Ron Ehrenreich, member of the Credit Union Advisory Council to the Consumer Financial Protection Bureau (CFPB), is a card-carrying Socialist. In 1988, he was the candidate for vice president on the Socialist Party ticket. Today, his standard biography describes him as a “credit union officer,” which sounds reassuringly benign. He founded the Syracuse Cooperative Federal Credit Union in 1982, and according to this story in The Washington Times, he was appointed to the Credit Union Advisory Council on the recommendation of the National Federation of Community Development Credit Unions.
Nothing in particular seems to be fishy about Mr. Ehrenreich, as we’ll see. He’s your basic other-people’s-money-spending socialist, completely at home in the community-organizing, government-facilitated shakedown milieu. The concern raised about him by Mark Calabria of the Cato Institute, and Republicans in the House of Representatives, is just one of the concerns congressional Republicans have about the CFPB, created in 2010 under Dodd-Frank. In recent months, CFPB entities have held a series of closed meetings with lawyers skilled in shakedown lawsuits; Congressman Sean Duffy (R-WI) was denied access to one such meeting in February. The whole situation is begging for a James O’Keefe video bust.
But Ron Ehrenreich is still an informative study in types in his own right. There can be no surprise, of course, that he talks one way about capitalism to TWT, and another to sympathetic (socialist) auditors.
Speaking to TWT:
[Ehrenreich] called capitalism the “most productive system that has ever been on the face of the earth” and joked, “You are hearing that from a socialist.”
Speaking to fellow socialists in New York:
[Ehrenreich mentor David] Edelstein shared what he believed were the problems with the current U.S. political system’s “infatuation with capitalism,” said Ehrenreich.
Under capitalism, said Ehrenreich, Americans face the “decimation of social safety nets, massive cuts to wages and benefits, and privatization of public services, in the name of mercilessly strict adherence to the free-market system.”
Nor will there be any surprise that Ehrenreich’s credit union was founded with some distinctly political commitments, as highlighted by a Catholic watchdog group which objects to grants made to the credit union by the Catholic Campaign for Human Development. Citing the Syracuse Cooperative Federal Credit Union (SCFCU) website, American Life League quotes the following language:
Our founders were specifically concerned with divesting from businesses that supported the Apartheid system of racial oppression in South Africa; providing fair and friendly financial services designed by and for people of modest means; and serving those that conventional banks fail to serve:
women, who at the time were entering the workforce in record numbers,
people facing the effects of present or past discrimination (particularly African Americans, native American Indians, and the Lesbian, Gay, Bisexual & Transgender [LGBT]community)…
Ehrenreich himself, as the founder of the “CNY Reds” socialist organization, subscribes to the CNY Reds credo outlined here:
We are a local organization of socialists who get together to educate, agitate and organize to build a socialist movement. We share core values and goals, but we come from many political backgrounds including radical labor, the greens, radical feminism, the civil rights movement, anarchism, religious socialism, sewer socialism, pacifism, and revolution for the hell of it. …
Socialists struggle for the full freedom of women and men to control their own bodies and reproductive systems and to determine their own sexual orientation. We stand for the right of women to choose to have a safe and legal abortion, at no cost, regardless of age, race, or circumstance. …
People of color, lesbians and gays, and other oppressed groups need independent organization to fight oppression. Racism will not be eliminated merely by eliminating capitalism.
Yada yada yada. The usual socialist liturgy. So can there be any doubt that Ehrenreich’s credit union – which he proudly describes as a “real world example of bottom-up socialism” – depends heavily on grant funding from agencies of the U.S. federal government? The special type of credit union it represents, a “community development credit union (CDCU),” gets a unique benefit as well from the Carter-era Community Reinvestment Act – which explains why such credit unions proliferated in the period after 1977 in which SCFCU was founded.
Of course, credit unions founded by socialists were never going to be successful without government help, whether from the taxpayer or (by extortion) from commercially viable banks. A 1992 study by Professor John Isbister of UC-Santa Cruz points out (p. 1) that CDCUs were launched in the 1960s under the aegis of the Office of Economic Opportunity, established by Lyndon Johnson in 1964 to administer “War on Poverty” programs.
The big accelerant for CDCUs was Jimmy Carter’s Community Reinvestment Act (CRA) in 1977:
The federal Community Reinvestment Act requires all FDIC-insured institutions (banks, savings banks, and savings and loan associations) to engage in lending, service and investment activities within the area where it has its offices (and therefore collects deposits). Such institutions will get CRA credit for assisting a CDCU, while assistance may take the form of pledging deposits for a period of time, making grants (commonly to cover the CDCU’s operating expenses), donating equipment (for example, furniture or older models of computers), or donating the services of personnel to provide guidance to the CDCU.
But such enforced funding sources still aren’t enough to keep CDCUs rolling. Bill Clinton enhanced their prospects further with a federal grant program established in 1994, the Community Development Financial Institutions Fund administered by the U.S. Treasury Department. SCFCU has regularly been a beneficiary of hundreds of thousands of dollars in CFDI grants (see here, here, and here, for example).
And that’s just the Treasury-managed grants. There are also grants from the Department of Health and Human Services, the Department of Housing and Urban Development (see here as well), and the Department of Labor.
Then there’s the state of New York (also here). And beyond that, there’s the occasional grant from a private non-profit organization, like the aforementioned Catholic Campaign for Human Development, the Gifford Foundation, or the John D. and Catherine T. MacArthur Foundation.
You’re probably getting the picture. Ehrenreich tells a charming tale of starting his credit union with a crowd-sourced capital base of $30 and growing it to assets of $20 million, but the truth is the same banal story as all the other community-organizer shakedowns (see here, here, and here as well). SCFCU simply takes advantage of the various ways in which U.S. federal law directs taxpayer money, and the deposit balances of commercial bank customers, at community-organizer financial institutions, which would have no hope of surviving otherwise.
It’s not the case, of course, that the people getting micro-loans and mortgage loans from these CDCUs would have no hope of getting loans in the absence of the community organizers. Probably some of the CDCU customers would find it difficult to get loans, at least at a given time. (Building a credit history with small, standard-type loans works wonders for one’s credit-worthiness.)
But the real difference the CDCUs make is that they are a way for community organizers to leverage other people’s money to gain political power. That opportunity is what’s missing, when less-creditworthy borrowers have to turn, like everyone else, to commercially viable lenders.
And that’s what the voting citizen should keep in mind, as the drama of the strangely secretive Consumer Financial Protections Bureau unfolds. Community organizers have one thing on their minds, when they’re pondering your money, and it isn’t the good of the average financial-products customer.