Center for Responsible Lending (CRL)

Center for Responsible Lending (CRL)


* Co-founded and funded by Herb and Marion Sandler
* Alleged to be a principal player in the subprime mortgage crisis

Established in 2002, the Center for Responsible Lending (CRL) is the non-profit, lobbying arm of Self-Help, which describes itself as “a community development lender, credit union, and real estate developer that works with individuals, organizations and communities traditionally underserved by conventional markets.” CRL’s founder and CEO is Yale-educated attorney Martin Eakes, who was born in 1955. Four years before setting up CRL, Eakes had created an entity known as the Coalition for Responsible Lending, which helped to write and pass America’s first anti-predatory-mortgage-lending law in North Carolina.

Spurred by the success of that coalition, Eakes launched the Center for Responsible Lending (CRL) as the last piece of Self-Help’s banking network, also in an effort “to combat predatory lending.” George Soros allies Herb and Marion Sandler, who built a substantial portion of their financial empire on adjustable-rate mortgages and were named by Time Magazine as two of the “Twenty-five people to blame for the [2008] financial crisis,” were co-founders in Eakes’ new endeavor. The Sandlers also co-founded the Center for American Progress and have been major donors to the ACLUACORN, and Human Rights Watch. From 2002 to 2008, they gave approximately $20 million to CRL, which quickly expanded to operate out of three offices, situated in North Carolina, Washington DC, and California.

CRL is also funded by the Annie E. Casey Foundation, the California Community Foundation, the F. B. Heron Foundation, the Ford Foundation, the Friedman Family Foundation, Google Grants, the John D. and Catherine T. MacArthur Foundation, the Mary Reynolds Babcock Foundation, George SorosOpen Society Institute, Paulson & Co. Inc., Silicon Valley Community Foundation, Working Assets/CREDO, and the Z. Smith Reynolds Foundation.

CRL’s board of directors includes, among others, Julian Bond, (Chairman Emeritus of the NAACP); Wade Henderson (Executive Director of the Leadership Conference on Civil Rights, former Washington Bureau Director for the NAACP, and a former Associate Director at the American Civil Liberties Union); Bonnie Howard (Senior Associate with the Annie E. Casey Foundation); and Shanna Smith (President and CEO of the National Fair Housing Alliance).

Eric Stein, who served as Senior Vice President of CRL and as Chief Operating Officer of Self-Help, is the most prominent member of CRL. In 2009, the Obama Administration appointed him Deputy Assistant Secretary for Consumer Protection at the Treasury Department. Stein reportedly helped craft Senator Chris Dodd’s 2010 financial-reform legislation, which proposed the creation of a Consumer Financial Protection Agency that Stein would head.

Contrary to its claim of having protected consumers from predatory lenders, CRL and Self-Help were chief players in the subprime mortgage crisis. From 1998 to 2008, with assistance from the Ford Foundation, the Self-Help network financed, under the Community Reinvestment Act, some $5 billion worth of mortgages with ultra-low or no down-payments. According to Phil Kerpen (vice president for policy at Americans for Prosperity), CRL “sh[ook] down and harass[ed] banks into making bad loans to unqualified borrowers.” Many of Self-Help’s loans performed poorly, running delinquency rates that were much higher than average. A large number of these high-risk loans were then sold to Fannie Mae and Freddie Mac, which eventually collapsed, requiring hundreds of billions of taxpayer dollars to keep them solvent. Moreover, CRL negotiated a contract enabling it to operate as a conduit of high-risk loans to Fannie Mae. CRL’s then-Vice President Stein admitted that this partnership served “to relax [Fannie Mae’s] restrictions for loans they purchased on the secondary market” (i.e. mortgage-backed securities).

According to Phil Kerpen, allegations about CRL’s wrongdoing pivot upon the organization’s double-dealing — on one hand, acting “to shake down and harass banks into making bad loans to unqualified borrowers” and, on the other hand, “lobbying for legislation to undermine the burgeoning subprime market they had helped create.” Hedge-fund billionaire John Paulson, who bet against the subprime mortgage market, gave CRL $15 million in 2007, a sum that increased CRL’s revenue by 250% and allowed it to expand its lobbying activities in Washington. Critics allege that Paulson’s relationship to CRL and Goldman Sachs, a group in which Paulson invested another $15 million during the same period, may reveal a conspiracy to profit illegally from the subprime crisis.

In April 2010, CRL claimed another major lobbying victory: Democrat Senator Kay Hagan (North Carolina) introduced the Payday Lending Limitation Act of 2010 as an amendment to the financial regulatory reform bill. CRL authored the bill, which, critics argued, sought to curtail the payday lending industry without limiting the “exorbitant fees” that big banks and lenders charge consumers. (Fannie Mae and Freddie Mac were exempted from the bill). The bill proposed that the federal government create a national database to keep track of the loan profiles of American citizens, further expanding government’s control over the banking industry.

On May 26, 2010, Congressman Darrell Issa (R-CA), ranking member of the House Committee on Oversight and Government Reform, began to investigate John Paulson’s relationship with CRL. Writing a letter to Paulson, Issa demanded that relevant information be procured and sent to his office in order to determine “the true impact” of Paulson’s donation to CRL.

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