Howard Dvorkin and Credit Counseling Confusion

Citizen Wealth Financial Justice

1e5bceed100e526d7feb4380c69b3038_thumbDallas        Recently there was a front page expose in the Wall Street Journal slamming Howard Dvorkin, who was the founder and former president of Consolidated Credit Counseling, perhaps the largest credit counseling outfit in the country.  The case made by the reporters was based on a pretty simple contradiction.  Dvorkin was a credit counselor but at the same time it appeared that he owned or had investments in many businesses that supported or were directly involved in payday lending operations that charged exorbitant and predatory interest rates contributing to the same credit catastrophes that he was supposedly trying to fix.  Add to that the fact that until 2013 when he left Consolidated, he was also frequently quoted as a consumer advocate blasting payday lending outfits.  At the least Dvorkin would have some explaining to do in order to help all of us understand where he really stood and what was up with all of this?

ACORN certainly knew about Consolidated.  Credit counseling was so close to what our housing counselors were doing with ACORN Housing in trying to get low-and-moderate income families up to snuff to buy and hold on to their houses, that we had regular debates about whether to also offer direct credit counseling and add that to our portfolio of services.  The housing team had looked closely at Consolidated, though I can’t remember if they actually met with Dvorkin or not, but there were discussions with them about potential partnerships with ACORN, as I recall, but it never evolved.  The ACORN housing team, led by Mike Shea, just never felt comfortable with the operation, the call center aspect, or whether it was something that could work for ACORN, so we passed.  Maybe they sniffed some of this then, but who knows.

Dvorkin’s explanations to the Journal for having his hand both upstream causing the credit problems and downstream supposedly fixing the problems were pretty lame.  He didn’t know, or his involvement was minor, or whatever.  Admittedly, he didn’t help his case.

I’ve got some problems with this story though, and don’t feel the Journal made their case either.  Sure it didn’t look good on the optics, but there was never a word about how Consolidated worked and whether or not under Dvorkin in the past or now, Dvorkin’s investments caused them to pull the string or lighten up on payday lenders.  In fact their point was that he was an effective advocate against payday lenders even though he had a lot of that sugar in his coffee.   Nor was there even a hint that Dvorkin left Consolidated Credit because of some unhappiness with his leadership or certainly because of these investments.  Nor did the reporters quote a single member of the board or staff of Consolidated Credit indicating that Dvorkin was a bum or had called their dogs off of the industry under his leadership.   Furthermore, he’s not there, having left two years ago.  So whatever strength of the case being made by the Journal is “been there, done that” and no longer current.

Dvorkin was quoted as saying essentially that, yes, his investments might look “weird,” and he’s right.  They do look weird and they do have a certain foul odor.   It’s a bit like the head scratch you might have if Ralph Nader was revealed now as a big investor in GM.  But, without the Journal finding any evidence of misdeeds, conflicts, ethical breeches, illegalities, or anything under his watch, this simply comes off as a “hey look at me” piece of nonprofit shaming, and that’s actually a lot more disgusting for me to read about than the get rich slow schemes of this fellow a couple of years after he’s left a nonprofit that has reportedly provided credit counseling to 5 million people.


Please enjoy Sleater0-Kinney’s  A New Wave , thanks to KABF.