compelled to pass the tape he left behind on to their boss. One news account had Self-Help distributing seven thousand copies of the videotape around the state. By that time, Eakes had testified no fewer than eight times in favor of an anti–predatory lending bill. “People say I work hard,” Mike Calhoun said, “but he put me to shame in that fight.” The initiative was supported by a group calling itself the Coalition for Responsible Lending. The coalition included such mainstream advocacy groups as the NAACP and AARP but the political establishment in Raleigh could be forgiven for thinking this legislative battle was brought to them and sponsored by Martin Eakes and the people of Self-Help.
Calhoun, whom Bill Brennan described as “the smartest lawyer I’ve ever worked with,” was the resident expert on consumer law within Self-Help, so it fell to him to type out a draft of the legislation. (“You’re not going to see a lot of clerical staff at Self-Help,” Calhoun sighed.) The aim of the bill was to impose limits on what a subprime lender could charge its customers. Roy Cooper, the senate majority leader and a Democrat, agreed to sponsor the bill. “We were beginning to see complaints filed by consumers and we began to hear concerns voiced by lawyers seeing these unfair terms at closings,” said Cooper, who had been elected to his second term as North Carolina attorney general by the time I visited him in the fall of 2008. “So we realized we needed to put some bright-line limits on the amount of charges associated with the loans.” Years later Cooper still remembered Freddie Rogers— not just his name but also his exact hourly wage and other details of his case.
Initially a long list of senators joined Cooper as co-sponsors, but after the lobbyists weighed in, Cooper ended up as its sole sponsor in the Senate. “North Carolina is the second-largest banking state in the country, so the banking industry is a significant economic engine here,” Cooper said. “They had a significant influence over the legislature and government process.” The key was to bring the banks around, or at least convince them to remain on the sidelines. That would be no easy task given the hundreds of millions in profits a local giant like NationsBank was booking selling subprime loans.
A year after the predatory lending fight was over, Eakes asked Keith Corbett, an executive at North Carolina Mutual, the nation’s oldest black-owned insurance company, to join them at Self-Help. “We don’t pay a lot in salary,” Eakes told Corbett. “But if we see someone who’s been mistreated, we’re willing to spend two to three million dollars to right that wrong.” Corbett was sold.
That’s exactly what happened in the case of Freddie Rogers. Mike Calhoun was among those working out an out-of-court settlement with Associates that allowed Rogers to refinance with Self-Help under terms he could afford. A few years later, a developer seeking to gentrify Rogers’s neighborhood paid him a substantial bounty for his home. By that time he had remarried.
Over the years Eakes had made his share of political enemies in Raleigh. “Imam” or “ayatollah” were among the less flattering nicknames given to him inside the state capitol by those resenting his sermonizing and righteousness, but there was also no denying his effectiveness. “He got along with a lot of my Republican colleagues, maybe better than I did,” Wib Gulley said. To his activist allies he might have been the accidental banker who was still one of their own, but for political purposes he was a subprime mortgage banker horrified by the lending practices of some of his more unscrupulous rivals. He was also a man on a first-name basis with the CEOs of some of the state’s largest lending institutions. He made the same pitch to each: The bad practices of the worst subprime lenders hurt the reputations of all in the mortgage business. Eventually even the North Carolina Bankers Association supported the reform bill. “That was Martin,” Roy Cooper said. “Working and working and working to bring the industry into the fold.”
The political fighting over the anti–predatory lending bill raged for the better part of a year. The bill was modified, for instance, to allow a lender to charge a borrower as much as 5 percent in up-front fees. “If your parents paid five points on a loan, you wouldn’t be very happy,” Calhoun said. But the legislation banned prepayment penalties on any mortgage less than $150,000 and made it illegal to roll into a loan the cost of credit insurance (credit insurance itself, with separate monthly payments, was still legal). Lenders could charge interest rates well above the rates enjoyed by prime customers but anyone wanting to sign a deal that would have them pay rates more than ten percentage points higher than a Treasury bill would be required to meet with a credit counselor. The bill was signed into law in July 1999.
Even with its limitations, consumer advocates hailed the law as a significant breakthrough. Inside Self-Help’s offices, the phone was now ringing with activists from places such as New Jersey, Chicago, and Dayton eager to pass something similar in their locale. “Initially we thought we passed this predatory lending bill, okay, good, we’re done, now we can go back to our day jobs,” said Mark Pearce. “But people wanted to know how we did it, especially as North Carolina wasn’t exactly seen as the most liberal, consumer-friendly state in the country.”
The Great Payday Land Rush
Allan Jones parks in front of his old office building and a sly smile appears on his face, like someone anticipating the punch line of a favorite joke. He points his chin at a drab, low-slung cement bunker of a structure sitting in the corner of a shopping center parking lot. This is where he played host, he tells me, when all those investment bankers flew south to see him in the late 1990s to talk about taking Check Into Cash public. They would arrive dressed in Bill Blass and Brooks Brothers and Armani. He would be wearing an off-the-rack suit he bought at a discount place in town. He would then usher them into his “conference room”—maybe ten metal chairs around a banged-up, folding banquet table—where he would make his presentation. Check Into Cash’s revenues were on pace to more than double in 1998; its profit margins were well above 20 percent. At that point, Jones said, they could have cared less had he been naked and standing in a cave: “Them numbers are all they ever noticed,” he said.
CIBC Oppenheimer agreed to serve as the lead underwriter on Check Into Cash’s IPO. CIBC wasn’t Goldman or Morgan but it was a large bank, respectable and legitimate. He even got to New York and rode the subway, where he saw a man with a hairdo he later learned was called a Mohawk. For months he entertained Doughball and the rest of the boys with stories about life up north. I must have arrived, he would say mockingly, because now I have me a real-life lawyer with a Park Avenue address.
Jones claims to have been relieved rather than disappointed when CIBC put the IPO on hold. They told him it was temporary, a short-term setback while the market recovered from a financial crisis everyone was calling the Asian flu, but the competition was heating up and he was anxious for his money. In Cleveland (Ohio), an old-time bank called National City was awakening to the profit potential of subprime and he convinced officials there to loan him the $50 million he had planned to raise through a public offering. The IPO would have meant $50 million in the bank while borrowing from NatCity meant paying back the loan with interest, but remaining private had its own rewards. He was not a man who liked answering to anyone but himself.
“We have board meetings at Check Into Cash,” Jones likes to joke, “but I win every vote one to nothing.” He mentioned a competitor named Billy Webster, whose company, Advance America, has traded shares on the New York Stock Exchange since 2004. “How much of his company does Billy own?” Jones asked. “How much of my company do I own? Go ask Billy and I’ll bet he’ll tell you: His shareholder meetings are a lot longer than mine.”
William M. Webster II lost everything during the Depression. His son, William M. Webster III, started from scratch, turning a single gas station in Greenville, South Carolina, into a modest-sized empire of twenty stations that he would sell to Marathon Oil in the 1970s at a handsome profit. Yet in the eyes of his son, William M. Webster IV, whom everyone called Billy, his father could have accomplished so much more. Billy Webster spent a good part of his teen years working for his old man, pumping gas and thinking how he would be different. His father had inherited his grandfather’s skittishness and worry about taking risks. He vowed that would never be him.
While he was still in college Billy Webster bought a laundry and charged other students a fee to wash their clothes. A Fulbright scholarship took him to Germany to spend a year studying Romantic poetry, but it was while he was studying law at the University of Virginia that his father started talking about the long lines of people queuing up at the Bojangles chicken shack near one of his old gas stations. That spelled the end of his legal career. “I graduated law school on a Saturday and Monday night I’m in the back of a Bojangles, learning how to fry chicken, being taught by a sixteen-year-old black guy from Frogmore, South Carolina,” Webster said. Ten years later,
