NEW YORK – In an effort to build support for low-income financial services, New York City plans to deposit $25 million into five city credit unions – with a big "if" – that is, if the legislature agrees to pass a bill allowing municipalities to deposit funds in credit unions.
The deposits would fund a program called "NYC Safe Start" which would provide a fresh start for troubled borrowers, according to Mayor Michael Bloomberg, who introduced the plans in his annual State of the City address last night.
"We’re calling them ‘NYC Safe Start’ because they won’t require minimum balances, and they won’t charge hidden fees. If you want overdraft protection or other services, you can opt for a traditional account, but with NYC Safe Start, you can’t withdraw more than you’ve got so you can’t be penalized for forgetting your balance," said the Mayor in his remarks.
"With Albany’s approval, we’ll also strengthen neighborhood-friendly credit unions, which reach out to customers who may have never had a bank account. We’ll seek to deposit $25 million in City tax dollars in federally insured and regulated credit unions that pay the same interest rate as commercial banks."
"It’s a relatively small amount of City resources, but it will have a big impact by allowing credit unions to make more loans to more low-income families. We’ll also help open credit unions serving public housing residents, like the one Bishop Taylor is opening in Long Island City this spring. Bishop: You are one banker who truly is doing God’s work," said Bloomberg.
The legislation, which has been a priority for New York’s credit unions for several years, has been introduced in both the state Senate and Assembly and has been endorsed by Gov. David Patterson, as well as Mayor Bloomberg, giving it strong support this year, according to Amy Kramer, chief lobbyist for the CU Association of New York. "We think it’s great to have one of the world’s largest cities say we would love to put this money into credit unions," Kramer told The Credit Union Journal yesterday.
The credit unions expected to participate in the program have worked with the city on several other initiatives and are: Lower East Sides Peoples’ FCU, Neighborhood Trust FCU, Union Settlement FCU, Bethex FCU and Brooklyn Cooperative FCU.
