Ohio’s Buckeye Institute asks, Is the Center for Responsible Lending being Hypocritical? They write:

 ”…there is research indicating that CRL is being funded by organizations that have business practices are not much different than those being used by payday lenders. While CRL’s research should be examined on its own merits (and it has been found lacking when examined by many economists, such as Dr. Tom Lehman), media members and legislators should question the consistency of CRL accepting funding from organizations that use the very practices it decries.

CRL is largely funded by the Center for Community Self-Help, which encompasses a variety of organizations, such as a venture capital firm and a credit union. These organizations cater to low-income Americans but often use the same tactics that CRL attacks when others do it. The Consumers Rights League recently completed a report that outlines some of the actions taken by organizations under the banner of the Center for Community Self-Help that are attacked by CRL when done by other organizations:

Aggressive debt collection As the Consumers Rights League report puts it, “Records show that Self-Help organizations have taken foreclosure or eviction steps against its low-income customers for as little as $62,332 in 2005 and $50,768 against another in 2002. And despite CRL’s public advocacy on behalf of small borrowers, Self-Help’s record includes lawsuits against countless small-dollar borrowers, including suits for as little as $96.”

Profiting from subprime mortgages  Although the CRL attacks subprime lending, it has no qualms about taking funds from organizations that profit from it. As Business Week reported, “Paulson & Co., [a hedge fund] which has seen its assets under management soar this year through fortuitous bets in the subprime market, has given $15 million to the Center for Responsible Lending, a Washington nonprofit that has been lobbying on Capitol Hill for passage of bankruptcy legislation.”

Making large profits of loans to the poor  As the Consumers Rights League notes, “Self-Help pays typically between zero and four percent interest on the loans it obtains, many of which come from government-supported entities…. But Self-Help charges interest far above the charitable rates at which it borrows. In 1998, the last year it reported interest rates on its publicly disclosed federal tax form, the Self Help Venture Fund reported that their average interest rate was more than 10 percent. For reference, that is approximately three percentage points higher than the average home mortgage rate in 1998, according to HSH Associates Financial Publishers. That adds up to a nearly 40 percent premium over the average rate. The Ventures Fund made other loans at interest rates as high as 13 percent.”

There is nothing inherently wrong with the Center for Community Self-Help aggressively pursuing debtors, taking contributions from businesses that profit from subprime mortgages, or making a profit on loans to the poor. But when its advocacy arm, the Center for Responsible Lending, attacks these same practices when other organizations do them, it calls its credibility into question.

Payday Pundit says, “Amen to this.”