Credit Unions and Banks Partner to Help Serve the Unbanked
(September 28, 2007 – New York, NY) New York City’s Office of Financial Empowerment (OFE) recently launched a new program aimed at banking previously unbanked low-income families and individuals through Opportunity NYC, a new incentivized savings account program. The pilot for the project includes four banks and four community development credit unions (CDCUs).
The CDCUs that are offering the Opportunity NYC accounts during the current pilot phase are Bethex FCU (Bronx, NY), Brooklyn Cooperative FCU (Brooklyn, NY), Lower East Side Peoples FCU (New York, NY), and Union Settlement FCU (New York, NY).
The new starter accounts are offered on a “no fee” basis, have no minimum balance requirement, they have no monthly fees, and provide all account holders with ATM cards. As an incentive, new account holders will receive $50 just for opening the accounts. Qualified low-income residents with existing bank accounts are also eligible to receive the $50 bonus.
“Community Development Credit Unions are a natural partner in this type of initiative,” explained Federation Executive Director Clifford N. Rosenthal. “CDCUs are community-controlled financial cooperatives with strong ties to the neighborhoods in which they operate. Many CDCUs already provide financial education, business, and homeownership counseling services, and these new accounts should help them reach even further into the low-income communities they serve.”
Jack Lawson, CEO of Brooklyn Cooperative FCU, agreed. “Many people simply don’t know about credit unions and the services we provide,” Lawson said, “but this program brings people through our front doors so they can see the benefits of opening a new account and taking advantage of our services.” Lawson said that new members typically find multiple ways that the credit union can help them save money. “Once a new member realizes that they are also shareholders in this cooperative,” he said, “they never want to pay fees to a check-casher or borrow from a payday lender again.”
Nearly 3,000 of the targeted 5,100 families have already entered the program, with full enrollment expected by October. Participants have already started to earn financial rewards for completing specific activities related to education, health, and employment and training. Program families can earn over $5,000 annually, depending on family size and level of targets met.
“The successful partnership with banks and credit unions in this pilot project paves an exciting path toward new and more targeted approaches to financially empowering New Yorkers,” said Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz. “Moving more workers with low incomes into smart – and safe – financial service products is a critical first step in building economic security, and a key focus of DCA’s Office of Financial Empowerment.”
Participating banks include Amalgamated Bank, M&T Bank, North Fork Bank, and Carver Federal Savings Bank, the largest minority-owned thrift in the United States. Carver Federal Savings Bank is also a federally-certified community development financial institution (CDFI) and has worked extensively with the Federation through its involvement on the Steering Committee of the New York Coalition of CDFIs, a program that has been staffed and operated by the Federation for over a decade.
OFE is the first program to be implemented under the Center for Economic Opportunity and it is part of Mayor Bloomberg’s aggressive efforts to combat poverty in New York City. Coordinating closely with local, state, and federal government agencies, non-profit and community- based organizations, as well as the private sector, OFE provides targeted watchdog protection through impact litigation, targeted enforcement, advocacy and outreach efforts; helps New Yorkers get the Earned Income Tax Credit and other financial credits they’ve earned; is establishing a dynamic network of financial service providers; and is identifying best practices locally and around the world.
Opportunity NYC is privately funded by the Rockefeller Foundation, The Starr Foundation, The Robin Hood Foundation, The Open Society Institute, the American International Group (AIG) as well as Mayor Bloomberg. The Rockefeller Foundation provided initial research and development capital for this effort.
The Department of Consumer Affairs’ Office of Financial Empowerment (OFE) is working to educate, empower and protect those with low incomes so they can build assets and make the most of their financial resources. OFE is the first program to be implemented under the Center for Economic Opportunity and it is part of Mayor Bloomberg’s aggressive efforts to fight poverty in New York City. Coordinating closely with local, state, and federal government agencies, non-profit and community-based organizations, as well as the private sector, OFE provides targeted watchdog protection through impact litigation, targeted enforcement, advocacy and outreach efforts; helps New Yorkers get the Earned Income Tax Credit and other financial credits they’ve earned; is establishing a dynamic network of financial service providers; and is identifying best practices locally and around the world.
The Center for Economic Opportunity (CEO) was established by Mayor Bloomberg to implement innovative ways to reduce poverty in New York City. Led by Executive Director Veronica White, the CEO works with City agencies to design and implement evidence-based initiatives aimed at poverty reduction. The CEO manages an Innovation Fund through which it provides City agencies annual funding to implement its initiatives, and it will oversee a rigorous evaluation of each initiative to determine which are successful in demonstrating results towards reducing poverty and increasing self-sufficiency among New Yorkers. The City of New York and the Center for Economic Opportunity, in collaboration with MDRC and Seedco, are responsible for the design, management, and implementation of Opportunity NYC.
© 2007 National Federation of Community Development Credit Unions.