Gobbling up predators

It was last fall, almost Thanksgiving, and there hung a big, fluffy, absolutely ridiculous turkey suit. Suzanne Alexander, at that time a new activist with the Association of Community Organizers for Reform Now (ACORN), studied it carefully.

“Would you like to … ?” an ACORN member asked her.

“Love to,” Alexander replied.

Alexander, enveloped by her head-to-toe turkey suit and surrounded by a coalition of about 25 ACORN volunteers, marched into the luxurious lobby of Beneficial of California as part of an action against predatory lending.

“It always works the same way,” says Alexander, a short middle-aged woman with exotically upswept red hair. “The front receptionist runs back and the manager soon comes out with a suit and tie and gives us a big smile … ‘May we help you?’” Alexander mimics in a saccharin voice with menacing undertones.

Alexander walked up to the polished executive and put out her wing. “Sir,” she said from within the huge colorful bird head, “I’m giving you the turkey of the year award … ” she offered him the homemade honor, “ … because you’ve been gobbling down all my money.”

“Some of the employees laughed,” Alexander remembers. “They thought it was great!”

Frequent calls to Beneficial of California failed to elicit a response.

Alexander is one of the citizens-turned-lobbyists who helped assemblymembers and community organizers transform Assembly Bill 489 from a hopelessly optimistic underdog with influential enemies into a more modest bill that gained the governor’s pledged support and finally into a new law limiting predatory lending.

The term “predatory lending” refers to a number of practices that rob sub-prime borrowers of thousands of dollars. Hidden balloon payments, exorbitant fees and unnecessary products, including insurance policies that offer little to no protection, come wrapped into loans with inflated interest rates. Common victims include the elderly, the poor or women alone. These borrowers might have dings on their credit histories that confine them to sub-prime borrowing, they might be vulnerable to manipulative sales pitches or they might find themselves in financial straits with few options.

Alexander was one of those women. “I was contacted at a vulnerable time in my life,” she says, “and I needed money.”

Alexander looked like the perfect victim on paper. She was a woman living alone in a house she’d bought in 1970. She’d recently retired early from the state. She was out of work and weakened by stress.

Alexander took the offered loan, along with the almost useless insurance policy and the high interest rate, but she was not your average victim. This seemingly vulnerable woman had recently helped the media uncover corruption inside a state program called, ironically, “Victims of Crime.”

A supervisor for the program, Alexander had been the catalyst for a major cleanup, but at great personal risk. She’d collected copies of official documents before and after she was asked to alter them. She’d covertly asked other employees to witness shady activities. She’d even smuggled out a copy of an audit that had mysteriously shown up on her desk one day.

When it was over, Alexander retired from the state on less than a thousand dollars a month.

In her cozy little dollhouse in East Sacramento, Alexander collects furniture and decorations. Her bedroom is filled with lacy pink accessories. Her kitchen table is draped in something resembling a homemade quilt. She refers to her style as “a little bit garage sale.” When she took out her loan, she upgraded from a wall heater to central heat. She bought needed appliances. She fixed her car.

Now Alexander carries two mortgages, one of them financed at 14 percent, the other at 22 percent. She would refinance with another lender, but she claims that Beneficial appraised her house at more than it was worth. Since then, she hasn’t gained enough equity to make it worth it for another institution to refinance for her.

Alexander routinely signs her monthly retirement check from the state over to Beneficial. She then dips into her regular income from working full time at the University of California at Davis to complete her monthly mortgage payments. Owing almost $1,500 a month is particularly galling when Alexander bought her home more than 30 years ago. To pay semiannual taxes and homeowner’s insurance, she borrows more.

“On many occasions, I had requested help from the predatory lenders. Never got it,” says Alexander. “I got a flyer in the mail: ‘if you’re tired of predatory lending, and you’d like to try to do something about it, come to a neighborhood meeting.’ Well, I have never, in 30 years, ever gone to a neighborhood meeting. Never. But the interest was there. Because I’d been searching for help since the early ’90s.”

Alexander joined ACORN for what looked like a losing battle. Predatory lending bills had been killed before, and the financial services industry had loads of money and very high-powered lobbyists. But this time, public awareness was growing. Powerful legislators, including author Assemblywoman Carol Migden, were behind the new bill, and the governor had pledged his support.

“The day of the legislative hearing,” said Alexander, “the bankers and lenders were on one side in their Italian suits, and we were on the other in our funky T-shirts.” Alexander was the last person to speak. Aware that sometimes activists lost support by “babbling,” she chose one message and delivered it as powerfully as she could.

“Anyone in this room today,” Alexander remembers saying to legislators, lawyers and financial professionals, “who doesn’t feel that it’s wrong to target individuals who are helpless, poor, minorities, the elderly … and are opposing this bill, ought to be ashamed of themselves.” She looked to the legislators. “It’s your political will,” she told them. “We have lobbied for this bill. We have been patient. We had a bill that was dead because of the way in which it was written. The problem is still there.”

Brian Kettenring, the regional director of ACORN, had worked for two years on predatory lending laws.

“We were in serious trouble,” he says, referring to the short days after the bill passed through the Senate, “because you need 41 votes to pass out of the Assembly… we did an initial count and we only counted about eight supporting votes. … We’d already made a lot of compromises in the Senate Banking Committee and we felt like we’re not willing to make any more compromises.”

Kettenring says that many pro-business Democrats were susceptible to the suggestion that the bill might be bad for business, might hurt the financial services industry or might dry up credit for low- and moderate-income people.

“What’s interesting in the Legislature,” says Kettenring, “is that the policy argument only matters so far. Ultimately, it’s about political power. We were up against some very powerful forces. The question was: Could we muster enough power of our own to swing enough votes back our way that we could get up to 41?”

On the day of the vote, ACORN volunteers gathered together at the Capitol.

“When the initial vote was cast,” Kettenring remembers, “the very dramatic thing that happened was … we got up to 39 votes.”

The polls are only held open for about half a minute. While Kettenring watched the screen, ACORN volunteers filled a room on the third floor waiting for the news.

“A number of legislators had not cast their votes,” says Kettenring. “The bill would have died, and Carol Migden and Senator Machado, who were sponsoring the bill, were running around hunting down the last couple people saying, ‘I need you to cast your vote for this. It’s an important consumer protection.’ So with, you know, five seconds to spare, the last two legislators cast their votes in favor. It passed out 41 to 27.”

But the fight for fair lending is still not over. While Sacramento considers Councilwoman Lauren Hammond’s proposed ordinance, which would ban the city of Sacramento from doing business with predatory lenders, the city of Oakland prepares to sit down with the Financial Services Association, which is suing it for passing its own predatory lending ordinance.

“It all forms a circle,” says Alexander, who claims she’s not against making a profit, as long as it’s fair. “It used to be, years ago, you had a balance. You paid on that balance and the balance comes down. That’s common sense. That’s fair, and everybody’s happy with that,” she says. “Whatever happened to those days?”