|U.S. Rep. Charles Rangel addresses attendees at the announcement.
Office of Financial Empowerment to be the First in the Nation
(December 18, 2006 - New York, NY) The Lower East Side People’s FCU was the setting today for the announcement of a major new anti-poverty initiative in New York City. At a press conference attended by prominent city and federal officials, Mayor Michael R. Bloomberg announced a $150 million annual commitment to implement recommendations made by the Commission for Economic Opportunity. Mayor Bloomberg appointed the Commission earlier in 2006 to assess existing programs for low-income people and to develop new strategies to alleviate poverty in New York City.
Harlem Congressman Charles Rangel thanked the mayor for his leadership in fighting poverty and, in his capacity as incoming Chairman of the House Ways and Means Committee, used the occasion to deliver a strong message of support for credit unions nationwide: “To the federal credit unions who have been under severe attack, you’re in your mother’s arms.”
A CDCU Success Story in Community Revitalization
The Lower East Side People’s Federal Credit Union (LESPFCU), host of the day’s event, is the largest community development credit union (CDCU) in New York City. Founded in 1986, LESPFCU replaced the last bank branch to depart a 100-square block area. Today, the credit union boasts over $19 million in assets and serves more than 5,000 members in this dense, low-income, multi-ethnic neighborhood. The credit union has hosted a number of major announcements, dealing with issues such as the Earned Income Tax Credit (EITC) and international money remittances. Linda Levy, CEO of the credit union, said “We are honored to host the Mayor at this historic event, and excited by the commitment of the City of New York to bring economic opportunity to those who have never had it before.”
The new initiative will focus on proven programs but will also develop a funding stream for innovative approaches, using funds that Mayor Bloomberg expects to be contributed by the private sector.
Bloomberg stressed the multiple, interrelated symptoms and causes of poverty, and the need to develop a broad, multifaceted approach. While recognizing that the city could not simultaneously tackle every problem and barrier, the mayor’s Commission on Economic Opportunity developed five targeted strategies:
- Breaking the cycle of poverty by improving the life chances of children under five
- Investing in the education of at-risk young adults
- Helping disengaged young adults find career paths
- Creating opportunities for low-wage workers to expand their skill sets to work their way up the career ladder.
- Empowering working adults to achieve financial stability by developing asset-building strategies to promote self-sufficiency for the working poor
A number of city agencies will be engaged, under the coordination of the new Center for Economic Opportunity (CEO), which will be run by Deputy Mayor of Health and Human Services Linda Gibbs.
In his remarks, Mayor Bloomberg highlighted the need for more consumer protection, stating that the CEO will operate as a watchdog group to deter deceptive practices such as tax fraud and predatory lending. “People don’t have the financial education to know when they are being taken advantage of,” explained Mayor Bloomberg. “By educating people to the pitfalls of some of these practices they can make better decisions that will help them have more money to feed their families.”
|(From left to right) U.S. Rep. Charles Rangel; Harlem Childrem Empowerment Zone Director Geoffrey Canadal NYC Mayor Michael Bloomberg; NYC Deputy Mayor for Health and Human Services Linda Gibbs; NYC Council Member Rosie Mendez; and NYC Department of Consumer Affairs Commissioner Jonathan Mintz.
Office of Financial Empowerment to Link Financial Capacity, Education
Through the CEO, the City will also create the nation’s first Office of Financial Empowerment (OFE). It will focus on five interconnected priorities: financial capacity, financial education, watchdog protection, strategic partnerships, and best practices. The OFE will be placed under the New York City Department of Consumer Affairs (DCA), headed by Commissioner Jonathan Mintz.
Through DCA, New York City has been a national leader in promoting the Earned Income Tax (EITC) and volunteer tax-preparation assistance (VITA); it has also aggressively fought high-cost “Refund Anticipation Loans.” The Federation’s Executive Director, Cliff Rosenthal, was appointed by Mayor Bloomberg in 2003 to serve on the advisory council of DCA.
Asset-Building Strategies Highlighted
“We are extremely pleased that Individual Development Accounts (IDAs) seem to be part of the strategy for helping low-income people to build assets,” said Cliff Rosenthal. “These restricted savings programs help people become homeowners, start small businesses, or obtain post-secondary education. They can be crucial in helping people up the ladder.” The Federation has been a leader in promoting IDAs within the credit union movement, and has raised matching funds for IDAs. As many as 50 CDCUs have established IDA programs over the last decade.
Federation Presses Broader City/State/Federal Agenda
“This initiative couldn’t come at a better time,” said Federation Public Affairs Officer Rafael Morales. “The Federation has been working with the New York State legislature as well as governor-elect Spitzer to create a New York State Community Development Financial Institutions (CDFI) Fund, and we believe were are on the verge of having the program funded. The mayor’s CEO initiative would really complement a state fund by supporting significant asset-building strategies here in New York City,” added Morales.
Rosenthal also pointed out at the press conference the possibility of leveraging federal IDA funds through the Assets For Independence (AFI) program of the Department of Health and Human Services, which puts out $25 million annually.
Congressman Rangel, who is expected to have an extremely powerful role in the new Congress, made a strong connection between city and federal policies. “People ask me, what’s this have to do with the Ways and Means Committee?” said Rangel. “Well, I truly believe with the corporate structure that we have to deal with for taxing purposes, [people should see] how much poverty is costing our economy, especially as we move towards globalization, especially as we talk about guest worker programs when we’ve got millions of people screaming out for training and jobs…. Poverty is so expensive.”
New Opportunities for Credit Unions
“CDCUs are uniquely positioned to serve the very populations this new initiative is targeting,” explained Federation Executive Director Cliff Rosenthal, “They are, in fact, already doing much of this work on their own and the Federation is working to ensure that this new program not only includes CDCUs, but makes them an integral part of the City’s strategy for alleviating poverty. That this event was held at a CDCU shows the growing recognition of the important work our credit unions do. We can help the city advance its agenda on many fronts, while strengthening and expanding CDCUs.”
Lower East Side People’s Federal Credit Union was founded in 1986 when all commercial banks left the Lower East Side of Manhattan. It is the largest community development credit union in New York City with more than $19 million in assets, serving over 5,000 members. LESPFCU was an early pioneer in microfinance, serving the immigrant community, and serving the underserved population of New York. The credit union offers a wide variety of services ranging from low-fee accounts, online banking, and low-interest personal loans to products such as short term loans to combat Refund Anticipation Loans and Payday Lending. LESPFCU also offers its members free tax service to educate about the EITC, offers free accounts and has offered education and small business IDAs. Visit: www.lespfcu.org for more information.