Broke, USA

by Gary Rivlin

  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 embarrass 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 scrap 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 assistance 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 class 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, 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 dubbed Self-Help “heroes of high finance” and the 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.”

  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, headband and tight shorts included. “He’d show up wearing these fat knee pads and thick Clark Kent glasses—all taped up, of course, because Martin isn’t going to buy new glasses 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 Clinton–style, 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 cocked his head and looked at me confusedly. He has had the same office, he told me, for nearly a decade.