This is from the USCG site:
The Corsair Fleet
During the first desperate months of 1942, when U-boats were sinking ships on American shores almost with impunity, the Navy found itself desperately short of the small craft needed to protect coastal shipping. In the summer of 1941, Alfred Stanford, commodore of the Cruising Club of America, began the difficult task of convincing the Navy that private boats and their owners could help meet the Navy’s need for small craft. On March 5,1942, the cruising club offered the Navy’s Eastern Sea Frontier Command the loan of 30 auxiliary sailing yachts between 50- and 90-feet, with skippers and skeleton crews. These vessels had sails and a gasoline or diesel engine for auxiliary propulsion.
By April, the offer had grown to 70 seagoing yachts and 100 smaller craft. Yet, the Navy refused. This caused a large flow of letters and editorials to those in command. The outcry caused the Navy to change its policy. On May 4,1942, ADM Ernest J. King, chief of naval operations and commander in chief, U.S. Fleet, requested the Coast Guard Reserve to take over and organize the Coastal Picket Patrol.
The Coast Guard Reserve had been formed in June 1939. The service trained civilian yachtsmen for cooperation with the Coast Guard’s search and rescue work and to assist with law enforcement activities such as boarding boats to insure boating safety regulations were being followed. In 1941 the Reserve had 7,000-8,000 members and 2,000-3,000 boats, most of which were unsuitable for offshore work.
Since there was no provision for the reservist to be called to active duty, legislation was passed to establish a new reserve. In February 1941, a new reserve force was created similar to the other military services’ reserves and the former reserve was renamed the Coast Guard Auxiliary. Congress amended the U.S. Coast Guard Auxiliary Act by authorizing suitable men to serve for as short a period as 30 days, even though regularly disqualified for service in the Navy or Coast Guard because of age or minor physical problems.
On May 23, King ordered all sea frontier commanders to expedite the selection of small craft for the picket patrol also called the Corsair Fleet. The orders stated that the vessels had to be "capable of going to sea in good weather for a period of at least 48 hours at cruising speeds." They could be auxiliary sailing or motor yachts, fishermen, or other privately owned craft. The vessels would be accepted as loans, purchases or requisitions. This task proved too much for the auxiliary, so King ordered the Coast Guard to establish the patrol.
The force was organized into six task groups: Northern, Narragansett, New York, Delaware, Chesapeake and Southern. Their duty was to supplement forces employed in anti-submarine, rescue and patrol duties. The boats normally carried machine guns, four depth charges and a radio. These small boats were to observe and report the actions of hostile forces and to attack enemy submarines when armament permitted.
The owner of the yacht usually remained onboard with the rating of chief boatswain’s mate. At first the crews were made up of college boys, adventurous lads of shore villages, Boy Scouts, beachcombers, ex-bootleggers and rumrunners. Almost everyone who declared he could reef and steer, and many who could not, were accepted. With such a diversified group of people under one organization, the Corsair Fleet was often referred to as the Hooligan Navy.
The Coast Guard also assigned some of its recruits to the patrol and by mid-1943 most of the crews were made up of Coast Guard enlisted men and officered by the former yacht owners. Normal patrol areas were along the 50-fathom curve off the Atlantic and Gulf Coasts. The craft patrolled in designated squares of about 15 nautical miles. This could be pleasant in summer weather, but in the winter or stormy weather, crews needed a good knowledge of seamanship and a strong stomach to endure the patrols.
Adventure on the seas
By the time the patrol reached a sizable force, the U-boat threat had lessened, never giving the force a chance to really test its worth. Even so, a few instances did show the Hooligan Navy may have helped the war effort if it had been formed in sufficient time. On Aug. 13, 1942, a flight of 10 airplanes from a base at Westover, MA tested the air defense network along the Massachusetts coast. No Navy ship or shore station made visual or radar sightings of the flight. The only units to accurately report the aircraft were four coastal picket-patrol craft.
The Edlu II, patrolling south of Montauk Point, N.Y., on Sept. 15, 1942, spotted a surfaced U-boat less than 100 yards away. Even though the Edlu II had not yet received depth charges, the small craft began to close, hoping to take the U-boat under machine gun fire. The Nazi vessel spotted the small boat and immediately dove, it is not surprising that the skipper of the submarine chose to submerge, he could not be certain what weapons the Edlu II had. The threat of the picket boats was not realized by some U-boat commanders. One German skipper surfaced his sub beside a reserve boat and reportedly stepped out on the deck. In excellent English he shouted, "Get the hell out of here, you guys! Do you want to get hurt? Now, scram!"
In another instance the reserve craft Jay-Tee had a close encounter with a U-boat. According to the Saturday Evening Post the crew of the 40-foot reserve craft was searching for survivors of a gun duel between a German sub and a merchant vessel. When the Jay-Tee got to the scene of the battle the merchant vessel was gone. While searching the area they spotted a submarine a mile or so away. The sub then submerged and surfaced several times. The crew of the Jay-Tee remained to see what would happen. Suddenly the Jay-Tee was lifted out of the water. The captain rushed to the side to see that the submarine had surfaced underneath his yacht, and watched as it submerged once again. The damaged Jay-Tee made it back to port. The crew’s claim was substantiated by the boat’s broken back, sprung planking, and streaks of German paint on the hull.