N.Y.'s Banks, CUs Team Up On Plan To Help Poor
Banks and credit unions here are joining forces to take part in a state-sponsored program to get 800,000 poor New Yorkers to open deposit accounts.
"There are a lot of people who think banks cannot serve their needs, that don't know how credit unions operate, so this is a way to really get together to let people know that there are alternatives to predatory financial services," said Meagan van Harte, director of development services for the Lower East Side Peoples Federal Credit Union in Manhattan.
Check cashers, payday lenders and stored value card products that appeal to the poor cost more than an account, she said.
This is the driving point of the month-long program started as an initiative of the New York Department of Consumer Affairs and the Banking Superintendency. The program ties in with other ongoing efforts to get the poor to use their tax returns to start accounts.
Van Harte said her $15-million, 4,185-member and two-branch credit union was invited to take part in the Bank on New York program by the DCA office.
The DCA office provided posters and fliers. "It's hard to say yes or no" as to whether the program worked. She said the CU is not asking new members if the program prompted them to open an account to track its results.
LESPCU charges $3 per account but only when the balance is below $75. The CU, founded in 1987 and with its roots in a community development program, offers personal loans, micro-enterprise loans, lines of credit, credit cards and real estate loans.
Kori-Ann Taylor, spokesperson at the New York State Banking Department, said that part of the promotional materials included a poster showing a jar filled with pennies next to the question: "Is this your idea of a bank account?"
Ads in posters at more than 20 banks and credit unions as well as on bus shelters run in English, Spanish and Chinese. The State Banking Department is still compiling feedback to decide whether to do the program again in 2006.
"It may be coordinated again around the tax season next year depending on feedback, " Taylor said.
There are an estimated 800,000 New Yorkers lacking a bank account even as state laws require all financial institutions to offer a low-fee account as one of the options.
Bushwick Cooperative Federal Credit Union, Montauk Credit Union, the National Federation of Community Development Credit Unions, and Union Settlement Federal Credit Union are among the institutions taking part in the program, the state banking department said.
Amelia Vinao, senior vice president at Amalgamated Bank which is also participating in the program, said that fliers have prompted people to inquire about cost of new accounts. She said that similar efforts focused on getting people to use their Earned Income Tax Credit to open accounts for the past three years have met partial success.
"A lot of people keep accounts open. There are always some that would take money and close it," she said.