Tar Heel Tattler - January 2006
Self-Help Helps Itself. That was the headline on a study published by the Washington, D.C.-based Capital Research Center. It accuses Durham-based Self-Help Credit Union and its CEO, Martin Eakes, of making insider loans and understating credit risks.
The report was written by David Hogberg, a research associate at the center, a think tank founded in 1984 by former staff members of the first Reagan administration. It monitors nonprofits that it says promote the expansion of government at the expense of private business.
Eakes denies the loan and credit-risk charges — which even Hogberg now says are baseless — and says it’s a case of becoming known by the enemies you make — in this case, the payday-loan industry, which he says is behind the report. He started Self-Help in 1980. It targets people who have trouble getting loans from conventional lenders, particularly minorities, women, rural residents and poor families — as does the payday-loan industry. The worst payday lenders, Eakes says, charge annual interest of up to 450%. “Most loan sharks would blush at that rate.” He has lobbied for the state’s predatory-lending law, adopted in 1999, and against payday lenders.
Despite backing off the insider-loan and credit-risk allegations, Hogberg says he stands by his report, which also criticizes Eakes for using money generated by a nonprofit to lobby Congress and state legislatures. “Eakes set up shop in Washington, D.C., to take the state lending law nationwide. Most other credit unions don’t have this sort of activist network. That makes him somewhat unique and worthy of investigation.” But, he adds, “we never did say that they were doing something illegal.”
He denies that the Community Financial Services Association, a payday-lending trade group, influenced the report. “I never had any direct contact with them.” Yet he says it was “open knowledge” — though the report doesn’t say it — that he had help from Dezenhall Resources, a Washington-based PR firm that represents the association. “You use a lot of background sources. Unless there is a reason to, I don’t put them in my report.”
Eakes says he doesn’t like being a target, but he considers it a fair trade for being an activist. “My mother had a saying. ‘There is a way to be popular with everybody: See nothing, say nothing, do nothing and be nothing, and all the world will love you.’ ”
He says he won’t back down. “In my early days with Self-Help, I had threats from the Klan and drug dealers in neighborhoods we were trying to clean up. These guys need to understand that we don’t scare easily.”