This from our first article in an ongoing investigation conducted by the MacIver News Service. Future stories will focus on any official reaction we receive from the University and an indepth look at Rogers’ Center on Wisconsin Strategy.

Joel Rogers Says College Credits May Be Available to Those Who Help Build Liberal Alternative to ALEC

[Madison, Wisc…] One of the University of Wisconsin’s most renowned liberal professors attempted to recruit his students to work on an elaborate private political project while final grades in their class were pending, the MacIver News Service has learned.

At the conclusion of his end-of-the-year email to his UW Law School students, Professor Joel Rogers wrote: “I think I mentioned a little project I’m doing now — which thus far involves professors from such crummy law schools as Yale, Harvard, Stanford, Columbia, Cornell, University of Michigan, University of Minnesota, Virgina [sic] and elsewhere, but thus far, beyond your lonesome, NOBODY from UW — to build a partial counter to ALEC. It’s going to involve a lot of law students. If you’re interested in helping out with that (no money, but possible credit), or know of somebody else who might be, please let me, or even better, “Nate Ela” <nela@cows.org>, a lawyer and now sociology grad student, know. Project description attached.“

Rogers is the Director of the Center on Wisconsin Strategy, a 501(c)(3) nonpartisan, educational, and charitable organization. COWS was founded in 1992 by Rogers, a professor of Law, Political Science, and Sociology at UW-Madison and a longtime commentator on economic development and democratic institutions. COWS is based at the University of Wisconsin-Madison, in the Social Science Building.

According to its website, COWS current and past funders include: the Alfred P. Sloan Foundation, the Annie E. Casey Foundation, the Carnegie Corporation of New York, theCarolyn Foundation, the Ford Foundation, the Garfield Foundation, Living Cities, the Joyce Foundation, the Nathan Cummings Foundation, the Open Society Institute, the Rockefeller Foundation, the Surdna Foundation, the Wallace Global Fund and the Wisconsin Department of Workforce Development.

This last semester, Rogers taught a class titled: Law & Contemporary Problems: Public Law & Private Power to approximately a dozen students at the University of Wisconsin Law School. Coursework was completed in December, but grades had not been issued at the time he sent his email to students. Rogers’ email was provided to MacIver News Service by someone who received the email from one of Rogers’ students. The MNS has confirmed the authenticity of the email, although we have not found a student who was willing to comment on the record.  Read more>>

Given that the federal budget is more than $1 trillion in the red and that deficits extend into the future as far as the eye can see, federal subsidies to public broadcasting understandably are on the table.

The just-released report of President Obama’s deficit-reduction commission recommends diverse measures to put Washington’s fiscal house in order, including a $100 billion reduction in defense spending, a substantial increase in the federal excise tax on gasoline, ending of the tax deductibility of home mortgage interest payments and eliminating all funding for the Corporation for Public Broadcasting.

Federal funding of public radio and television seems to be comparatively small potatoes in the larger budget picture.

This year, for example, congressional appropriations for CPB, the primary channel through which tax dollars are funneled to PBS television and NPR, amounted to $422 million.

At a time when economic stimulus programs, financed primarily by borrowing and the Federal Reserve’s recently announced second round of “quantitative easing,” total in the trillions, who could object to spending a mere few hundred million dollars to support the production and distribution of public programming? Well, I do!

The best estimates suggest that, historically, about 15 percent to 20 percent of public broadcasting’s operating expenses are financed by federal taxpayers. Over the last four years, private donations, both in cash and in kind, accounted for about 33 to 39 percent of the public media’s annual revenue. State and local governments, foundations, colleges and universities, both public and private, contributed another 29 percent of the total.

Supporters of continued taxpayer support of CPB and its affiliated local stations argue that $400 million is a small price to pay for financing a voice “independent” of the commercial media. Juan Williams, recently fired in response to his expression of unease in boarding aircraft with obviously Muslim passengers, would beg to differ, as many other Americans would.

Because of its tax-exempt status, the CPB attracts many “angels,” such as Joan Kroc of the McDonald’s fortune, and the John D. and Katherine T. MacArthur Foundation, each of which reportedly contributed more than $5 million to NPR’s annual fund between 1993 and 2005. Other private contributors, such as Carolyn and Matthew Buscksbaum, Anne and John Hermann, and the Ford, Kresge and Doris Duke foundations, reportedly wrote checks of between $1 million and $5 million per year over the same period.

The Corporation for Public Broadcasting was established in 1967 at a time when three national television networks dominated the airwaves. Today, the broadcast media offer a diverse mix of content over the air, and via cable and satellite. It may have once been true that a publicly financed source of “quality programming” and diverse opinion was necessary to ensure access to highbrow entertainment, and news and opinions not available elsewhere.

Nowadays, however, the History and Discovery channels, Public Radio International, American Public Media, and SIRIUS satellite radio, among others, compete effectively with NPR and PBS—and millions of Americans willingly pay for commercially distributed content.

If NPR and public television cannot survive in such an environment without taxpayer subsidies, they should be allowed to go the way of the dodo bird.

In today’s information-heavy media marketplace, no one should have special privileges. The public media do not broadcast commercials, but they do have sponsors who can fill the funding gap.

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

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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.)

Holder’s Justice Department released a legal opinion last week that allows the Obama administration to ignore the will of Congress which has voted overwhelmingly to suspend federal funding of ACORN until at least Dec. 18. He’s also ignored the 88-page report on ACORN’s systemic corruption and flagrant racketeering activities that was issued this summer by Republican investigators on the House Oversight and Government Reform Committee.

Apparently, public outrage at the continuing antics of the corrupt radical advocacy group that used to employ President Obama and White House political director Patrick Gaspard counts for nothing.

U.S. Attorney General Eric Holder (center) with ACORN ally Los Angeles Mayor Antonio Villaraigosa (left), and former California Gov. Gray Davis (right).

But Americans really shouldn’t be surprised that Attorney General Holder is bending over backwards to help his radical friends at ACORN.

Holder, whom I’ve long argued is unfit to serve as the federal government’s chief law enforcement officer, supports ACORN’s goals.

ACORN wants to use the power of government to bring about a radical transformation of American society.

So does Holder.

He is unapologetic about his desire to force Big Government down the throats of Americans. Holder rarely misses an opportunity to advocate expanding the size and scope of the federal government. He told a 2004 gathering of the left-wing American Constitution Society, “Government has been the primary force for positive social change in our country’s history. It can be again.”

Like ACORN, he thinks electoral fraud is a myth manufactured by people who want to disenfranchise minorities and the poor. “I think there is a feeling among Republicans that there is a widespread amount of voter fraud out there. I don’t think the statistics actually would substantiate it,” he told Fox News in 2004.

When Darnell Nash, whom ACORN registered to vote nine times, was convicted of vote fraud –not just mere voter registration fraud— in Cleveland earlier this year, Holder couldn’t be bothered to comment. A spokesman for Cleveland prosecutor Bill Mason, a Democrat, told me last month that a local investigation of ACORN remains wide open.

Like ACORN, Holder supports the so-called Fairness Doctrine that would force conservative talk radio hosts off the air Hugo Chavez-style. He told the American Constitution Society:

The nation must be reminded that the word liberal is more than a conservative slur. The nation must be reminded that it was the progressive, liberal tradition that brought about the social and economic changes that were necessary many years ago. The nation must be convinced that it is a progressive future that holds the greatest promise for equality and the continuation of those policies that serve to support the greatest number of our people. In the short term this will not be an easy task. With the mainstream media somewhat cowered by conservative critics, and the conservative media disseminating the news in anything but a fair and balanced manner, and you know what I mean there, the means to reach the greatest number of people is not easily accessible.

Also like ACORN, Attorney General Holder hates conservatives. Viscerally.

His public utterances are weighted down with the same old tiresome liberal clichés about those on the right one might find on the ultra left-wing Daily Kos hate site.

Holder told the American Constitution Society gathering that “conservatives have been defenders of the status quo, afraid of the future, and content to allow to continue to exist all but the most blatant inequalities.” They have “made a mockery of the rule of law.” Conservatives try to “put the environment at risk for the sake of unproven economic theories, to play to the fears of our citizens, and not to their hopes, and to return the nation to a time that in fact never existed.”

Conservatives are “breathtaking” in their “arrogance,” Holder claimed. “From redistricting schemes, to attacks on abortion rights, to energy policies that are as shortsighted as they are ineffective, to tax cuts that disproportionately favor those who are well off and perpetuate many of the inequities in our nation, the conservative movement has been unafraid to push the limits in advancing this agenda.”

Holder denounced what he called “the conservative agenda of social division, mindless tax cutting, and a defense posture that does not really make us safer.”

ACORN’s chief organizer Bertha Lewis couldn’t have said it better.

Holder also has a long history of involvement in charities and nonprofits that seek to stick it to conservatives.

He has been a member of the board of directors of the American Constitution Society. The ACS believes in the myth of the “living” Constitution and views the limits that great charter places on government power as quaint anachronisms to be overcome through clever legal sophistry.

ACS is, of course, funded by the big players in left-wing political finance, including members of the billionaires’ club, the Democracy Alliance. Reliably liberal benefactors of ACS include George Soros’s Open Society Institute ($2,201,500 since 2002), Ford Foundation ($600,000 since 2003), Sandler Foundation ($200,000 in 2003), Tides Foundation ($25,000 since 2002), Barbra Streisand Foundation ($20,000 since 2002).

Meanwhile, it has been exhaustively documented that Holder has what could charitably be called a cavalier approach to a key civil right, you know, that inconvenient, archaic one described in the Second Amendment that the media wishes we would all forget about.

As the Independent Institute’s Stephen P. Halbrook, author of The Founder’s Second Amendment, told a Senate panel considering Holder’s nomination at the beginning of the year, “many Americans have reason to be uneasy about Mr. Holder’s nomination for attorney general. They deserve to have a person in this role who is committed to upholding all parts of the Constitution, including the Second Amendment. Unfortunately, Mr. Holder has proven himself not to be that person.”

As deputy attorney general in the Clinton administration, Holder pushed for federal licensing of handgun owners and federal registration of guns, waiting periods for gun purchases, and rationing of handgun sales. The former Janet Reno acolyte signed on to a pro-gun prohibition amicus curiae brief in District of Columbia v. Heller, last year’s groundbreaking Supreme Court case in which justices struck down the District’s oppressive handgun ban.

Like Holder, ACORN has long supported gun control. Content to leave poor people in the inner city defenseless at the hands of violent criminals, ACORN intervened in court to defend a Jersey City, N.J., gun control ordinance.

The liberal political organizing group ACORN, battered by the release of embarrassing videos and allegations of financial mismanagement and fraud, has also been losing support from several major foundations.

The Ford Foundation, the Annie E. Casey Foundation, the Charles Stewart Mott Foundation, the Marguerite Casey Foundation and Bank of America have stopped funding the group and its affiliates over the past year and a half.

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