Broke USA Part 3

The house itself is modeled on the Biltmore, the stunning 250-room, French Renaissancestyle vacation home that George Vanderbilt built for himself during the Gilded Age in the North Carolina mountains. Like the famous Vanderbilt estate, Jones's home is built from stone and stucco and stands several stories high. It has a slate blue roof and a copper dome that had to be flown to the property by helicopter and installed by a crane operator.

"Everyone was laughing when I started buying property up here," Jones told me as we stood in the marble entranceway to his home, a high-ceilinged room with a sweeping staircase. He felt vindicated, he continued, when in recent years Cleveland's moneyed set started building in the new development down the hill, where Toby McKenzie had been constructing his home. "That's where I'm a visionary," he said. "Now everyone wants to be in this part of town." He invited them to see his home shortly after it was built. "They saw the estate that I was capable of building," he said and, as he imagines it at least, "no one is laughing at me anymore."

They were certainly chuckling back in March 1996, though, when the big news in town was Jimmy Logan's revenge. Tennessee might not have expressly outlawed these high-rate short-term loans but state law didn't permit them, either, and Logan filed a cla.s.s-action suit on behalf of several clients challenging their legality. At that point, Jones, in addition to the several dozen Check Into Cash outlets he had in Tennessee, was operating stores in Kentucky, Indiana, Illinois, and Wisconsin. His pretax profits for the year would exceed $2.3 million. Yet he faced a formidable foe in Logan, an ambitious lawyer with a nose for notoriety who was starting to appear on lists of Tennessee's top attorneys. Jones opened forty-five stores in 1995, but he would open just seventeen in 1996. "Here's this lawyer everyone is telling me is so powerful," Jones said, "telling me he's going to put me out of business. I was scared."

Jones saw the suit as an act of revenge. When we met in Cleveland, however, Logan would claim he sued Jones and several other big payday chains as a matter of principle. He felt they were operating in violation of the state's usury and consumer protection laws and he was intent on seeing them stop making these "loans that were destroying lives." Jones, the former wrestler, wanted to "drive Logan into the ground," he said, to "prove to him that I wasn't as dumb as he thought." But after months of distractions, Jones agreed to a $2.2 million settlement that included a $600,000 payout to Logan and the lawyers he had enlisted to work with him. That was on top of the $500,000 Jones had already squandered fighting the claim and the untold sum he then had to spend convincing the Tennessee legislature to explicitly legalize payday lending, which it did in 1997. "They hired a Noah's Ark of lobbyists," a state senator told a reporter for the a.s.sociated Press. "They hired a black lobbyist to get the black votes. If we'd have had a transs.e.xual, they would have hired a transs.e.xual lobbyist." Campaign finance records show that Jones and his family donated more than $29,000 to local officials in Tennessee in the months leading up to the vote.

Jones emerged from the fog of those lost months fighting with Logan more determined than ever to grow his expanding empire of payday stores. For that, he needed cash but all the bankers he knew proved to be squeamish about venturing into this shadowy world of fringe financing. He ended up securing the $3.5 million he was seeking from a private equity firm at an interest rate of 14 percent. Check Into Cash opened more than two stores a week through 1997. Jones secured an additional $11 million line of credit from NationsBank at the end of the year, allowing him to open an average of three stores per week through the first half of 1998. Jones promoted Steve Scoggins to president and gave him a 2.5 percent share of the company.

What is there about the entrepreneur who, if he owns two stores, can think of little else but growing his holdings to four or six or ten? Or the corporate executive successfully managing 100 outlets dreaming of running 500 or 1,000? Blame it on Sam Walton, the founder of Walmart, or travel further back in time to the turn of the last century and blame Frederick Winslow Taylor, who might reasonably be dubbed the world's first efficiency expert and also its first management consultant. It was Taylor, a student of the manufacturing process, who championed the notion that a business was nothing but an immense and expandable management-designed machine populated by replaceable cogs whose only job was to learn the processes that the top managers had put into place.

Allan Jones has never heard of Frederick Taylor; nor did he attend any of the symposia put on by those who had rediscovered Taylor's ideas. He is not a man who has much use for management theories, but Taylor would certainly have approved of his approach to growth. Jones established the systems and routines intended to make his business run most efficiently and then ruled over his burgeoning empire with an iron fist. Hiring the best and the brightest was not necessary. With an effective template in place, the only thing that was required was obedience by all those replaceable parts residing in the lower reaches of the organizational chart.

Simplify, routinize, monitor, control-those were the watchwords of Taylorism and they were also the principles that Jones and Scoggins employed as their budding payday loan empire grew. Marketing, payroll, human resources, and other functions that could be centralized were handled by the home office and an expanding core of vice presidents were charged with keeping close tabs on the performance of individual stores. The company would hire a new regional manager every time they added ten to fifteen new stores, depending on the size of the region, and a new divisional vice president would be hired in Cleveland for every five to seven regional managers. Bonuses were granted based on the performance of those directly below them on the organizational chart. If the stores under a regional or district manager saw an increase in fees collected-a.s.suming those financial gains were not washed out by bad debts-they would receive a bonus for that month. If not, well, the disappointed divisional managers chewed out their regional managers, who in turn dressed down the laggards among their store managers, who also were paid bonuses only if their numbers rose.

Store managers tended to have a year or two of college on their resumes; a.s.sistant managers typically had high school degrees. The managers were flown to the mothership for four days of intensive training and then, according to a Check Into Cash doc.u.ment, "closely monitored on a daily basis for two to three months." While in Cleveland they were given a policy manual that they were instructed to treat as if it were the word of G.o.d handed down from the mountaintop. The manual spelled out in intricate detail the most mundane of tasks, from the proper storage of bank receipts to the number of times a day a manager should phone a bank to see if a customer's postdated check (the check a customer had written when initially taking out the cash advance) was good. There were daily business reports that were to be faxed to the company headquarters at the end of each day and also weekly and monthly summaries.

Study, evaluate, jigger, refine. With time Scoggins and company perfected their system for scouting out new locales. First they would seek out a town's name-brand grocery stores and discount retailers. The Holy Grail was a shopping center anch.o.r.ed by a Walmart, but a shop close to a Kmart or a Kroger was also pretty much a guaranteed winner. The next choice was typically a strip mall because it tended to offer cheap rents and ample parking. Trial and error taught the Check Into Cash brain trust that they should cl.u.s.ter stores rather than renting wherever a scout happened to find a good spot. Cl.u.s.tering meant better oversight and a more efficient use of marketing dollars. It wasn't uncommon for Check Into Cash to open one store in an area and then open a bunch more, even if that meant opening branches no more than a few miles apart. On average a new store would start showing a profit less than five months after opening. By its ninth month, it had typically generated enough cash to cover the initial start-up costs.

The new stores all looked exactly the same. Uniformity meant expediency-the ability to move in quickly and cheaply while also helping to build a brand. By 1998, a Check Into Cash team could open a new store in less than two weeks at a cost of $20,000. The new look conjured up something like a bank branch, though one outfitted by the local Office Depot. The walls of each new store were painted the same pale yellow, its floors covered by the same industrial-strength tufted mauve carpeting, the furniture made of particleboard finished with the same cherry wood veneer. Male employees were instructed to dress in a starched blue or white cotton shirt and tie; female employees were told to wear similarly professional attire. Clothing expenses would be borne by the employees, who were paid salaries in the high teens or low twenties.

When Jones first got into the payday business, he was cautious about how much Check Into Cash would lend a borrower, but he gradually loosened those guidelines and by the late 1990s the company established the lending standard that it still uses today: A person can borrow as much as one-quarter of his or her monthly paycheck. Predictably, that increased the proportion of people unable to pay back the money they had borrowed (the percentage of loans the company wrote off doubled from 2 percent in 1993 to 4 percent in 1998) but the company's financial statements from that period show that the change made economic sense. The increased revenues more than made up for the jump in people who failed to pay back a loan. Profits soared.

Jones, as well as McKenzie and the Davis brothers and others, moved into Ohio. They competed out in California and in Missouri, North Carolina, and Washington state. In 1997 Check Into Cash generated $21 million in fees; it brought in that same amount through the first six months of 1998. By then, the average store in Jones's growing archipelago of shops was generating $46,000 in profits. The only thing stopping him, Jones concluded, was a shortage of money. He sold his collections business. He started meeting with investment bankers about a possible public offering. It was time, Jones decided, "to really throw the hammer down."

Four.

Confessions of a Subprime Lender DURHAM, NORTH CAROLINA, 19801998 When conservatives defend the Bush administration against the charge that its devotion to deregulation helped bring about the 2008 global economic collapse, they like to talk about the past. The real culprit wasn't unbridled capitalism as it was practiced in the early years of the twenty-first century; it wasn't missed opportunities to rein in strange new creatures, such as credit default swaps and collateralized debt obligations, that had been birthed by Wall Street. Instead, fault lies with all those inept if well-intentioned liberals who forced otherwise sober bankers to extend credit to marginal borrowers to buy houses they couldn't afford. They blame legislation like the Community Reinvestment Act, or CRA, a Jimmy Carterera law that forced banks to make loans in every neighborhood in which they had branches.

Allan Jones, though, is more specific. He blames the evaporation of trillions of dollars of global wealth in only a few months' time on just one man: Martin Eakes.

It's easy to see why Jones might name Eakes. It was Eakes who, in the mid-1990s, convinced the Federal National Mortgage a.s.sociation-Fannie Mae-to help his organization, the Center for Community Self-Help, create a first-of-its-kind secondary market to buy and sell subprime mortgages. With Fannie's backing, Eakes and Self-Help were able to buy up billions of dollars' worth of subprime loans from banks across the country and repackage them into mortgage-backed securities sold on Wall Street. It was the failure of so many subprime loans buried in mortgage-backed securities that accelerated the global credit crisis.

There's no doubt that Eakes possesses a revolutionary's desire to change the world. Eakes and Self-Help started making home loans in the mid-1980s to African-American families and others of modest means. As if targeting the kinds of neighborhoods other banks expressly avoided weren't enough of a challenge, Self-Help deliberately sought borrowers with a credit score below 620 "because we wanted to prove that this number says as much about the lack of wealth in a family as it does the lack of character, which was the dominant stereotype at the time," Eakes said. Over the years, nearly half the homebuyers who have received financing through Self-Help have been black or Latino and nearly half were single mothers at the time they took out a loan. Its borrowers paid an interest rate around a percentage point above the going conventional rate and a fixed 1 percent in fees and points. That was more than enough, he found, to compensate him for the additional risks he took lending to those of modest income.

Eakes himself never put up much of a fight when someone dubbed him a subprime lender. "It used to be, we were happy to describe ourselves as subprime lenders," said Eric Stein, a top Eakes aide until taking a post inside the Obama administration as deputy a.s.sistant Treasury secretary for consumer protection. "We would say, 'We've been subprime lenders since 1984,' or whatever." Self-Help has dropped that sobriquet but Eakes is unapologetic about making loans to all those single mothers with tarnished credit and meager savings. If he harbors any disappointment about his years as a subprime lender, it's that Self-Help never made nearly enough loans and that the secondary market didn't grow larger than it did. "I'd rather put my faith and my money in a person who knows what it means to work hard," Eakes told me when I visited him, more than a year after the start of the subprime meltdown, "than someone who has paper credentials."

In person, Eakes seems an unlikely candidate for bringing the worldwide capitalist system to its knees. He's on the short side, about five feet, five inches tall, a wiry and good-natured man in his fifties who seems more jokester than master of the universe. He has an old woman's cackly laugh and a tendency to playfully propel his eyebrows into a dance to punctuate a point. He certainly hasn't grown rich off subprime mortgage lending. When I visited with him, he was driving a sixteen-year-old Chevy Corsica with a moldy backseat that for years had a crack that ran the length of the back window. Eakes's foes, and they are many-"half the people I know would take a bullet for me," he likes to joke, "and the other half want to fire the gun"-work hard to blacken Eakes's name so I feel obliged to check: His is among the bigger homes on his block but that's only because he lives in a working-cla.s.s neighborhood in Durham, North Carolina, where homes sell for $150,000 to $250,000. He meets frequently with bankers, politicians, and regulators yet owns a single suit, and his wife, Bonnie Wright, still cuts his hair to save money. He claims, and Wright confirms, that he has never had so much as a sip of alcohol in his life.

Eakes had tried warning others about the coming collapse in subprime as early as 2000. That's when he stood up at a meeting convened by the Federal Reserve to report that overpriced subprime loans were a growing problem across the country. If anything, he made a pest of himself trying to sound the alarm about what he saw going on around him. He is not a man without connections. He has met a president (Clinton) and I heard him speak at a one-day conference sponsored by the Federal Deposit Insurance Corporation (FDIC) that also featured appearances by Ben Bernanke and Henry Paulson. He has testified before Congress at least a dozen times. Yet to Eakes these appearances only underscore how little clout he truly has. "If they had listened to me up in Washington, we wouldn't be in this mess," he cackled. In 2002, he created the Center for Responsible Lending (CRL) to fight predatory lending in all its forms, whether overpriced and destructive mortgage loans or any of a long list of products entrepreneurs had devised to grow rich off the working poor over the previous decade or two. If anything, people inside Self-Help chide themselves for having taken so long. "We were way late to this fight," said David Beck, a longtime Self-Help staffer who handles media and policy for Eakes. "Some people here thought we were embarra.s.singly late."

It's an interesting question whether Martin Eakes was a culprit in the Great Crash of 2008, but his creation of the CRL seems a more reasonable explanation for how Allan Jones came to blame him for the subprime meltdown. The payday loan has taken a close second behind the predatory subprime mortgage as the CRL's top issue. Eakes and his organization were behind the payday lending industry's first big political loss in the late 1990s and they would play a critical part in every big loss payday would suffer in the ensuing years. Unsurprisingly, Eakes was involved in the Ohio fight over payday lending that preoccupied the industry through most of 2008.

At his home, Eakes has a framed photo of himself in Ohio, posing in front of a roving billboard that his payday foes had leased specifically to discredit his organization as a "predatory charity." It's one of Bonnie Wright's favorite photos of her husband, who is smiling happily despite the smear. The attacks help to sustain him, Wright said-and on occasion cause him even to betray the memory of his beloved mother. A few years back, Eakes told me, someone inside the payday industry tried scaring him with the news that they had created a $10 million fund not just to counterbalance the CRL's attacks on the industry but also to destroy his reputation. "My momma raised us that any level of pride is a sin," Eakes said. "But that got me pretty close to making me feel real proud."

His mother was the bleeding heart in the family. A demure college graduate from the mountains of western North Carolina, she would make sure to show up at the polls if for no reason other than to cancel out the vote of her husband, a Jesse Helms Republican. "You could say I grew up genetically confused in terms of my politics," Eakes said. It was more than just politics. His mother, with her simple adages and generous heart, was frequently described as a "living saint." His father, by contrast, was a tobacco-chewing farm boy who taught himself the heating and air-conditioning business and then grew rich installing systems for businesses around Greensboro. The elder Eakes was outspoken and opinionated, a real brawler. "He makes me look tame," Eakes said.

Allan Jones saw his birth as a sign he was destined for greatness. Eakes's birth seemed a testament to his determination. His mother had tied her tubes after having her first two sons but then gave birth to this one, a so-called "blue baby" whose very survival required an immediate blood transfusion. Eakes's friend Gordon Widenhouse recalled when the two played Pee Wee football together. Eakes was scrawny and small but, Widenhouse said, "Martin always insisted on playing nose tackle." The position normally calls for someone beefy and wide but "that was Martin; he wanted to show you how tough he was." Marshall Eakes recalls the time a bigger kid challenged his brother to a fight-and the bigger kid got the living tar knocked out of him. "What sums up Martin," Marshall Eakes said, "is a refusal to give up, a refusal to give in, a refusal to lose."

Eakes was around eleven years old when his parents moved into a white brick mansion with a two-acre farm on the southwestern edge of the Greensboro metro area. His father wanted to teach his sons a love for working on the land but the move seemed to have had the opposite effect. "All that experience taught us is that none of us would ever want to be farmers," Eakes said. The senior Eakes miscalculated on a second front as well. "What he didn't realize," Eakes said, "is that the community he moved us to, like many rural communities in the south, was ninety-five percent black." And so this red-haired son of the Old South with a love for basketball spent much of his time running with a largely African-American crowd, and a housing activist was born. He saw how hard the mothers and fathers of his friends worked and how modestly they lived. "The people I grew up with would do anything they could to pay back their loans if ever anyone gave them a chance to borrow money," Eakes said. "I know that on a gut level."

Over lunch Eakes chose to tell me three stories from his childhood, all relating to race relations in Greensboro in the second half of the 1960s and early '70s. These three events shaped his life, Eakes told me. The first took place when he was eleven or twelve, in the office of the preacher of his church. Eakes had a good friend from the neighborhood and he was there to ask to let his friend join the congregation so they could both play football in the church league. His friend, an African-American, had accompanied him. Eakes remembers the preacher being kind about letting them know the friend couldn't join their whites-only church, but he also remembers the tears that welled up in his friend's eyes. "He says, 'I don't understand,'" Eakes said. Neither did Eakes. "Little kids don't understand why we have to tolerate inequity-which is a pretty good trait," he said.

The second event happened during the integration of the Greensboro public schools in the late 1960s. Eakes was fifteen at the time and in the ninth grade. There was one black student on their bus and it bothered Eakes to watch the way the other kids taunted and abused him. After several weeks Eakes stood up next to the kid and declared, "I'm not going to let you pick on this person again." That prompted a bigger boy at the front of the bus to walk straight at him and, without a word, smack Eakes to the ground. Yet what sticks most with him, Eakes said, was the reaction of the kid he was standing up to protect. "He pulls me up to the seat beside him and says to me, 'You can't fight hate with anger, you can only show people who you are by how you live your life.'"

The third event occurred a couple of years after that when a kid named John Rogers proposed the idea that the two of them run on a black-white student government ticket. Only around 10 percent of the student body was black in a school that had been 100 percent white only three years earlier, but Rogers had practically dared Eakes to run. "You're a big shot here," Rogers had said to him-and if you run with me, I might be elected school president. Eakes couldn't say no. "He was so charismatic I used to think this was someone who could be the first black president someday," Eakes said. "He would speak and send chills up and down your spine." If nothing else, he was struck by Rogers's boldness. "I realized it took so much more courage to ask me to be an ally than it took me to say yes," Eakes said.

Somehow the pair won. Eakes claims to have no idea how Rogers had been elected president and him treasurer but Gordon Widenhouse said a lot of it had to have been Eakes, a top student (Eakes was his school's valedictorian) from a well-off family who was nonetheless liked by pretty much everyone. "Martin always had this charm about him," said Widenhouse, now a death penalty defense attorney living in Chapel Hill. "Male or female, everyone liked Martin. He got along with everyone."

Tragically, Rogers died shortly after graduating from high school. He had volunteered to coach at an area playground and was shot and killed when he called out someone for bringing a gun to a place where children play. "When I get really tired, I try to remember that my friend would not stop fighting for what he thought was right, so I don't feel like I have the choice to do that, either," Eakes said.

Eakes was attending Davidson College, a small, elite liberal arts school just north of Charlotte, when he learned that his friend had been murdered. At Davidson, an oasis for idealists and big thinkers, Eakes fell in with a brainy, eclectic crowd that included Tony Snow, who would go on to be a conservative commentator and regular on Fox News and served briefly as press secretary to President George W. Bush. Eakes drove a beat-up bread van that he had fixed up after buying it for next to nothing, and, said his friend Gordon Widenhouse, who went to Davidson and roomed with Eakes, the two spent the bulk of their free time either trying to meet co-eds or debating solutions to the big social ills of the day. "Martin and his friends were different than anyone else I had ever met," said Bonnie Wright, who was a freshman when Eakes was a senior at Davidson. "They could be a lot of fun but they were already interested in poverty and housing and all these other big issues." Wright met Eakes while he was wrapped in a blanket and tied to a flagpole in the center of campus, retaliation for the elaborate pranks he had been pulling on his friends. The pair started dating shortly thereafter. Eakes would move to New Haven, Connecticut, to attend Yale Law School and then Prince ton, where he earned a master's in public policy studying economics at the Woodrow Wilson School, before the couple settled, after much debate, in Durham in 1980.

Eakes was still in law school when he, Wright, Widenhouse, and several others rented a house in Washington, D.C., so they could spend a summer trying to figure out how they were going to save the world. The goal was to pick a single locale where they would all live after graduation, so they could collectively have an impact on the life of the dispossessed and downtrodden of that community. "The idea was that it'd be unanimous, whatever we decided, and so basically you had to beat everyone into consensus," Bonnie Wright said. That served as this small band's first big lesson in the limits of idealism. "By the end of the summer," Eakes said, "we were spending less time talking about revolution and more time arguing over the schedule for washing the dishes." Eakes and Wright ended up choosing Durham because it was only an hour's drive away from Greensboro and his parents but "far enough away so that if I fell flat on my face," Eakes said, "I wouldn't embarra.s.s them." They would move there alone.

In 1980, Eakes and Wright created an organization they earnestly, if not redundantly, named the Self-Help Center for Community Self-Help. The idea, at least initially, was to foster the spread of worker-owned cooperatives around the state. Cheap imports, automation, and corporate takeovers were causing plant closures at textile mills and furniture factories around North Carolina. Self-Help, the pair hoped, would provide legal and technical advice, along with moral support, to workers seeking to retain their jobs by buying threatened factories from departing owners, hiring a manager, and running it themselves. There was one year, Eakes recalled, when his fledgling organization had a staff of four and a budget of only $4,000. The first Self-Help employee to receive anything resembling a living wage was Thad Moore, a local activist who shared Eakes and Wright's faith in the potential of worker-owned cooperatives (when he met Eakes, Moore was toiling away at an employee-run sc.r.a.p metal yard despite a degree from Wake Forest)-and he remembered being paid a salary of maybe $10,000.

"I don't think Martin paid himself a penny until 1985 or 1986," Moore recalled. In time, Moore said, he came to realize he was in the presence of a virtuoso workaholic-a man who approaches the job as if it were an extreme sport. To save money and keep Self-Help going, Eakes and Wright lived in a wreck of a home that was so cold in the winter that ice would form in the toilet. His office was the backseat and trunk of whatever car he had bought at a salvage yard and fixed up so he could crisscross North Carolina looking for potential worker cooperative sites. "I've worked with some crazy, crazy committed activists in my time," said Moore, who was still working for Self-Help more than twenty years later when I visited Durham. "But Martin took it to a maniacal degree, beyond normal even for people who were abnormal in their commitment. He brought an intensity and devotion to his mission that I don't think I have ever observed even in the activist world."

Eakes and Wright initially lived off Eakes's savings. When that money was gone he opened up a small legal office in downtown Durham, but then, as if seeking to undermine his goal of bringing in extra money while building Self-Help, he announced that his hourly rate for his services would be whatever a client earned for an hour of his or her time. Why should an hour of his time, the former philosophy student posited, be worth any more than that of another human being? The problem with that logic was that he was spending most of his time with unemployed textile workers. "It turned out my first four or five clients were out of work," Eakes chuckled. Adding to their financial pressures, Wright had returned to school to earn a graduate degree at the Yale School of Management.

Eakes added a law partner a year or so later: Wib Gulley, a tall, blue-eyed man with sandy hair and a Dudley Do-Right chin. Gulley was another committed soul, a man who had taught at a school for the mentally disabled and then ran the North Carolina chapter of the Public Interest Research Group before going to law school, but even he had to roll his eyes over the novel sliding scale Eakes had devised. "It was wonderful what Martin was doing," he said. "Except textile workers were making $8 an hour, $12 an hour, maybe $15-and our overhead worked out to like $25 an hour." So by fiat Gulley initiated a new billing policy that Eakes would later dub "unjust but pragmatic": Clients were still charged based on their hourly wages but then hit with a $25 hourly surcharge on top of that rate. "We were hardly getting rich off that plan," Gulley said, "but at least we were no longer losing more money with every new client." A longtime legal aid attorney named Mike Calhoun would join the firm in 1985. Legal aid societies are notorious for lousy pay, but Calhoun figured he took roughly a 50 percent pay cut when joining the firm of Eakes and Gulley. "In seven years there I don't think I ever got back up to my legal aid pay," Calhoun said. To supplement his income, Calhoun would do side work for Self-Help until going to work there full-time in 1992.

This first incarnation of Self-Help as a consultancy providing advice to fledgling employee-owned cooperatives was not without its successes. They helped a group of unemployed textile workers in a coastal town a couple of hours from Durham convert their old mill into a bakery, and they provided critical a.s.sistance to a sewing cooperative of around seventy workers, most of them black women, struggling to make payroll each month after buying the bankrupt cut-and-sew operation where most of them had worked. But mainly they learned the world was more complicated than they had imagined it to be during their late-night bull sessions. It turned out there were other reasons for plant closings beyond the heartlessness of management. Sometimes there was no longer a market for the goods a mill produced; other times the costs of upgrading a facility were prohibitive. Moreover, they discovered that the main impediment workers faced was a lack of working capital. Self-Help could provide all the expertise and encouragement in the world but it meant nothing if a lender refused to finance a deal, even when the employees could offer a mill and pending orders as collateral. "For some reason," Eakes says, "bankers wouldn't give these people a loan, particularly if they happened to be African-American, female, or from rural Carolina." The answer, Eakes and Wright decided, was to get into the lending business themselves.

That would be Wright's job. For a cla.s.s project at Yale, she had written a business plan for a credit union, and she put the plan into effect after returning to Durham in mid-1983. (The couple would marry the next year "once both of us were done with schooling," Wright said, and have two children.) Wright would run the Self-Help Credit Union until the early 1990s. "It was time," she said, "for me and for my family." One all-consumed activist in the family, it seemed, was more than enough.

Raising money so they could start making loans proved easier than they thought. Their first benefactors were several Catholic orders that together put up well over $1 million in working capital during that first year. "We were paying them better than zero interest but not by much," Eakes said, "but they wanted to put their money to use to help working people." Eakes was so touched by their generosity that he vowed that, if necessary, he would work the rest of his adult life to pay back the Catholic orders should Self-Help lose any of their money. He would strike a lighter note when around that time he joked in an interview with the local Durham daily, "We make money the old-fashioned way. We beg for it."

At first the credit union stuck to financing worker-owned cooperatives. When, for instance, an out-of-state owner shut down a mill in the center of the state, laying off more than one hundred people, Self-Help loaned money to thirteen former employees so they could reopen the plant and get back into the business of making men's and women's socks. It helped another 150 workers buy a nearby sock factory after the children of the former owners made it clear they had no interest in running a struggling textile mill for the rest of their lives. Self-Help tried to use its money as leverage to help these fledgling cooperatives pry money from the local banks or agencies like the federal Small Business Administration. "People really had to make their case to us," Wright said. "We needed to see a viable business plan." But that didn't make the ventures any less risky. Self-Help wrote off the first three loans it made, for a total of $90,000, and Eakes had to acknowledge that he probably knew a lot more about eighteenth-century philosophy and nineteenth-century economics than twentieth-century financing. "I had to confess my banker friends were not as dumb as I liked to think," Eakes said. Over time, the credit union expanded its loan profile to women and people of color seeking capital to start or expand a business, even if those entrepreneurs had no intention of creating a worker-owned cooperative. Self-Help continued to grow, and by 1986, with $4.5 million in deposits that had been harvested from churches, labor unions, foundations, and socially minded individuals, the credit union moved into home loans.

Over lunch at a restaurant in Durham in 2008, Eakes wondered what had taken them so long. Self-Help is now housed in an old bank building it bought and rehabilitated more than a decade earlier. In the fashion of a big bank, it has put the Self-Help name on top of the eight-story building in letters large enough to read from the highway. It owns several more buildings downtown to house its various operations, including the Center for Responsible Lending, and employs more than 250 people. "When we started Self-Help, we felt jobs were the key to making a difference in the life of poor people," Eakes said. Then he came across statistics showing that where the median white family had a net worth of $44,000 in the mid-1980s, the average black family had a net worth of under $4,000. The difference, he knew, was the equity people built up in their homes. Dating back to his undergraduate days, he and his friends had been debating whether jobs or education or health care or poverty eradication programs were the most effective way of bringing about a more equitable world. He now had his answer. "I guess we were very slow learners, because it took us six or seven years to figure out that the real issue was equity. We became preachers for the importance of owning a home." They opened branch offices around the state and focused on helping the working poor grow their wealth through what he liked to call "bricks-and-mortar savings accounts."

It was never easy. "If we had known what kinds of loans you intended to make," Eakes quotes an early regulator as saying, "we'd have never let you get started." Self-Help was deliberately seeking out those with the poorest credit rankings getting by on meager wages; its typical borrower in the early 1990s had a family income of $22,000. (A household wasn't eligible for a Self-Help loan if its occupants earned more than the area's median income.) But Self-Help's borrowers were purchasing $30,000 or $50,000 homes and receiving loans almost as favorable as their prime counterparts. The key, Eakes said, was to find people who had proven themselves to be hard workers and then make sure they weren't buying a home beyond their means. In a 1993 interview with a publication called Business/North Carolina Business/North Carolina, H. Allen Carver, who ran the Atlanta office for the National Credit Union Administration, declared himself a convert. His agency, he said, watched Self-Help "like a hawk" but Eakes's organization had proven "they've got their act together."

The local media seemed equally impressed. The editorial board at the Raleigh News & Observer Raleigh News & Observer dubbed Self-Help "heroes of high finance" and the dubbed Self-Help "heroes of high finance" and the Winston-Salem Journal Winston-Salem Journal heralded the organization as "the bank of last resort." All around the state newspapers were running Self-Help profiles featuring single mothers and people who had known mostly bad luck and misfortune until Self-Help boosted them out of a trailer park or public housing and into a modest home of their own. President George H. W. Bush designated Self-Help one of his "thousand points of light," and in 1993 President Clinton singled out Self-Help as a model when announcing a $382 million revolving loan fund to help bring economic opportunity to neglected communities. By that time, the Self-Help Credit Union had thirty-five full-time employees and $40 million under management. Over the next few years, the United Nations would honor Self-Help as one of the United States' twenty most successful economic development projects and the MacArthur Foundation would bestow on Eakes a $260,000 "genius" grant for "helping the rural poor, women and minorities obtain $90 million in loans to start businesses and buy homes." heralded the organization as "the bank of last resort." All around the state newspapers were running Self-Help profiles featuring single mothers and people who had known mostly bad luck and misfortune until Self-Help boosted them out of a trailer park or public housing and into a modest home of their own. President George H. W. Bush designated Self-Help one of his "thousand points of light," and in 1993 President Clinton singled out Self-Help as a model when announcing a $382 million revolving loan fund to help bring economic opportunity to neglected communities. By that time, the Self-Help Credit Union had thirty-five full-time employees and $40 million under management. Over the next few years, the United Nations would honor Self-Help as one of the United States' twenty most successful economic development projects and the MacArthur Foundation would bestow on Eakes a $260,000 "genius" grant for "helping the rural poor, women and minorities obtain $90 million in loans to start businesses and buy homes."

His shoes were a pair of scuffed, dirt-smeared Reeboks that might raise an eyebrow at a backyard barbecue. They looked even more out of place given the rest of Martin Eakes's ensemble. He wore a pair of pinstriped gray dress slacks that matched the suit jacket draped atop a box in the corner, and a wrinkled white dress shirt that was frayed at the cuffs and collar. Later that day, he explained after shaking my hand to welcome me to his office, he would be flying to New York. So he put on the pants this morning and wore the sport coat to the office so he wouldn't have to carry a garment bag on the plane.

"Martin," said Keith Corbett, who has worked with Eakes since 2000, "is not a man who wastes a lot of time thinking about things like fashion." His old law partner's manner of dress, Wib Gulley told me, caused bemused smirks even on the basketball court. He's deceptively quick, said Gulley, who played in a regular pickup game with Eakes. He's smart and tough on the court and he's certainly not opposed to throwing the occasional elbow. But it was also like playing with Will Ferrell in the movie Semi-Pro Semi-Pro, headband and tight shorts included. "He'd show up wearing these fat knee pads and thick Clark Kent gla.s.ses-all taped up, of course, because Martin isn't going to buy new gla.s.ses when he can fix them with a little tape," Gulley said.

He's lean and fit, despite his age and what Gulley described as Eakes's "very narrow approach" to food groups. "It's a wonder he can operate as efficiently as he does," Gulley said, "on a diet of chocolate chip cookies and ice cream." For twenty-five years Eakes was a vegetarian but it was causing too many headaches in his family. "I decided I'd be the accommodating one," Eakes said. He has hazel eyes, a ruddy complexion, and a proud, stubborn chin that he thrusts out and clenches, Bill Clintonstyle, when conveying sincerity or defiance. With a razor tongue and reedy Southern accent, he is constantly cracking jokes, offering wiseguy asides, and making self-deprecating remarks. He tends to smirk a lot, as if constantly amusing himself with private jokes, and more often than not he seems to share those lines. For fun the former physics major reads science journals.

His office has a temporary look to it, as if he's only just moved in. Picture frames and plaques lean against one wall; several cardboard cartons sit on the floor. The walls are practically bare. The first time I saw it, late in 2008, I asked if he'd recently switched offices. He c.o.c.ked his head and looked at me confusedly. He has had the same office, he told me, for nearly a decade.

Since its inception, Self-Help's bylaws have dictated that no employee can earn more than three times the pay of the lowest-paid person on the staff. At the end of 2008, some Self-Help workers made $23,000 a year, so that meant Eakes, despite the size of Self-Help and his fancy credentials, was earning a salary of $69,000. "He's a guy who could have made a bazillion dollars on Wall Street if he didn't have these social goals," Calhoun said. "Martin is a hard-nosed businessperson. Make no mistake about it."

Despite its inability to pay big salaries, Self-Help has never had trouble filling its headquarters with young graduates with advanced degrees from redoubts like Harvard and Prince ton. Its halls are filled with Eakes clones, nerdy and smart and over-degreed and seemingly indifferent to their clothes and their cars. Some years back, when the maximum salary at Self-Help was $32,000 a year, a potential funder came to visit. He took one look at the employee parking lot and shook his head. Never in his life, he said, had he seen such a collection of junkers in a single place. "Basically you could describe Self-Help as a bunch of misfits," Eakes said. New initiatives seem to be born at night, when people find Eakes in his office and sit to spend an hour or two puzzling through a problem. Eakes describes himself as an introvert but friends and even subordinates scoff at that characterization. Being around other people seems to enliven him, and he certainly doesn't seem an introvert during staff meetings when he's acting like the cla.s.s clown.

Yet Eakes seems to have mixed feelings about the limelight. I've seen him speak and he's a natural, playful and chatty and entertaining, yet he says, and people around him confirm, that he genuinely would prefer to remain at the office and let others take the podium on Self-Help or CRL's behalf. "He probably turns down ten requests to speak for every one he accepts," said Mark Pearce, who worked as a top Self-Help executive between 1996 and 2006. "To Martin, testifying before Congress or a state legislature-any kind of public speaking-is a necessary evil that he'll do only if he can convince himself he has no choice."

That's not to say Eakes lacks a robust ego. At times he can come off as supremely confident-even c.o.c.ky. Within the first few minutes of our first meeting, he mentioned an email he had just written to the chief of staff of an important congressman and then dropped the names of two senators with whom he'd recently spoken. "We're going to get the mortgage industry cleaned up over the next year," he said over lunch, "and then we'll be able to take care of these other issues like payday loans and credit card overdraft fees." He said this matter-of-factly, as if these vexing national issues were just ch.o.r.es his wife had asked him to do on the way home from the office. Given Self-Help's modest roots, I asked Eakes, was he astonished by its soaring success? "Not really," he said with a shrug.

With the recognition and the acclaim, the deposits flowed in, and with more capital to work with, Eakes and Self-Help were able to get more ambitious still. A fund was established expressly to loan money to people wanting to get in the day-care business and the credit union got in the charter school financing business as well. Self-Help financed a homeless shelter in Durham and a large home that served as an early sanctuary for people with AIDS. Self-Help even acted in the role of a developer, buying landmark buildings in cities around North Carolina where it had a branch, rehabbing the properties, and then leasing offices to local nonprofits at a discount.

Self-Help's boldest move began when Eakes started to think about the limits of what he had built. By the mid-1990s, Self-Help was up to seven branches around the state, but in ten years the organization had helped maybe one thousand families buy a first home. Some might have been impressed with Self-Help and its pace of growth but Eakes was struck with how slowly they were moving. That was what propelled him to make the drive to Winston-Salem, ninety minutes from Durham, to meet with Leslie "Bud" Baker, Jr., then the president of the Wachovia Corporation, one of North Carolina's largest banks.

"We knew we were never going to be big enough to have the kind of impact we wanted to have," Eakes said. "But Wachovia had branches all over the state. If we could get Wachovia to make loans to single African-American mothers, it would have a much bigger impact than we ever could."

In Baker's office, Eakes offered Self-Help's clients as Exhibit A. His borrowers might not seem loan-worthy at first glance but they also realized this might be the only chance in their lives to own a home. They had less of a financial cushion than those in higher income brackets and were more likely to fall behind in their payments, Eakes conceded. But by that point, Eakes and Self-Help had been in the home loan business for nearly a decade. They had foreclosed on only three homes, and in all three cases the credit union had recouped its original investment. In almost ten years, they had yet to write off a single loss.

Eakes didn't persuade Baker to start loaning Wachovia's money to low-income families that first time they met. He failed to convince him a few months later when they met again or when he visited him for a third time several months after that. It might have been the right thing to do, and also judicious given the Community Reinvestment Act, but it also meant breaking with the established benchmarks of lending and Wachovia was a traditional, old-fashioned bank. When Baker finally relented, he told Eakes, "We'll give it a try. We'll make $10 million worth of these loans. I think we'll lose half that money but it's worth it to get you out of my office so I don't have to hear you talking anymore." As Eakes likes to tell the story, he walked out of Baker's office without another word.

As Baker had promised, Wachovia wrote $10 million in home loans to those with solid work records but tarnished credit ratings, and Wachovia would write another $10 million in similar loans after that. But though people inside Wachovia a.s.sured Eakes the loans were performing well, they also told him that was more or less it. The bank didn't feel comfortable carrying more than $20 million in nontraditional, subprime loans on its books.

That was when Self-Help decided to take the truly revolutionary step of creating a secondary market for subprime loans. As Eakes saw it, Self-Help could help so many more people if they had more than just a dozen or so loan officers scattered around a single midsize state. That was Eakes's pitch to Bud Baker and the other bank presidents with whom he would meet. "I said to them, 'Most people covet your money but I covet your delivery mechanism. You have branches all over the state. You have twenty thousand loan officers all over kingdom come. You can reach every little neighborhood we can't.'" And if joining in his cause wasn't reason enough to play in the secondary market he was creating, there were more concrete advantages as well. "I would tell them," Eakes said, "'We'll pay you a fee, you'll make your money, and you get to be the hero and get your CRA credits.'"

Again Eakes started with Wachovia, whom he approached with a unique offer. We'll buy all the $20 million in loans you've made to low-income clients, he told Baker, if you promise to use the proceeds to make more loans to people of modest means. The catch was that Self-Help was going to borrow most of that $20 million from Wachovia itself. They'd put up $2 million as a down payment and the $20 million loan portfolio would serve as the collateral for the loan. "We were taking all the credit risk," said Mike Calhoun. "If the mortgages went bad, we were out our reserves and the entire portfolio with a book value of $20 million reverted to them." They would pay market rate on the loan to Wachovia but Calhoun and others had done the math: Self-Help would still come out ahead if all went as planned. Wachovia said yes and, Calhoun said, "We knew we were in business."

Eakes was anxious to approach other banks with what he called his "G.o.dfather proposition"-a deal too good to refuse. Holding him back was a lack of cash. To make that first $20 million deal work, Self-Help needed to make a $2 million down payment, and it wasn't as if the organization had that kind of money lying around to write more checks of that size. As luck would have it, one of Self-Help's biggest financial backers, the Ford Foundation, which had aided Self-Help dating back to its worker-owned cooperative days, was confronting a unique challenge: the need to spend a lot of money and spend it fast.

By law, a foundation must pay out at least 5 percent of the total worth of its holdings each year, and in 1998, with dot-com fever fueling the stock market, the Ford Foundation's portfolio ballooned. "I have a really big idea," Eakes began when contacting his liaison at the foundation, and his timing couldn't have been better. Ford gave Self-Help $50 million to help underwrite this new secondary market for subprime real estate loans, and with the commitment from Ford, Self-Help was able to convince Fannie Mae to guarantee the loans. Self-Help's money would still be on the line-the company had to indemnify Fannie for 100 percent of any losses-but the mortgage giant's imprimatur meant that this relatively anonymous, relatively small, Durham-based nonprofit could package and resell mortgages to Wall Street.

The process was called "mortgage securitization."

Five.

Freddie Rogers DURHAM, NORTH CAROLINA, 1999.

The staff of Self-Help was so focused on their mission of expanding access to mortgage credit for the working poor that for a long time-despite some high-profile warnings-they didn't notice they had compet.i.tion. One of the most prominent was the investigative piece that ABC's Primetime Live Primetime Live did on a company called a.s.sociates. It featured an interview with a former a.s.sociates loan officer who claimed he could barely live with himself while he worked there, given the gimmicks he was taught (talk fast, turn the pages fast) by higher-ups to trick people into signing for loans they couldn't possibly afford. A second former employee told of the "tremendous pressure" every loan officer felt to pack loans with expensive extras, and both confessed to witnessing fellow agents forge signatures. The did on a company called a.s.sociates. It featured an interview with a former a.s.sociates loan officer who claimed he could barely live with himself while he worked there, given the gimmicks he was taught (talk fast, turn the pages fast) by higher-ups to trick people into signing for loans they couldn't possibly afford. A second former employee told of the "tremendous pressure" every loan officer felt to pack loans with expensive extras, and both confessed to witnessing fellow agents forge signatures. The Wall Street Journal Wall Street Journal ran an equally unflattering piece about a.s.sociates focused on a single customer, a retired quarry worker named Bennie Roberts living in Virginia on $841 a month in Social Security and retirement benefits. The ran an equally unflattering piece about a.s.sociates focused on a single customer, a retired quarry worker named Bennie Roberts living in Virginia on $841 a month in Social Security and retirement benefits. The Journal Journal found that a.s.sociates, a subsidiary of the Ford Motor Company, had refinanced, or flipped, Roberts' loan ten times in four years, costing him $19,000 in fees on what had originally been a $1,250 home equity loan. a.s.sociates would even earn its own chapter in a book called found that a.s.sociates, a subsidiary of the Ford Motor Company, had refinanced, or flipped, Roberts' loan ten times in four years, costing him $19,000 in fees on what had originally been a $1,250 home equity loan. a.s.sociates would even earn its own chapter in a book called Merchants of Misery Merchants of Misery, edited and largely written by a reporter named Mike Hudson. But who had time for books or the Wall Street Journal Wall Street Journal or TV when inside Self-Help they were busy saving the world? "It's a tough act to run the business we do," Mike Calhoun said. or TV when inside Self-Help they were busy saving the world? "It's a tough act to run the business we do," Mike Calhoun said.

Then a man named Freddie Rogers, a widower in his fifties raising a daughter on his own, walked into Self-Help's offices. "I think we're basically self-honest about where we're making a difference and where we're not," Eakes said. And Freddie Rogers, earning $8.24 an hour driving a bus for the Durham public schools, showed Self-Help "that just one predatory lender like a.s.sociates was doing more harm than all the good we were doing."

Lanier Blum took an instant liking to the tall black man who showed up in her Self-Help office in the fall of 1998 interested in talking about a new home loan. Borrowers at Self-Help typically seem to arrive wearing whatever they happen to have on, but Freddie Rogers had dressed smartly in nice slacks, a b.u.t.ton-down shirt, and a stylish hat worn jauntily on his head. "I had business to take care of," he would later explain. He was outgoing, warm, and chatty, and he showed Blum pictures of his daughter and spoke lovingly about his wife, who had died some years earlier. "He was a very, very charming guy," Blum said.

Self-Help had always focused on first-time homebuyers. But Blum had recently been put in charge of a new product Self-Help was experimenting with called the "fix-it loan." Borrowers seeking a mortgage on a home that needed extensive repairs were eligible for a fix-it loan but so, too, were homeowners who needed money to make the basic repairs so a property holds its value. That was Rogers, who years earlier had bought a home with his wife in a semirural neighborhood on the southern outskirts of Durham. Drainage problems caused the bas.e.m.e.nt to flood, and the flooding, along with a lack of proper ventilation, was causing mold to form on walls inside the house. Worse, there were no sewer or water lines in that part of the city and the septic tank they used for their waste had developed a leak, which was fouling the water of a well they relied on for their drinking water. It had gotten so bad, Rogers explained to Blum, that he and his daughter had been forced to move out until he could find the money to make the repairs.

Blum was familiar with the community where Rogers lived, an historically black section of town not far from a large regional mall that had recently opened near the interstate. Subdivisions were popping up all around that part of town, and, though Rogers still lived in a neighborhood with gravel roads and few amenities, his was a potentially hot property. Already there had been noise about rezoning the area to encourage outside investment. "I really wanted to help him stay where he was living," Blum said. "He was obviously very attached to the house because he had bought it with his wife. But I also thought he could be in a position to do very well if the area was developed."

Rogers had served in the army when he was young and then taken a job with the Durham schools, where he had worked since the early 1960s. "He seemed a real stable guy," Blum said. "He had some credit issues but nothing too terrible. I thought, Let's get a payoff quote and see what we're dealing with." She phoned Irving, Texas, where a.s.sociates had its headquarters-and then she phoned and phoned and phoned some more. "We absolutely hara.s.sed those people," said Blum, whom Eakes has nicknamed "the Pest."

At first the sticking point was the payoff figure. The person on the other end of the phone refused to give it to her, though refusing a payoff quote for a borrower is akin to a credit card company declining to tell a customer the total amount he or she owes in back charges. When finally someone provided Blum with the dollar figure, that only served to confuse the issue further. Rogers had records showing that while he was often late in paying his mortgage, he had never missed a payment, yet a.s.sociates was claiming he still owed the company nearly as much as he had borrowed ten years earlier. In all those years he had managed to pay down the princ.i.p.al by only a few thousand dollars. That must be a mistake, Blum told herself, so she asked someone to fax over a copy of his payment history. That seemed no more complicated than making a few taps on a keyboard but a company representative claimed that information wasn't available. The Pest persevered until eventually somebody in Irving faxed over pages of records that Blum was convinced had been fabricated, and she handed the file off to Self-Help's loan servicing department.

At that point, Blum wasn't suspicious so much as curious. Sure, the people on the other end of the phone couldn't respond in a straightforward manner to a routine request, but she figured they were some fly-by-night operator staffed by incompetents. "I had never seen a loan like this," Blum said. "I really wanted to know what these other lenders knew that we didn't know." More borrowers came in seeking a fix-it loan and they too had loan terms similar to Rogers's. At Self-Help, they required down payments of at least 5 to 10 percent, yet a.s.sociates and other lenders proved willing to write loans valued at 100 percent of the a.s.sessed worth of the property. "I was thinking, Why are we being so conservative? What have these banks figured out that we haven't?" said Blum. These other lenders were charging interest rates four, five, or six percentage points higher than Self-Help's, if not more. That struck Blum as a steep premium but she also had to ask herself if Self-Help was taking more risk than people inside the organization realized.

"We always saw ourselves as the high-risk lender of last resort," said Blum, who had a degree in city planning, not finance. "We thought we were the ones out there providing loans to our customers where no one else was doing it. It came as a surprise that there were even these other players in the communities we were serving."

The truth would emerge once Blum, with the help of others inside Self-Help, was able to piece together the details of Rogers's loan. Years earlier, he and his wife had borrowed $29,000 through the Veterans Administration to buy their home, but then they had allowed themselves to be talked into refinancing with a.s.sociates. Under the new loan terms, they were paying 13.7 percent in interest and now owed $47,500, including thousands in fees and thousands more for a credit insurance policy. a.s.sociates. .h.i.t Rogers with a penalty fee every time he was late with a payment, as any lender would, but the company would also tack on extra interest charges, treating his account as if it were perpetually in arrears. The bottom line was that Rogers was stuck. His home was not worth enough to justify the size of the loan Self-Help would need to pay off a.s.sociates and still have enough money left over for Rogers to make the necessary repairs on his property. And even if Self-Help were inclined to take the risk, Rogers, with a salary of around $17,000 a year, didn't make enough to reliably cover the monthly payments.

"It took us some time," Blum confessed, "but we eventually realized this wasn't just an issue of one guy. This was a big company out there and they were lending a lot of money to a lot of people."

Blum stopped by Eakes's office one night when both were working late. She told him about Rogers's predicament and Eakes pulled out his calculator. Had Rogers refinanced his loan through Self-Help and made the same monthly payments he had been making to a.s.sociates, Eakes found, he would have paid off his loan in full and even built up a modest-sized savings account. Instead he still owed a.s.sociates nearly as much as he had borrowed. Freddie Rogers's only crime was that he, like much of the populace, wasn't financially sophisticated. It had ended up costing him tens of thousands of dollars and it might well cost him his house. "This is scandalous," he declared. He promised Blum he would call Irving, Texas, the next day.

Pretty much any housing activist or consumer advocate who has heard Martin Eakes speak in public in recent years has heard the story of the phone call Eakes made to Texas on behalf of Freddie Rogers. The woman on the other end of the line accused Eakes of being a compet.i.tor out to steal a loan away from her company. She was evasive and dodged basic questions that a lender was legally obligated to answer. "I just snapped," Eakes said. "I just started making a lot of threats." We're going to get this borrower out from under your thumb, he told the woman. We're going to drive your company out of our state. "You've picked a fight with the wrong guy at the wrong time," he told her. It was only after he hung up the phone that, with the help of his staff, Eakes realized he had threatened to boot from North Carolina one of the two or three largest consumer finance companies in the world.

Eakes is intense when he's angry but he's not the demonstrative kind. The signs that he is steeling for a fight are more subtle. His normally ruddy complexion turns a darker, more splotchy red. His jaw gets a fierce set to it and his jaw muscles start working. Those who have been at his side for a long time notice that his language changes as well. The more pragmatic Eakes, the physics major turned lawyer and banker, is replaced by the philosophy major who orates about right and wrong and the moral imperative everyone at Self-Help should feel to confront injustice when they see it. When Eakes is in that mode, Thad Moore, who has worked with Eakes for more than twenty-five years, hears a lapsed Baptist channeling the sermons of his youth. "He gets in this preaching mode about why we do what we do and why it's important and how we're taking on these pressing issues in our society that demand to be dealt with," Moore said. "When I hear him power up and get going, I feel like I'm hearing the Baptist within."

The Self-Help way is to meet, a.n.a.lyze, and dissect, and then meet some more. Every time Self-Help contemplated venturing into a n