A news organization funded in part by one of the subprime mortgage crisis’ biggest beneficiaries sponsored a journalism series targeted at high interest loans.
ProPublica, a left-leaning nonprofit investigative news outlet, teamed with Marketplace, a National Public Radio (NPR) show sponsored by American Public Media, last week to expose "deceptively expensive" high interest lending practices aimed at poor customers.
The series took a harsh look at installment and payday loans. These organizations provide high interest loans for small amounts to people with bad credit rates. One ProPublica story, for instance, highlighted a Wal-Mart employee whose $207 loan cost her $350.
"A credit check showed "my FICO score was 500-something," [the borrower] remembered, putting her creditworthiness in the bottom 25 percent of borrowers. "But they didn't have no problem giving me the loan."
She walked out with a check for $207. To pay it back, she agreed to make seven monthly payments of $50 for a total of $350. The loan papers said the annual percentage rate, which includes interest as well as fees, was 90 percent.
ProPublica has pocketed substantial donations from Herbert Sandler and his late wife, Marion, who made a fortune on subprime mortgages issued to poor customers with bad credit. The Sandlers’ World Savings Bank pioneered the technique of adjustable rate mortgages that offer easy money to customers, but carry high interest rates. The couple sold the bank for $2.3 billion in 2006 to Wachovia.
The sale played a major role in the financial crisis. Wachovia imploded under the weight of the risky lending liabilities. It folded and was subsequently purchased by Wells Fargo.
After the sale, the Sandlers approached ProPublica founder Paul Steiger about spending as much as $10 million per year on investigative journalism. The Sandlers do not publicize how much they have given, but ProPublica lists the Sandler Foundation as a supporter on its website.
They provided $20 million in seed money to launch the Center for American Progress in 2003 and gave millions to far-left groups, such as ACORN and MoveOn.Org.
The couple’s focus on funding media initiatives led the liberal site Slate.com to conclude that they wanted to "return us to the days of the partisan press."
Neither ProPublica, nor American Public Media returned emails for comment.