspect.

The Sandlers and their Philanthropy
Unlike other major philanthropists Herb and Marion Sandler have attracted little attention even though they are big givers to liberal politicians, activist groups and liberal nonprofits. In 2004 they donated $13 million to liberal groups and political committees like MoveOn.org and Citizens for a Strong Senate. Those contributions made them the third largest donors to liberal political groups during the election cycle, just after Soros ($27 million) and Progressive insurance magnate Peter B. Lewis ($23 million). The Sandlers also contributed about $1 million to Democratic political campaigns across the country.

Through their Sandler Foundation, the couple donated more than $23 million to Human Rights Watch, a group adamantly opposed to effective war on terror policies. The Sandler Foundation (2007 assets: $1.1 billion, grants: $94.5 million) also has been generous to the ACLU ($4.6 million in 2007), to ProPublica ($3.75 million in 2007), and the Center on Budget and Policy Priorities ($1.8 million in 2007). The Sandlers also helped found the Center for American Progress, the liberal think tank – “on steroids,” according to head John Podesta— that doubles as a rapid response organization for the Democratic Party. The foundation gave it $7.2 million in 2007 and about $10 million in total since 2005.

As late as 2004, the Sandler Foundation had little more than $20 million in assets. But after the couple sold Golden West to Wachovia in 2006, they poured $530 million into it in 2006 and $811 million in 2007, according to data from Guidestar.org, the nonprofit database.

The Sandlers’ pride and joy – and the reason why the SNL sketch stung so badly – is the Center for Responsible Lending (CRL). Their giving has helped transform what was a tiny North Carolina-founded nonprofit into a major player in financial services and banking policy-making. Indeed, CRL is to those issues what the ACLU is to civil rights or AARP is to seniors’ entitlements: It is the dominant left-wing advocacy/lobbying group—the one political and media elites in Washington, D.C. listen to regarding low income lending policies.

The Sandlers have personally donated more than $20 million to the organization – including $5.2 million from the Sandler Foundation in 2007. Their efforts are key to CRL’s reputation as the left’s authority on responsible lending.

CRL has aggressively attacked “redlining,” the now-outlawed financial practice of outlining (at one time with red ink on a map) the poor minority neighborhoods where banks would not make home loans. It also has lobbied states and the federal government to ban lending practices that it deems “predatory.”

But CRL’s activities have done as much harm as good. Ironically, CRL’s eagerness to castigate banks for alleged redlining has caused banks to overcompensate by making more of the subprime loans that have caused so much misery in poor neighborhoods. The group has turned a blind eye towards the lending practices of people like its benefactors, the Sandlers, persons whom Time magazine dubbed two of the “Twenty-five people to blame for the financial crisis.”

Profits Before Philanthropy In 1963 Herbert and Marion Sandler, now 78 and 79 respectively, purchased what is invariably called a “mom and pop” enterprise called Golden West Savings and Loan Association, located in Oakland, California.

They renamed it the World Savings Bank as it grew to be one of the nation’s largest savings and loans. What distinguished World Savings were the Sandlers’ social views. They built their business on making home loans to the minority poor who were considered poor credit risks by other lenders. The Sandlers disagreed and claimed loans could be profitable if they were properly scrutinized and carefully managed.

Their business model acquired a reputation for thoroughness that was only burnished when World Savings came through the S&L crisis of the late 1980s virtually unscathed.

Behind the scenes, however, World Savings Bank aggressively pushed an exotic form of mortgage called an option adjustable rate mortgage, or option ARM. World Savings gave it a cute name: “Pick-A-Pay.” There was nothing cutesy, though, about the way it worked. The customer was given several alternatives for making a monthly mortgage payment. Ostensibly this gave homeowners more fl exibility in handling their payments should they encounter money problems. In practice, however, Option ARMs lured borrowers into going deeper into debt. Some of the options offered payment amounts so low they didn’t cover the interest on the principal, and by allowing consumers to choose them, the mortgage holder encouraged borrowers to make regular monthly payments that actually put them deeper in debt, owing more and more to the bank with each passing month.

Inevitably many borrowers did just that, and World Savings Bank’s portfolio soon swelled with “toxic” loans. “This product is the most destructive financial weapon ever deployed against the American middle class,” housing lawyer William Purdy told the New York Times.

By the time it was sold to Wachovia in May 2006 for $25.5 billion World Savings Bank carried an amazing $122 billion in adjustable rate mortgages on its books. Shortly after World Savings Bank was sold to Wachovia, the loans became a drain on the bank. In the first quarter of 2007 Wachovia reported losses of $2.3 billion. By the second quarter of 2008 it reported losses of $8.9 billion. Wachovia effectively ceased to exist by October 2008 when it was acquired by Wells Fargo in a forced government sale.

How Self-Help Helped Create the Housing Crisis
As the Sandlers’ wealth increased so did their interest in philanthropy. As liberals, they wanted to fund political activists and nonprofit advocacy groups. And as bankers they sought out a nonprofit group focused on expanding mortgage lending to low income people. That combination attracted them to Martin Eakes.

Martin Eakes is the “main intellectual engine driving Democratic responses to the housing crisis,” wrote the Washington insider journal Politico in a January 2008 profile.

Politico reported that Eakes, now 55, held meetings with powerful figures like Federal Reserve Chairman Ben Bernanke and House Financial Services Committee chairman Barney Frank.

How did Eakes come to be in such company?

As chief executive officer of the Center for Responsible Lending, Eakes is by all accounts a tireless advocate of financial regulatory reform and foe of the mortgage industry. The Center is an outgrowth of an earlier nonprofit community lender called Self-Help, founded by Eakes and his wife, Bonnie Wright, in Durham, North Carolina in 1980. With degrees from Yale and Princeton and a summer of experience as a Ford Foundation intern, Eakes set up Self-Help to provide loans to poor people with bad credit.

He told Politico that Self-Help was “one of the earliest subprime lenders in the nation.” (Eakes and his nonprofits were profiled by David Hogberg in the October 2005 Organization Trends.) Over time Eakes began to spin off various parts of Self-Help, creating the Self-Help Ventures Fund and the Self-Help Credit Union in 1984. The Self-Help Community Development Corporation followed along
with the Center for Community Self-Help.

All were—and are—closely affiliated. They have overlapping staff and missions, according to disclosures in their IRS form 990 tax returns. The family of groups is usually referred to as “Self-Help.”

According to Self-Help’s website, the organizations exist to, “provide financing, technical support and advocacy for those left out of the economic mainstream” Female, rural, and minority homeowners are specifically mentioned. Self-Help operates a “secondary market program that enables private lenders to make more loans in low-wealth communities.”

A note on terminology: At one time there was no such thing as a “secondary market.” The primary mortgage market consisted of banks making loans to borrowers, which enabled people to buy homes. But increasingly the banks began to sell securities in a secondary market backed by their mortgages. Buyers of these mortgage-backed securities were buying the promise that they would receive proceeds from the mortgage payments. Fannie Mae and Freddie Mac, were key producers of these instruments. They bought mortgages and repackaged them as mortgage-backed securities.

The federal government had to bail out Fannie and Freddie because so many of the mortgages underlying the securities were “toxic.” In other words, the mortgage backed securities were not the sure thing they appeared to be because so many of the people who had to pay the mortgages could not afford them after all. Many borrowers allowed their homes to go into foreclosure because the amount of their mortgage was more than the value of their house. The house was “underwater.”

Self-Help has promoted home loan secondary markets in every way possible. It claims to have facilitated the extension of more than $3.6 billion in financing for home mortgages and loans. Self-Help became very popular with left-wing funders and received large grants from the Surdna, Annie E. Casey, and MacArthur foundations to promote its mortgage programs. The Ford Foundation provided a staggering $50 million to subsidize minority and low-income mortgages. A Ford press release explained how Self-Help would use its giant grant:

Fannie Mae has made a commitment to purchase and/or securitize the total $2 billion in loans Self-Help will acquire. The combined effort will in turn help lenders such as BankAmerica Mortgage, Chase Manhattan, and NationsBank which have expanded outreach and developed special products to increase their services to low-wealth borrowers as part of their efforts under the Community Reinvestment Act (CRA), by enabling them to make additional loans.

Self-Help taps taxpayers directly by doing business with Fannie Mae, a government sponsored enterprise (GSE) that was nationalized during the housing crisis. According to Self-Help’s website, the group offers a “flow” program that provides lenders “the assurance and convenience of a guaranteed buyer for qualified loans to low-and-moderate income homebuyers, along with the ability to sell loans directly to Fannie Mae through Self-Help.” Self-Help’s portfolio program “purchases selected loans from lenders after a careful analysis of loan characteristics and performance.”

The federal government underwrites Self- Help in other ways. The U.S. Department of Agriculture has loaned about $4 million to the Self-Help Ventures Fund. Those loans have a 1% interest rate and the loan does not have to be repaid in full until 2021 at the earliest. The Small Business Administration (SBA) has lent the Ventures Fund another $2.5 million at interest rates varying from 2.63% to 4.5%. Self-Help also gets government grants. In 2005 the U.S. Department of Education gave it an $8 million grant to guarantee loans for charter schools. According to a 2003 report, Self-Help made 31 loans totaling $33 million to 17 schools.

Despite all this back-up support, the Self-Help Credit Union’s business appears to have suffered during the housing downturn. Financial reports by the National Credit Union Agency put the assets of the Self-Help Credit Union at nearly $184 million in June 2005. By the June 2009 report, the assets were only $72.7 million.

Martin Eakes’s relentless activities at the state level caught the Sandler’s attention. “I said, ‘Isn’t it incredible what he is doing?’” Herbert Sandler told the New York Times. “I said to Martin (Eakes), ‘What would it take to do what you do on a national level?’”

Together, the Sandlers and Eakes created the Center for Responsible Lending in 2002.

Since then, the Sandlers have been major funders of the Center, pouring more than $20 million into it.

With the Sandlers’ financial support, Eakes has made the Center for Responsible Lending a powerhouse in the inside-the-beltway politics of f nancial policymaking. CRL combines think tank policy research with advocacy group lobbying. Its reports and research have generally been uncritically accepted by the mainstream media despite the organization’s well known bias on housing issues.

The Housing Bubble and the Financial Meltdown
CRL’s mission is to stamp out what it calls “predatory lending,” a term of art used to characterize loans made to borrowers who are misinformed or misled about the cost of their loan and its schedule for repayment.

Critics typically allege that the lender either knows or should know that the borrower is incapable of fulfilling the loan conditions, but ignores the high risk of default in order to make the deal.

“Community organizing” groups frequently attack what they consider predatory lending, claiming that it has spiked during the last decade. The irony is that by working to expand subprime loans to the poor, long a political goal of the left, CRL has increased the likelihood of predatory lending.

At one time the lending industry was very cautious about making loans. Banks only extended credit to low risk borrowers who were considered certain to repay their loans.

Consequently a loan was a difficult, time consuming process in which borrowers had to prove their creditworthiness. The joke was that to get a bank loan you had to prove that you didn’t need it.

Low-income people had a hard time getting credit because it was thought there was a greater risk that they would be unable to repay their loans. And when those with low incomes lived in minority neighborhoods it was easy for left-wing critics to call the lenders racists for discriminating against minority borrowers. Fighting the practice of “redlining” became a social justice cause on the left.

This changed in 1995 when the Clinton administration expanded the scope of the Community Reinvestment Act (CRA). The 1995 CRA revision toughened government oversight over bank lending. Now banks receiving insurance from the Federal Deposit Insurance Corporation (FDIC) were required to make loans in the communities they served.

Banks lost some of their discretion to refuse to make loans because FDIC gave them ratings based on their compliance with the CRA. A bank or other financial institution that received a poor CRA rating became a magnet for bad publicity and civil rights lawsuits.

Activists would cite the rating as proof that the bank was guilty of racist practices.

This gave the banks a strong incentive to make more loans to residents in “underserved” communities—even to borrowers who were credit risks likely to fall into bankruptcy or foreclosure. But for many years this danger was obscured by the housing bubble as some prices increased higher and faster than at any previous time, giving borrowers a false sense of increased wealth.

Martin Eakes and the Center for Responsible Lending have pushed hard for expanding bank lending to low-income minority communities, and they are in denial about the obvious connection between the housing crisis and the role of the Community Reinvestment Act in expanding high-risk lending.

CRL’s website says calling attention to the linkage is “scapegoating.” Instead, it argues that the problem is inadequate government regulation: “Had regulators leveled the playing field through common sense underwriting requirements and more vigorously enforced CRA requirements instead of allowing a race to the bottom, this crisis would have been averted.” (Emphasis added.)

Activists like Eakes are unwilling to admit any doubts. They wanted the government to loosen credit. But when prices soar and foreclosures skyrocket they blame only the lenders, not the borrowers or the policy advocates like themselves for the fiscal meltdown and the collapse of the housing bubble.

Eakes has his own “scapegoat” and it’s “predatory lending.”

As he explained to PBS in 2000, low income borrowers are simply not a risk:

“[W]e went for 10 years, we have had our first loss of a home loan of $10,000 in a total of $120 million of lending directly and indirectly we have made, to mostly minority, single moms. We had our first $10,000 this past year. So, whatever people believe, the truth is, if someone has a chance to get a toehold and own a home, they will be far better borrowers than most of the rest of us. That is just a fact.”

Trial Lawyers to the Rescue
In interviews, the Ivy League-educated Eakes dwells on his humble North Carolina roots. Articles report that his annual salary is $60,000 (plus $26,000 in “other compensation” according to CRL tax forms). In 1996 Eakes received a $260,000 MacArthur Foundation “genius grant.” And he has a nice office: In 2004 CRL purchased an 11-story building in Washington D.C.’s Farragut Square for $23 million. That makes CRL part of Washington’s infamous “K Street” corridor of lobbying firms located blocks from the White House.

Besides the Sandlers’ $20 million ($13.9 million of it since 2005), CRL has received grants from the usual suspects: the Pew Charitable Trusts ($1 million in 2007), MacArthur Foundation ($500,000 in 2002), Ford Foundation ($200,000 in 2003), Rockefeller Fund ($150,000 in 2002), Philadelphia Foundation ($268,847 since 2000), and George Soros’s Open Society Institute ($100,000 since 2003).

However, eyebrows were raised over a recent major donation.

In 2007, hedge fund manager John Paulson [no relation to Treasury Secretary Henry Paulson] had his company contribute $15 million to CRL. The donation was to create an “Institute for Foreclosure Legal Assistance” to be managed by the National Association of Consumer Advocates (NACA), an association of 1,000 class-action attorneys. The Institute’s website says the purpose of the group is to make grants of about $250,000 to nonprofit legal aid groups and law school clinics for “homeowner protection.”

The Paulson gift was made at the same time that Paulson and Co. hedge fund was pushing for a form of bankruptcy reform legislation that would let federal judges rewrite the home mortgages of people in bankruptcy—a process called “cramdown” in the mortgage business. Paulson and Co. senior vice president Michael Waldorf said the firm’s generous contribution was in the public interest (a “positive contribution in addressing a serious economic problem.”)

By contrast, Business Week surmised that “Paulson … stands to rake in a windfall if the measure passes.” How? Paulson made a massive bet against the subprime market. “Economy’s Loss Was One Man’s Gain” was how a New York Times review of a book on Paulson’s feat put it.

As he explained in an interview for Portfolio.com, Paulson saw the turmoil in the housing market early on because the securities traded in the subprime market were far riskier than their ratings indicated: “We thought that many banks and brokerages were massively overleveraged, with very risky assets, and that a small decline in the assets would wipe out the equity and impair the debt.”

Financial institutions had every reason to worry that the cramdown legislation would further roil the already troubled secondary market trading subprime mortgage securities.

Who would invest if judges were given the authority to rewrite the terms of mortgages? The secondary market would dry up.

According to BusinessWeek, Paulson’s plan was to create a broad coalition of consumer and legal aid groups to push for the legislation.

He also took short positions on securities he thought would tumble when the housing market did. One of the banks he focused on was Wachovia.

The bet on the fall of the mortgage securities paid off and generated a record $15 billion for Paulson and Co. in 2007.

John Paulson’s personal payday return was $3.7 billion. The total would have been even higher had the cramdown legislation become law. CRL, whose $15 million grant was small change for Paulson, denied that there was any quid pro quo. Reacting to the BusinessWeek story, the organization said none of the money Paulson contributed would be used to lobby for the cramdown legislation. The insinuation, it said, was “outrageous.”

CRL’s Crusade Against Payday Lending
CRL and its supporters assume predatory lenders are always at fault, eager to have borrowers fall behind on their payments in order to collect ever-higher payments. That’s what’s behind the current Democratic bill to create a Consumer Financial Protection Agency, which would expand the federal government’s powers to monitor lenders, extend lenders’ legal liabilities, and create the basis for a new wave of class-action lawsuits.

It’s also what’s behind legislation introduced by Sen. Dick Durbin, (D-IL) to crack down on the payday lending industry.

Payday lending, sometimes also known as cash advances, is a state-regulated industry in which retail lenders make small short term loans (e.g. a few hundred dollars for two weeks). Low-income people who find themselves in a sudden cash crunch often rely on such lenders—for instance, for auto repairs so that a borrower has transportation to get to work. Payday lending is a substantial industry throughout the U.S., providing quick, convenient and customer-friendly services. CRL, however, calls the practice “nothing more than legal loansharking” that forces borrowers into a “debt trap.”

“The problem for the borrowers—and the payoff for the lenders—is that the terms of these loans are cleverly designed to be very difficult to meet. The borrower must keep coming back and renewing their loan because they aren’t allowed to pay it down and can’t afford to pay it off. They pay the lender another chunk of interest each time, about $50 for a $300 loan.”

Eakes created CRL to fight payday lending. In 1999, his Coalition for Responsible Lending, composed of credit unions and nonprofits like the NAACP, succeeded in stopping North Carolina lenders from making loans containing what the Coalition considered excessive balloon payments, fees and refinancing charges. Eakes got Georgia to pass similar legislation in 2004, and CRL is now pushing Durbin’s federal legislation.

CRL says banning payday loans would protect Americans, especially African-Americans, from abusive loans. A March 2005 CRL study, “Race Matters,” asserts that “abusive loans made by payday lenders are not just an issue of fair and responsible lending, but are a civil rights issue as well.”

However, no less an authority than the Federal Reserve Bank of New York has argued against banning borrowers from securing loans from payday lenders. Its November 2007 report on what happened in Georgia and North Carolina warned that there would be unintended consequences if payday lending was outlawed:

Georgians and North Carolinians do not seem better off since their states outlawed payday credit: they have bounced more checks, complained more about lenders, and debt collectors, and have filed for Chapter 7 (“no asset”) bankruptcy at a higher rate. The increase in bounced checks represents a potentially huge transfer from depositors to banks and credit unions. Banning payday loans did not save Georgian households $154 million per year, as the CRL projected, it cost them millions per year in returned check fees.

The report also noted that borrowers in Hawaii had “fewer and less chronic” financial problems after the state doubled the legal limit of a payday loan to $600.

A 2009 report by Gregory Elliehausen of the George Washington School of Business seconded the Federal Reserve study, noting that payday loans, while often costly, are “better than the alternatives.” Payday loans “increase communities’ resiliency to financial difficulties, relax credit restraints without increasing delinquency and reduce the incidence of financial problems.”

Elliehausen added that the loans were also popular with consumers: “Nearly all payday loan customers evaluated their own experience with their recent payday loan positively and believed that payday loan companies provide a useful service to consumers.”

Conclusion Such findings have not stopped CRL’s crusade against payday loans. It claimed in January 2009 that “payday lending alone costs American families $4.2 billion in predatory fees,” arguing that “[f]or every payday lending staff position, 179 Americans are caught in the cycle of high cost payday debt.”

The collapse of the housing market and the crisis affecting American financial institutions should have caused the Center for Responsible Lending and its Self-Help affiliates to reexamine their premises about the best ways to help low-income people. And the mainstream media should have more closely examined how the philanthropy of financiers like John Paulson and Herb and Marion Sandler promoted their business interests.

Neither reevaluation has occurred.

How ironic that the toughest media scrutiny lending advocates have faced came from a late night comedy skit on television.

Sean Higgins is a Washington, D.C.-based reporter.

(This article appeared in the March 2010 issue of Capital Research Center’s monthly newsletter, Organization Trends.)