$25M Price Tag Put On NY's Municipal Deposits Bill
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 legislation allowing municipalities to deposit funds in credit unions.
The deposits would fund the "NYC Safe Start" program, 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.
"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 Paterson, 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 said.
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.
Former CU Holds $119M IPO
FORT WORTH, Texas-OmniAmerican Bank, the one-time credit union chartered as Carswell (Air Force Base) CU that had to fight NCUA in court to convert to a bank, raised $119 million this week in an initial public offering.
The IPO comes four years after the $1 billion credit union, then known as OmniAmerican CU, converted to a mutual savings bank. Initial shares were reserved for depositors in the bank going back to March 31, 2008, 27 months after the credit union conversion.
"This is kind of the culmination of a process that started more than four years ago," said Tim Carter, CEO of the bank. "We are really pleased that tomorrow we're going to be trading on the NASDAQ."
The IPO was originally planned to take place in January 2007, around the same time another $1 billion Texas credit union convert, Community CU (now ViewPoint Bank), went public, but was delayed by the death of OmniAmerican's long-time CEO Larry Duckworth in February 2007. Both credit unions had to fight their way out of a credit union charter when NCUA tried to invalidate their respective members' votes to convert, only to have a federal judge overrule NCUA and allow the charter switches to banks.
Omni said it sold 11.9 million common shares at $10 apiece in the IPO.
Single Mother Wins $10K Prize
TALLAHASSEE, Fla.-A single mother of three children won $10,000 as winner of Florida Commerce CU's WeLifeFIT! savings challenge.
Karen Rubin, who joined the competition just as she was finalizing her divorce, was financially disorganized. In the end she lowered her debt by $4,500, increased her savings to more than $30,000 and improved her credit score by 96 points.
Rubin, along with six other families, competed for 10 months to lower their debt, increase their savings and improve their credit score. Rubin said she and her family originally had plans to go on a Disney Cruise with her winnings, but after having gone through the competition, they have decided to go on a less expensive vacation and save the money. "The real challenge is maintaining these good habits," Rubin said. "It's like cleaning house, dieting or committing to exercise. This, too, requires that kind of daily maintenance."
