WASHINGTON – The fight between payday lenders and credit unions raged on in 2005. Credit unions which had begun to offer alternatives to payday loans for their members continued to do so in 2005, both in established programs such as those offered by the $13 billion State Employees' Credit Union, headquartered in Raleigh, North Carolina and in smaller pilot programs around the country aimed at fighting payday lending in specific communities. But in April the FDIC's Center For Financial Research issued a report Payday Lending: Do the costs justify the price, which appeared to suggest that the practice may not be quite as predatory as opponents had long charged. The report represented one of the only occasions where data from actual payday lender records was analyzed to determine the profitability of the store front lenders and their pricing practices. This was significant because few other studies in the past have examined actual payday data. In this case, two "monoline payday advance firms" provided their records, though the report did not name them. "We find that fixed operating costs and loan losses justify a large part of the high APR charged on payday advance loans," the study said. "The business relies heavily on maximizing the number of loans made from each store, which operates with a relatively fixed cost.we find no evidence that repeat borrowers affect store profits beyond their proportional contribution to total loan volume. In other words, the industry's profitability does not depend on the presence of repeat borrowers per se." The report also found that, contrary to widespread impressions, payday loan stores only really begin to make money when they have been in the same location for a while. Opponents had long alleged the high fees charged must make the stores profitable from the outset and that the payday lenders were unduly profiting from low-income communities. But the report was of little help in the political fight which had shaped up in North Carolina and which saw the legislature decline to reauthorize payday lending in the state in 2005. In retaliation, the payday loan industry mounted a strong attack on Martin Eakes, the CEO of the $184 million Self-Help Credit Union and leader in the payday lending opponents in North Carolina. Writing in one of its monthly publications, Organization Trends, the Capital Research Center, a well-connected conservative think tank, 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. Eakes said that he is aware of the attack on the credit union's effort and did not apologize for it, arguing that the article had 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, confirmed working with Denzenhall Resources on the article. The center has also produced an opinion piece about Eakes and Self-Help that Eakes said has been offered to North Carolina newspapers without finding any takers. As 2005 comes to an end the attack appeared to not have gained any traction, leaving the opponents of payday lending, including some credit unions, victors on the field at least for now. [email protected].