DETROIT — The National Federation of Community Development Credit Unions' annual conference here earlier this month had two things that aren't often found at credit union confabs: slot machines and a positive attitude toward big banks.
The three-day event for low-income credit unions took place at Detroit's MGM Grand, which — in addition to hotel accommodations and ballroom space — also boasts a casino.
Gambling might seem antithetical when compared with the missions of community development credit unions, but representatives from the federation defended their choice of venue.
Cathie Mahon, CEO at the Federation, told Credit Union Journal that while some faith-based "friends and sponsors" were concerned about the juxtaposition of thrift and the casino, "we felt like there was enough of a separation" because the casino occupies only one floor of the hotel and was not a part of the conference.
Mahon added that despite the on-site casino, the MGM Grand was chosen in part because it is a union hotel — something the Federation regularly looks for when selecting conference sites — and because the hotel is a SEG for Detroit-based Communicating Arts FCU, which was heavily involved in the conference.
"It felt like it was yet another indication of a credit union being a part of the fabric of the community," said Mahon.
To be sure, many credit union — and other conferences are often held in Las Vegas or other venues where gambling is even more prevalent than in the Motor City.
Pablo de Filippi, VP of membership and business development at the Federation, added that the just being in Detroit was more important than the specific venue where the sessions were held.
"The decision was to show support for the community in Detroit," he said. "It's a poster child for potential revitalization, and we wanted to be a part of that. We've been to New Orleans the year after Katrina hit. This city was chosen because of that reason. The location — the hotel — was chosen because we didn't have any other venues available for that period of time."
Clarissa Ritter, director of marketing and communications at the Federation, noted that while there are many hotels in downtown Detroit, many of them also double as casinos.
Unusual Sponsors?
The CDCU conference also had some unusual logos on the sponsor board. Along with organizations like CUNA, Navy FCU and others commonly seen on the CU conference circuit, Bank of America, CitiBank, and Capital One were major sponsors for the CDCU meeting and have been in years past.
De Filippi noted that most of the credit unions the Federation works with are CDFI certified and low-income designated, meaning many of those institutions can accept deposits from non-member entities — including the big banks.
"Mainstream credit unions and banks don't interact much," said Mahon, "but in this community development space — and largely because of [the Community Reinvestment Act] — banks have traditionally invested in, supported, sponsored and provided funding to us and our members."
The Federation also serves as a CDFI financial intermediary, with $27 million in assets that are invested in secondary capital, non-member deposits and more. Mahon said that about 75% of the investors to that fund are banks, while the remaining 25% "are predominantly religious organizations."
"We wouldn't be able to be investing in our members and our communities the way we are if it were not for the banks," she said. "Are they doing out of the goodness of their hearts or because they get so inspired by all the great work we do? Probably not; they're probably doing it because of CRA."
The Federation has a $10 million line of credit with Bank of America, which it uses for non-member deposits as well as its CDCU mortgage center, which purchases non-conforming mortgages from credit unions that originated the home loans but can no longer hold them on the books. B of A helped the Federation capitalize that mortgage center about five years ago, said Mahon.
Mahon said that she believes Bank of America puts more than that $10 million toward credit unions as part of its CRA efforts, "but not much more."
The megabank's overall investment in credit union affairs "is admittedly fairly small," said Mahon, "and we are in the process of trying to work with them to come up with additional vehicles that would greatly enhance our sector and do a lot for credit unions, and they're very receptive to it."
The Federation has also had a long relationship with CitiBank, noted de Filippi, and "many of our members have had those relationships as well. We understand that it's a politically charged topic, but the reality is that for many banks, credit unions can be a partner and vice versa — especially when it comes to complying with CRA. The way that banks view this partnership is that we're helping them reach out to low-income consumers, so by making our credit unions and our federation stronger, we're helping fulfill their obligations."
'I See the Irony'
The irony of the location and the sponsors was not lost on Laura Aguirre, president and CEO at $33 million-asset Hawaii First FCU in Kamuela, Hawaii.
"It was kind of odd," she said of the casino location, noting that many people she spoke with at the conference had similar reactions and discussed how unsavory it would be for any credit union professionals to be spotted on the gambling floor.
But Aguirre spoke highly of the conference and added that she and others understood the choice of the location in light of its status as a union hotel and because it is a SEG for Communicating Arts CU.
She was less struck by the choice of sponsors. "When it comes down to it, if it allows me funding to do more of the work we do, I'm okay with it," she said, noting that the conference even included a session on how to look outside the box for partners that can assist small CUs.
"Being a low-income CDFI, every dollar is so important for us to be able to continue to do what we do," said Aguirre, adding that "when I was looking for training in HUD counseling, Wells Fargo gave me a sponsorship to a conference so I could become certified."
With CUNA set to be a major sponsor for next year's Federation conference, Aguirre said she was unsure how many big banks will be sponsors for the 2015 event.
"I see the irony, but I also see the importance of what we do," she said.
