At the Center for Consumer Freedom, we follow activist groups in all shapes and sizes — nutrition zealots, seafood scaremongers, save-the-cows prima donnas, and more. Their pet issues may vary, but groups like PETA and the Center for Science in the Public Interest (CSPI) share quite a bit in common: huge bank accounts (the Humane Society of the United States spent over $5.8 million influencing the 2008 elections alone), deceptive names (the Physicians Committee for Responsible Medicine is less than 4 percent physicians), that “we know what’s best for you” mentality (CSPI has certainly earned its status as undisputed Chief of the food police). But as we’ve been telling you, these kinds of activists are no longer concerned only about what’s on your plate.
There’s a new school of anti-consumer-choice advocacy, and it’s taken the model of professional busybodyism beyond our menus and into our wallets. Leading the charge is a group that may be as deceptive, meddling, and filthy rich as any other group you’ve seen here: the Center for Responsible Lending (CRL).
CRL has already managed to eliminate short-term lending options for consumers in New Hampshire, Ohio, Oregon, Virginia, Arkansas, Georgia, and its home state of North Carolina. But as with other activist groups, there’s a lot more to CRL’s brand of “responsible lending.” As this December New York Times article explained, two CRL founders made millions pushing one of the very same products from which CRL purports to “protect” consumers: the option-ARM (or “Pick-a-Pay”) mortgage:
Once invited by Congress to testify about good lending practices, the Sandlers were recently parodied on “Saturday Night Live” as greedy bankers who handily sold their bank - and pocketed $2.3 billion in shares and cash - in 2006 before many of their loans began to sour…
Known as an option ARM and named “Pick-A-Pay” by World Savings it is now seen by an array of housing analysts and regulators as the Typhoid Mary of the mortgage industry….
“This product is the most destructive financial weapon ever deployed against the American middle class,” said William J. Purdy III, a housing lawyer in California who is representing elderly World Savings customers struggling to repay their loans. “People who have this loan are now trapped, and they can’t get another loan.”
Herbert Sandler isn’t the only big-ticket CRL donor to scored big from the subprime mortgage mess. As a new profile in Condé Nast Portfolio points out, CRL also received a $15 million donation from billion-dollar hedge fund manager John Paulson — the man who reaped the largest windfall in Wall Street history by betting against the subprime market.
Funny thing: While CRL has been rallying against certain kinds of lenders, the group’s leaders didn’t find it necessary to comment on their funders’ own illicit mortgage practices. That “responsible lending” tag loses credibility when the soapbox attacks on others come from an enormous glass mansion — funded by subprime pick-a-pay snakeoil lenders.