Issa Probing Paulson & Co., Center for Responsible Lending

Posted June 4, 2010 at 3:30pm

Rep. Darrell Issa has launched an investigation into the hedge fund Paulson & Co. and the anti-predatory lending group the Center for Responsible Lending over a $15 million donation that Paulson made to the nonprofit in 2007.

The California Republican, ranking member on the Oversight and Government Reform Committee, sent letters to Martin Eakes, CEO of the CRL, and John Paulson, president of Paulson & Co., on May 26 requesting information regarding the contribution because the CRL was pushing for affordable lending while Paulson was betting on a collapse in the housing market.

“This relationship raises questions about the connections between organizations advocating for policies that caused the housing bubble and companies that were positioned to profit from the bubble’s collapse,” Issa wrote. “The American people have a right to know the true impact of Paulson & Co.’s donation to CRL on CRL’s ability to push for the kind of mortgages that precipitated the financial crisis.”

CRL spokeswoman Kathleen Day said the allegations are completely untrue.

“They’ve been untrue for two and a half years,” Day said. “They are the same ones that the payday [lending] industry has been trying to peddle for two years.”

Day said the CRL believes that if the bankruptcy reform measure that the nonprofit supported in 1999 had been enacted into law, it would have kept about 600,000 more people in their homes.

Issa is requesting both institutions provide all records and communications between the two entities since 2005 and an explanation of charitable contributions to the CRL from institutions that collect assets from the public and place them in financial assets. Issa also wants any information that was sent between the two groups regarding specific financial institutions, lobbying or any specific mortgage information of the groups run by the CRL.

And Issa asked for all records and communication between the CRL and Eric Stein in his role as deputy assistant secretary for consumer protection at the Treasury Department.

Paulson and Eakes have until Wednesday to respond to the letter.