The Center for LESS Responsible Lending

If the road to Hell (or serfdom) was paved with good intention (and economic ignorance) then surely that road starts at the North Carolina doorstep of the Center for Responsible Lending. Haven’t heard of it? Not surprising. It’s less well-known than ACORN and SEIU, but its actions have terrible consequences for the rest of us.

The Center for Responsible Lending is part of a giant web of financial institutions that make cheap loans (and act like loan sharks as they sue their customers over loans as small as $96) — all while smearing the reputation of customers and lobbying to restrict competing financial products. (Click here to learn more.) For what it’s worth, the Consumers Rights League, a watchdog group, has filed a massive IRS complaint alleging:

• The totality of the Center’s activities seems to constitute lobbying in violation of their tax-exempt status.
• The Center receives the vast majority of their revenue from only two donors–both of whom have potentially made billions of dollars as a result of the Center’s lobbying activities.
• The Center may have attempted to hide the role of major donors who stood to benefit from the Center’s lobbying activities by failing to file disclosures required by the Lobbying Disclosure Act.
• The Center may have attempted to mask the extent of their lobbying by illegally combining entities on reports and improperly or outright failing to report lobbying expenditures and activities.
• The Center has reported significantly fewer lobbying expenditures to the IRS than to Congress in what seems to be an attempt to camouflage lobbying expenditures that exceed the allowable amounts for tax-exempt 501c3 organizations.

There’s a lot more on this group to get into in the future, but let’s turn to today’s news pages. The Center for Ir-Responsible Lending has once again lobbied for regulations that end up raising prices for consumers. First, it was outlawing payday lending, which cost consumers millions of dollars per year.

Now it’s lobbying to restrict fees that allow credit card companies to operate. Without those fees, where do credit card companies get revenue to pay their employees and keep the lights on? The obvious answer is interest rates charged on loans to customers. The New York Times reports:

Banks began raising interest rates and pulling back credit lines about a year ago as delinquencies crept upward and regulators discussed reforms. As banks have become more aggressive in making changes, lawmakers have accused them of trying to impose rate increases before many of the new rules take effect in February.

On Monday, the Federal Reserve provided new evidence of the banks’ actions. About 50 percent of the banks responding to the Fed’s survey said they were increasing interest rates and reducing credit lines on borrowers with good credit scores. About 40 percent said they were imposing higher fees. The banks also said they were demanding higher minimum credit scores and tightening other requirements.

Who knows how much the additional interest rates will cost customers? One thing is certain, though: the cost is largely because of “well-intentioned” groups like the Center for Responsible Lending.