2005 Tar Heel of the Year - Self-Help's Martin Eakes

At the heart of Martin Eakes' quarter-century quest to lift folks out of poverty is a stubborn faith forged by basketball and the mothers of his boyhood friends.

Eakes was a scrawny, red-headed kid in the mid-1960s whose buddies lived a far poorer life in Marytown, a rural hamlet on the southwestern outskirts of Greensboro.

In an era of electric racial tension, he and the fellas could be found making another furious salt-and-pepper run of half-court hoops in the white-washed barn behind his house.

On those after-school afternoons, race seemed irrelevant. A hard foul, a nose bloodied by an elbow -- that was just roundball with the Marytown boys, some of them white and well-off, most of them black and not.

But poverty was another matter. Eakes, co-founder and chief executive officer of the Durham-based nonprofit empire known as Self-Help, was keenly aware of the line between haves and hungries, between himself and his buddies.

He still wears the brand of that knowledge.

The deepest impression was made by the hard-working grit of a buddy's mother, her determination to keep a roof over the heads of her children -- despite the absence of a husband, regardless of odds lengthened by skin color and very little money.

This enduring image convinced Eakes, the scrappy son of a self-made businessman, that lending money to the working poor so they could buy a house or start a small business wasn't as risky as bankers feared.

"To this very day, I'll make the argument that poor people are better borrowers than rich people," said Eakes, 51. "If I have to choose where to put my faith and Self-Help's money, I'll put it with a person who knows how to work rather than a person with paper credentials."

Call it faith, gambler's luck or a mulish refusal to accept conventional financial wisdom, but this belief is the foundation of the outfit Eakes commands, including the Self-Help Credit Union and the Center for Community Self-Help.

Celebrating its 25th anniversary this year, Self-Help touts itself as the nation's largest nonprofit community lender, making Eakes one of the leading experts on loaning money to people most bankers would rather not trust.

But faith in the working poor fires Eakes, a passionate do-gooder with a banker's cold eye for the bottom line and a Main Street cure for poverty straight out of the Jimmy Stewart movie "It's a Wonderful Life."

Handout mentality? Not exactly. Eakes gives his borrowers a slim entree into the American dream -- which must be repaid, with interest. Or else.

"I always called myself a bleeding heart conservative," Eakes said. "We will meet you exactly halfway -- not one step further or beyond. The most important part of this agreement was that you must pay the loan back or we will foreclose on you faster than any bank."

Faith into deeds

If Stewart's character, George Bailey, were recast as a skinny, short, white-haired guy with glasses, a cheap suit and a reedy Southern accent, Martin Eakes would be a flat natural for a remake of the Frank Capra classic.

But if Eakes stepped into the role, the good people of Bedford Falls would have to get used to an obnoxious cackle, a needling wit and a habit of wearing mismatched socks.

They would also make the slow-dawning discovery that Eakes, a Yale-educated lawyer with a public administration degree from Princeton, is a financial wizard who has pushed his belief in the working poor far beyond the confines of a storefront savings and loan.

Since he and his wife, Bonnie Wright, launched the Center for Community Self-Help in 1980, Eakes has turned faith into deeds, making loans to single moms, minorities or displaced textile workers -- with an annual loss rate of less than 1 percent on home mortgages, about half the national average for similarly sized credit unions.

But success was never a lock.

Advice not needed

As they came out of college, Eakes and Wright wanted to fulfill the unmet promise of the civil rights movement. They picked Durham as a home base because of its yeasty mix of rich and poor, academics and factory workers.

In the early 1980s, the state's textile and furniture industries were being ravaged by corporate raiders and cheap imports. The couple's first notion was to provide legal and financial advice to workers who wanted to buy the mill or factory where they worked.

But they discovered a simple truth: Their clients didn't need advice; they needed money.

Eakes and Wright created the Self-Help Credit Union in 1984, with the raffle of a now-legendary chocolate cake, fresh from a New Bern bakery that they helped an unemployed textile worker named Percy White establish. The raffle plopped $77 in Self-Help's coffers.

Their first three business clients failed, leading them to a second truth: For long-term survival, a small-business owner needs an asset to secure a steady line of credit. That meant owning a home.

Building a ladder of wealth to climb out of poverty is the core credo of Self-Help's mortgages and business loans.

On the business side, the outfit started small, with "microloans" of less than $25,000, seeded by support from the federal Small Business Administration. Over time, those loans grew larger as Self-Help joined partnerships with commercial banks and the federal small-business agency.

Self-Help also has loaned millions to child-care centers and public charter schools, serving thousands of children in North Carolina and other states. The outfit has bought vacant downtown office buildings in Durham, Asheville and other North Carolina cities, renovating historic sites and leasing the space to nonprofits, foundations and others.

Using the bottom-line proof of Self-Help's balance sheets, Eakes persuaded some of the biggest lenders in North Carolina, including Wachovia, to make more loans to the working poor and people with less-than-perfect credit.

He also launched an ambitious partnership with the Federal National Mortgage Association, known as Fannie Mae. The partnership has so far bought $3.6 billion in "subprime" loans from commercial banks in 47 states and the District of Columbia, extracting a promise from those banks to lend more money to people who don't have the income, credit rating or savings to qualify for a traditional mortgage.

And here's the twist: Eakes, using a $50 million grant from the Ford Foundation, said Self-Help would assume the risk for every loan he bought and resold to Fannie Mae.

"It's amazing -- this little old credit union in Durham, N.C., has created a secondary market," said N.C. Banking Commissioner Joseph Smith. "It's pioneering work, and it's the lasting legacy of Self-Help."

Both programs have expanded Self-Help's reach and made it easier for poor people to grab their slice of the American Dream.

Evangelical firebrand

But Eakes isn't satisfied with helping the working poor create their own wealth. He's also a zealous defender of that wealth.

Eakes played a crucial role in the creation of North Carolina's 1999 anti-predatory lending law -- the nation's first comprehensive ban on packing loans with high, hidden costs that can cause borrowers to lose their homes.

He also quit a voluntary consulting post with Blue Cross and Blue Shield of North Carolina to whip up opposition to the nonprofit health insurance outfit's 1997 attempt to steamroll legislation that would convert it into a for-profit corporation.

Friends and allies say Eakes is a scrapper who loves the sting of battle. They also note that he's armed with skills not usually found in the same warrior.

Eakes is an evangelical firebrand with an unbendable sense of right and wrong -- even allies call him Imam Martin. But he also has a steely ability to master the complex details of law, finance and public policy -- talents that buy him credibility with bankers, legislators and fellow social justice crusaders.

This combination places him in a league far above George Bailey or another Jimmy Stewart character in another Frank Capra movie -- U.S. Sen. Jefferson Smith, the naive idealist who battles corruption in "Mr. Smith Goes to Washington."

But just like Bailey and Smith, Eakes champions the little guy.

For that, give a dollop of credit to the mothers of his boyhood basketball buddies.

"Only a preacher or a fool will talk as much about race and poverty as I do," Eakes said. "I don't think of myself as a very good preacher. I just speak on what I believe in."

There's a temptation to portray a guy like Martin Eakes as a selfless saint, an ego-free Mother Teresa type who drives a 13-year-old Chevrolet Corsica with a cracked rear window and who may not remember to wear a belt.

After all, he doesn't have a bravura personality or the swagger of a corporate CEO. He masks his cocky streak with a sharp wit both devilish and self-deprecating. And he insists that he succeeds only because he's made an accidental habit of hiring people smarter than he -- a stock line undercut by the $260,000 MacArthur Foundation genius award he won in 1996.

He'd have you believe Self-Help's accomplishments are all about his staff or his heroic borrowers -- anybody but him.

But talent without ego is useless, and Eakes' constellation of skills is marshaled by fierce competitiveness and a self-confidence burnished by years of being the smartest guy in almost any room.

The questions are: Where is that ego pointed, and what does it serve?

Friends and allies say it isn't fed by money, power or the roar of the crowd. What stokes his ego, they say, is seeing a wrong and applying his skills to make it right.

"More than most, he's been successful at bending the world to his values and what he thinks it ought to be," said former Durham Mayor Wib Gulley, who was Eakes' partner in a three-person law firm formed in the early 1980s that represented working-class clients.

The Rev. Luther Brooks, pastor of St. James Baptist Church in Durham's Walltown neighborhood, has worked with Eakes in a partnership underwritten by Duke University to revitalize a community once ravaged by poverty and drug dealing.

"He doesn't need you to affirm what he does -- he doesn't have to tell somebody who he is," Brooks said. "The question is, 'Did we accomplish what we set out to do?' "

This self-confidence is turbocharged by Eakes' ferocious tenacity and dogged attention to detail. Think of a brainy terrier that knows your business as well as he knows his and is willing to chomp down and not let go -- that's Martin Eakes.

"What Martin has that few people in the social justice arena have is the ability to understand what's going on in the world of high finance,"said Wright, his wife. "He can go head to head with them."

Payday lending

These days, the payday lending crowd is feeling the terrier's teeth.

Eakes is a leader in the struggle to revive a lapsed state law that regulated payday lenders. He has blasted these store-front operations for burying poor borrowers in a pile of short-term loans with interest topping an annual rate of 400 percent.

Eakes also has taken his fight against predatory loans and payday lending to the national stage, opening a lobbying arm with offices in Durham, Washington, D.C., and California and twice testifying before Congress this year.

And that has made him a target of a conservative watchdog, Capital Research Center, which recently accused Self-Help of making insider loans -- a charge Self-Help and state regulators say is false. It also accused Eakes of abandoning his central mission and downplaying the risks of Self-Help's loans.

His newest enemies say Eakes is a moralistic crusader -- a Boy Scout who thinks only he knows what's best for his clients.

"He really thinks he's the last honest man," said Steve Schlein, spokesman for the Community Financial Services Association of America, a trade group for payday lenders based in Arlington, Va. "Just listen to the guy -- he oozes elitism out of every pore."

They also say Eakes cynically plays the cards of race and patriotism against a service that helps a soldier or single mom weather a cash crisis.

"I do more for my people than Martin Eakes would ever do," said Willie Green, a former pro football player who owns seven payday lending franchises in the Carolinas and Florida.

Eakes returns fire by pointing to a framed quotation by Harry Truman he keeps on his desk: "I never give 'em hell. I just tell the truth, and they think it's hell."

Then he says: "I've had death threats from the Ku Klux Klan, death threats from drug dealers in the neighborhoods we've tried to improve -- I don't scare that easily."

This flash of defiance makes it easy to see Eakes as the quick-tempered, red-haired kid who whipped larger opponents as a high-school wrestling champ and neighborhood boxer.

He spins a biblical image to portray himself as practitioner of the "compassionate conservativism" touted by President Bush.

"I really am an apostle for the ownership society the Bush administration espouses," Eakes said. "So it's almost comical to me that a far right-wing organization is going to trade barbs with me over who is the most conservative."

Discipline instilled

There's an old-fashioned explanation for Eakes' disparate traits of compassion and hard-headed business sense.

He was raised that way.

His father, Marion "M.L." Eakes, was a tobacco-chewing farm boy from Robersonville, in western Martin County, whose family also tilled acres near Oxford and Apex.

A ball-turret gunner on a B-17 that flew flak-scarred missions over Germany during World War II, Eakes' father was a self-taught engineer who owned a Greensboro-based heating and air-conditioning company that handled industrial-scale customers.

M.L. Eakes, who died in 1997 of mesothelioma, a cancer associated with asbestos insulation, was also a Jesse Helms Republican who tried to instill grit and discipline in his four sons.

Mary Williams Eakes, who was born in Asheville and went to college in Alabama, taught her sons they were duty-bound to fix problems they saw, not ignore them.

She also told them the best way to be loved by everyone was to do nothing and say nothing -- an empty life not worth living. She died in 1996.

"If I appear to be confused as a bleeding-heart conservative, I come by it genetically," Eakes said. "There's a power in business and discipline, but there's also a power in compassion and service."

There's also a simple reason for Eakes' combative nature -- it's a byproduct of birth.

After bearing two sons, his mother had her tubes tied but still became pregnant with Martin.

Martin Eakes, the third of four sons, was also a "blue baby" who required a transfusion at birth -- he got blood from Hargrove "Skipper" Bowles, the wealthy and progressive Democrat from Greensboro and late father of Erskine Bowles, the newly named president of the University of North Carolina.

"I was fighting to survive from the day I was born," Eakes said.

M.L. Eakes tried to pass along his love of the land, moving the family in 1965 to a white brick mansion on the southwest fringe of Greensboro that had once been the center of a 2,000-acre cattle farm.

It didn't take. The four brothers learned to loathe farm work.

But the Eakes boys had to earn what they wanted in life. Their parents didn't shower them with money, clothes or cars.

"I didn't know I was a spoiled rich kid until I went away from home," said Marshall Eakes, 49, the youngest, who owns a plastics factory and the childhood home.

'A refusal to lose'

When the Eakes boys were growing up, Marytown was a predominantly black community, peopled by the descendants of folks who had worked on the cattle farm for the previous owners.

With its fields and nearby lakes and woods -- and that basketball court in the barn with one hoop and a wooden backboard -- the Eakes home became a magnet for neighborhood boys.

"At his house, it didn't matter whether you were black or white, rich or poor, Jewish or atheist -- everybody got treated the same," said Gordon Widenhouse, a Chapel Hill defense lawyer and a death penalty opponent who was Eakes' boyhood friend and college roommate.

This gave Eakes, raised a Southern Baptist, firsthand knowledge of the gulf between America's rich and poor. He saw the line between those who had money, like his family, and those who didn't, like the families of his black friends.

One of those friends was John George Rogers Jr., a bright, charismatic Marytown kid who was a year behind Eakes at Lucy Coffin Ragsdale High School. Rogers and Eakes ran together on a winning student government ticket.

In February 1977, Rogers was shot to death while sitting in his car at a playground near Eakes' house. As Marshall Eakes recalls, Rogers, who was coaching a boys basketball team, was shot by a fellow coach Rogers had chastised for packing a pistol to practice.

Rogers' first name and middle initial -- John G -- are scrawled in fading black Magic Marker on the wooden backboard that still hangs in the Eakes' barn.

"When I'm beaten down, I remind myself he would never, ever quit, and I don't have that option either," Martin Eakes said.

Marshall Eakes also remembers when his brother and a man-child friend donned boxing gloves in the barn.

"Martin just beat the snot out of the guy," Marshall Eakes said. "What sums up Martin is a refusal to give up, a refusal to give in, a refusal to lose."

Eakes was also a natural leader, a daredevil straight-arrow with a taste for outrageous pranks, Widenhouse said.

At Davidson, a small liberal arts college just north of Charlotte, Eakes majored in physics and philosophy. These contrasting disciplines, Widenhouse said, underscore a refusal to be pigeonholed.

During late-night bull sessions, Eakes, Widenhouse and other classmates argued about whether they would pursue safe careers in law or medicine or do something to make a difference in life. Eakes' idea: Pick a town, buy an old building, fill it with doctors, lawyers and social workers, help the poor.

"I've heard Martin ask, 'Why should government be taking care of this problem?' " Widenhouse said. "He doesn't say government shouldn't be doing it. He says we should be doing it ourselves. And he does it, and then he doesn't drive his Mercedes off into the sunset."

'Go git 'em'

Fast forward to the present day.

Eakes makes $60,000 a year, Self-Help's salary ceiling, and is notoriously cheap. He once taught himself how to do fiberglass body work to repair damage to two well-worn jet skis that a spendthrift would have junked.

Once a goad, he's now a godfather of loans to the poor. Bigwigs from Citigroup, Bank of America and other financial giants seek his advice and his blessing.

But at heart, Eakes is still a Tar Heel Jimmy Stewart, helping poor folks help themselves. He's still that red-headed scrapper from the outskirts of Greensboro, ready to slug it out with a bigger opponent.

When the Blue Cross and Blue Shield battle erupted, M.L. Eakes was dying of cancer. Every Friday evening, Eakes drove to Greensboro to be with his daddy, torn between a son's duty and the fight he was leaving behind.

"He knew it was tearing me up," Eakes said. "At one point, he said, 'Go git 'em. Go git 'em for me.' "

Eakes did. He still does.

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