WASHINGTON – The national payday loan industry appears to have taken its fight with Martin Eakes, the CEO of the $184 million Self-Help Credit Union, from being a legislative and regulatory argument at the state level to being the subject of an attack from a well-connected conservative think tank. Writing in one of its monthly publications, Organization Trends, the Capital Research Center has attacked Self-Help and Eakes for working and lobbying state and federal regulators and legislators to increase the credit union's power and influence at the same time it worked and lobbied them to, in the Center's view, limit consumer choice by attacking payday lending and so-called predatory mortgage lending. Founded in 1984 by former Reagan Administration staff, the Center has slipped into a lower profile among Washington insiders but it is still well known. The September issue of Organization Trends attacked the State attorneys general for becoming a “national association of aspiring governors.” Eakes said that he is aware of the attack on the credit union's effort but will not apologize for it, arguing that the article has its roots in the payday lender's trade group, the Community Financial Services Association, and in its hard-nosed public relations firm Dezenhall Resources. David Hogberg, an editor for the Center and author of the Organization Trends piece has confirmed working with Denzenhall Resources on the article. The Center has also produced an opinion piece about Eakes and Self-Help that Eakes said it has offered to North Carolina newspapers without finding any takers. The CRC piece goes into depth about Self-Help's growth and lending, charging that it “exploits” its non-profit status by offering low-interest loans with money it obtains tax-free from grants or other low interest loans. The stalwart conservative organization also detailed the “cozy” relationship it alleges Self-Help has with allegedly liberal grant makers such as the John D. and Catherine T. McArthur Foundation and the Ford Foundation. Sometimes the article attacks aspects of Self-Help's lending which other conservative organizations generally support, such as loaning money to charter schools, institutions which the Bush Administration has publicly supported. Perhaps the most inflammatory charge was that Self-Help has made loans in large amounts to its officers and senior staff, an allegation which Eakes flatly denied and which Self-Help denied in an April 29, 2005 letter to both the CFSA and Dezenhall Resources. “If this is what they can come up with after having bragged about coming to get me,” Eakes said, “then I think we must be doing all right. Besides, they don't know that I got death threats from the local Ku Klux Klan when I was just starting out, I don't scare easily.” Eakes explained that from his view the CRC attack is the latest attempt from the payday lenders to “smear” both he and Self-Help because of the credit union's persevering and apparently victorious fight to close down payday lenders in North Carolina. In the late 1990's, North Carolina authorized payday lending but did so with a sunset provision. Unless re-authorized before the end of 2001, the law authorizing payday lending in the state would go out of effect. “It was a hard fight and we were in the thick of it,” said Eakes, “but in the end we won and payday lending is now illegal across North Carolina. Everything after has been more or less the legal and regulatory mopping up,” Eakes explained. Payday lenders operating in the state tried different approaches to getting around the law, Eakes explained, including arguing that only the FDIC had the authority to interest rates being exported across state borders (the so-called rent a charter phenomenon) and that the state regulations lacked the authority to shut them down. But one by one, Eakes explained, the arguments have failed, the loopholes have been closed and the number of payday lenders in the state, once above 1,100, has dropped to just above 200 and those are expected to leave the business soon. Even though another bill reauthorizing payday lending has been introduced into the North Carolina legislature, payday lending is effectively over in the state, Eakes explained. Advance America, one of the largest payday lending chains in the country has left the state and Eakes says that payday lenders' overall frustration with the situation, combined with Dezenhall Resources well-reported willingness to make no-holds-barred attacks on opponents, led to the CRC article. “In order to fight back, the target must be willing to be disliked, and be willing to be accused of being heavy-handed,” Eric Dezenhall, the founder of Dezenhall Resources, wrote in his book Nail `Em! “You cannot always survive attack and be loved” Steven Schlein, the spokesman for the CFSA and an executive with Dezenhall Resources, acknowledged that the firm's job is to be the spokesman for the industry and to defend it from its critics which are often “crazy and wrong.” Schlein acknowledged sharing information with the CRC about Self-Help and said such opposition research was included in the firm's service to the CFSA. When asked how CRC came to focus on Self-Help, a relatively small target for such an established Washington think tank, Hogberg said that the Center tried to bring under-the-radar organizations to its readers' attention and that the credit union has a growing profile on the state and national level. But Diane Farsetta, senior researcher for the Madison, Wisconsin, based Center for Media and Democracy, said it wouldn't be surprising if Dezenhall and the CFSA played a large role in the CRC piece since getting third-party support for a point of view is such an old PR tactic. “Certainly if Dezzenhall or the payday lenders had run attacks on the credit union under their own names they would lack credibility to say the least,” Farsetta said. “But having an independent third party do it can help build momentum for your argument,” she added. Think tanks on the right and the left have been guilty of lending themselves to these sorts of third party attacks in the past, she added. -

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