BUSINESS
03/18/2010 05:12 am ET | Updated May 25, 2011

Center For Responsible Lending In Fight With Front Group

The Consumers Rights League alleges that its nemesis, the Center for Responsible Lending, is failing to properly disclose allegedly nefarious lobbying activity to the government.

The Consumer Rights League asked the Clerk of the House and the Secretary of the Senate to investigate whether the Center for Responsible Lending and its parent organization, the Center for Community Self-Help, violated lobbying rules by not properly disclosing lobbying activities. And the league asked the IRS whether the center ought to lose its tax-exempt nonprofit status because of the amount of lobbying it does.

The Center for Responsible Lending admitted to Roll Call that it was late in filing reports on political contributions. And, the paper reported, the "center and two employees filed their 2009 midyear report after Roll Call notified it of the complaint."

The Huffington Post asked Michael Flynn, president of the Consumer Rights League, if that satisfied him.

"A lot of the things I complained about are technical violations," he said. "However, it is a sign of how much lobbying is going on they can't keep the filings straight."

The center has spent $320,000 so far this year and has more than ten lobbyists working for it, according to the Center for Responsive Politics.

The Center for Responsible Lending says the Consumer Rights League is just doing the bidding of the financial industry, which opposes reforms advocated by the center.

"This is an industry-funded front group, also known as Astroturf, that can't win on the merits of their arguments so they have to attack people personally," said Kathleen Day, spokeswoman for the Center for Responsible Lending. "They lack transparency. "That should make everyone wonder why. Whose water are they carrying?"

"We don't claim to be a grassroots organization. We claim to be a different voice for consumers," Flynn said.

But who's paying for the megaphone? Flynn refuses to say, though he admitted to Roll Call that the financial industry does contribute to the group.

According to tax forms, the league was founded in 2007 with Flynn, Jason Roe, Duane Dicharia, Michael McKay, and Theresa Kibbe as its directors. Roe and Mckay are both principals in the Federal Strategy Group lobbying firm, which has some clients in the financial industry and was paid $40,000 for start-up costs. Kibbe is married to Matt Kibbe, president of FreedomWorks, which provided office space to the league.

Flynn said the league is not connected to the Federal Strategy Group. He said James Terry has replaced Terry Kibbe as the group's chief public advocate, that McKay is no longer one of the directors and that he (Flynn) works from home.

A key part of the league's complaint is that the center's big donors benefited from the center's lobbying. It's the same argument made against the center on websites like www.activistcash.com, propagated by notorious industry PR man Rick Berman, for whom Flynn used to work.

Flynn provided the government with two news clippings purportedly showing how the center is a front for its donors. One, a BusinessWeek story from 2007, suggested that hedge fund Paulson & Co. gave $15 million to the Center for Responsible Lending hoping to benefit from bankruptcy reform legislation for which the center had been lobbying. Another is a December 2008 New York Times story about Herb and Marion Sandler, who helped found and fund the Center for Responsible Lending. Citing this article, Flynn wrote in his letter to the IRS that Herb Sandler "made billions of dollars as the owner of a bank that wrote what are now called subprime mortgages for the low-income beneficiaries of CRL's various advocacy efforts."

"Although we lack sufficient information to determine whether these violations may have actually occurred," Flynn wrote, "we believe that the track record of CRL and CCSH in violating the lobbying disclosure laws plus the information set forth in this letter warrant your thorough investigation."

"They can't prove it because it's not true," said Kathleen Day. "The complaint merely repeats discredited claims about our donors that this bogus group has been trying to make since early 2008. The real intent is to try to prevent us from fighting unfair lending practices."

As far as tax issues, the Consumer Rights League might have a "technical violation" of its own. Here's a screen grab from the Delaware Division of Corporations website, accessed on Tuesday, Oct. 20:

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