A new article in Conde Nast’s Portfolio  details the windfall profits of Center for Responsible Lending contributor, John Paulson:

“Hedge fund manager John Paulson has profited more than anyone else from the financial crisis. His $3.7 billion payday in 2007 broke every record, and he made it all by betting against homeowners, shareholders, and the rest of us. Now he’s paying the price.”

The Credit Union times detailed Paulson’s relationship with CRL (and the resulting Congressional hearing):

“In October, he gave $15 million to the Center For Responsible Lending, which has been leading the charge in lobbying for a law that would let bankruptcy judges restructure mortgage loans. By forcing servicers to accept lowered monthly payments, market values would likely fall even further, and Mr. Paulson would most definitely benefit financially.”

From the blog…

Here’s the Deceiver-worthy part: While Herbert Sandler is ripping off the poor, he’s giving gajillions of dollars to nonprofit groups that crusade against just this sort of thing. One of them is the Center for Responsible Lending, which he and his wife helped found.

Responsible Lending?

Sandler gave the group $5.2 million in 2005, and another $7 million in 2007. Sounds like a weak-ass effort at conscience scrubbing to me.

Responsible Lending. Responsible Lending. Responsible Lending. If you say it enough times, it loses all meaning. Maybe that’s how Sandler did it too…

Maybe the point is that if he funds them, he controls them. So they can criticize everybody but him.

A National Review article looks at the financial donations by Herb and Marion Sandler…

Topping all these groups, however, is the Center for Responsible Lending. Through the middle of last year, the Sandler Foundation had given nearly $20 million to the CRL, whose idea of “responsible lending” does not include loans that make economic sense for banks and their investors, but rather loans that fulfill the Left’s notion of social justice. The CRL is a professional grievance organization that concentrates on accusations of racial redlining. In recent weeks, its main project has been to defend the Community Reinvestment Act, which encouraged subprime lending, against charges that it played any role in Wall Street’s financial crisis. “These are the very people who have destroyed the American credit system,” says Jerry Bowyer, the chief economist at BenchMark Financial Network

From the Conservative Pundit, speaking about Herb and Marion Sandler…

These same people are also behind The Center For Responsible Lending.  They portray themselves as being on the side of the consumer — but that couldn’t be further from the truth.  The “Center for Responsible Lending” is, in fact, a multi-million dollar operation backed by a wealthy financial institution that actually profits from advancing the very policies it advocates.  Sound like a conflict of interest??   Worse, it pursues aggressive lobbying for policies that would restrict the financial choices of millions of consumers.

Read the NY Times article on the Sandlers.

From the article:

The Center for Responsible Lending is an interesting place to hover for a minute. The organization markets itself as a resource for “predatory lending opponents”, and it is taking on such practices as sub-prime lending, pay-day lending, overdraft loans and refund anticipation loans, among other things.

 In the Times Magazine piece about the Sandler’s philanthropic activity, they said:
“It starts with outrage,” said Herb. “You go a little crazy when power takes advantage of those without power. It could be political corruption — ”
“Or subprime lending,” Marion interrupted.
“The story of subprime is worse than anyone has written so far,” Herb said, shaking his head in dismay.
“It is,” Marion said, nodding in agreement.

So where’s the outrage, Mr. and Mrs. Sandler, at the way in which your own Pick-a-Pay invention has allowed thousands of people to acquire more debt than they could reasonably pay off? It doesn’t matter that they started out with good credit. Allowing a person with a solid credit rating and a $130,000 annual household income buy a home he cannot afford is just as irresponsible and exploitative as allowing someone with bad credit and $30,000 a year in income buy a home he can’t afford.

…reads the headline of a New York Times article on Herbert Sandler, the founder of the Center for Responsible Lending.

The Sandlers’ giving intersected most directly with their business interests in 2002 when they helped create an advocacy group for low-income borrowers called the Center for Responsible Lending.

The center was the successor to a smaller organization in North Carolina, whose director, Martin Eakes, had helped the elderly and minorities avoid predatory banking practices.

“I said, ‘Isn’t that incredible what he is doing?’ ” Mr. Sandler recalled. “I said to Martin, ‘What would it take to do what you do on a national scale?’ ”

From a report by the Credit Union National Association and the National Credit Union Foundation, “Payday Lending: The Credit Union Way.”

Let’s consider some alternatives for the working mom who is short $100 until payday, 14 days from now. She could get a $100 payday loan, pay $15, and the APR for that two week loan would be 391 percent..

She could also choose to write a bad check and pay an average of $48 in NSF and merchant fees. That would be a comparable APR of 1,251 percent!

Even if she has courtesy pay with her credit union, the average fee is $25, or an APR of 650 percent. Another option for her might be to not pay the $100 minimum balance due on her credit card, resulting in a $26 late fee—678 percent. If she chooses to not pay her $100 utility bill which may result in a $50 late or reconnect fee, that’s a comparable APR of 1,304 percent!

The argument can be made that by securing a payday loan to solve her cash flow needs, this woman is taking a proactive approach to her financial dilemma.

The Center for Responsible Lending indicates the 11 states that banned or limited payday lending saved consumers $1.4 billion in fees in 2006. But eliminating local payday lending activity does not eliminate the need for emergency cash loans. People still come up short prior to payday and the center does not address how these consumers managed their cash-flow problems. If they had to use one of the other alternatives, or had to drive to an adjoining state that made payday loans, or used the Internet to get an even higher priced loan, it is possible consumers in these states paid even more to solve their cashflow problems.

America’s #1 Populist, Jim Hightower, has jumped on the anti-payday lending bandwagon and denounced payday loans.  Like so many of the anti-payday lending groups, Mr. Hightower demands that payday lending businesses be shuttered to protect “very-low-wage working people – those living paycheck to paycheck who can least afford to have their pockets picked” but fails to tell those very same people what to do when they need to make ends meet.  If you don’t offer any other option for a clearly defined need, is that actually helpful?  Payday loans are often a less costly option to bouncing a check, paying overdraft fees or other bank charges.  Take away this option, what are consumers to do when they have an unexpected expense?  The masses are waiting for your answer, Mr. Hightower.

The Phoenix Business Journal reports that “200isNoReform.com” is now “Arizonians for Responsible Lending,” yet another branch of the Center for Responsible Lending and is working to strip Arizonians of their financial choices by capping payday lending at a 36% annual interest rate. The Payday Pundit has said it once and will probably have to say it a million times…payday loans are not annual loans, they are not mortgages, they are short term, low dollar loans. Applying an annual interest rate to them is akin to trying to rent a car for a weekend and the agent telling you how much it would be to buy the car. It makes absolutely no sense.

An Ohio State University professor details what employees can do to be considered “most valued employees” by their boss. Listed in what not to do:

• Do not ask your employer for loans and pay advances. Your employer is not a banker. Asking for loans and pay advances suggests that you cannot manage your finances. Such a negative evaluation of your personal management abilities may threaten future career advancement.

The Center for Responsible Lending lists “ask your employer for a salary advance” as an alternative for payday loans. While it may be an alternative, it may not be good for your career.