BROOKLYN, N.Y. - Combining intimate knowledge of the inner city with Ivy League backgrounds, Mark Griffith and Errol Lewis have created the country's fastest-growing community development credit union.
Their activist backgrounds allowed them to rally popular support for creating Central Brooklyn Federal Credit Union in Bedford-Stuyvesant, a predominantly African-American neighborhood whose residents have low to moderate incomes.
Their ability to speak bankers' language helped them gain assistance to get the credit union off the ground.
"To be quite honest, people see us as good, safe, young black people to do business with," said Mr. Griffith, 31, who grew up in Bed-Stuy and graduated from Brown University. "We're able to bridge different worlds."
The result: the world's first self-styled "hip-hop credit union."
"Hip-hop music takes music from the past and puts brand new sounds over it," said Mr. Griffith, probably the nation's only credit union board president with dreadlocks. "We figured we were doing the same thing, using institutions and ideas that aren't new" and putting a new spin on them.
"The mere fact that we are making loans to people who live and work in this area is in a way totally different from what's going on right now," he said.
The credit union's progress since receiving its charter in January 1993 has surpassed its organizers' expectations. It has grown to $4 million of assets with 2,600 members, and is adding 200 members a month.
Those numbers would be infinitesimal for a bank, but they are impressive for a credit union with a member base of predominantly low-income people.
The credit union has built up a $600,000 loan portfolio. Mr. Griffith said the amount is relatively small because Central Brooklyn only started lending in early 1994.
"By the end of the year we want to at least quadruple that," he said. "We want to have most of the money on the street."
That's feasible, because Central Brooklyn Federal bends over backwards to extend credit.
"Many credit decisions are made where you don't have a nice, neat formula, but we're still making loans to meet safety and soundnesss requirements," he said.
Most of the portfolio consists of unsecured and auto loans, and the average size is $4,000.
Because Central Brooklyn is a newly chartered institution, its lending is restricted by several agreements with the National Credit Union Administration. Among them: no loans for more than $10,000 and no loans secured by business assets or real estate.
The credit union is working to either increase or eliminate the loan ceiling and get the power to originate mortgages, Mr. Griffith said. The credit union's staff already has had success in persuading the NCUA to back off: Before the credit union was chartered, the agency tried to establish a $5,000 loan ceiling.
"We said that was ludicrous," Mr. Griffith said. "We couldn't grow at the rate we wanted to with that limit."
And although the credit union can't make loans to businesses, several of its loans to members are used for business purposes.
For example, the credit union has "a loan to two artists for them to buy art supplies and go on tour," Mr. Griffith said. "For collateral, we have pieces of artwork that have been appraised. The artwork is technically owned by individuals and is not a business asset, but when you look at small businesses and microindustries, it's hard to distinguish between the person and the business."
Brooklyn Central plans to issue automated teller machine cards by the summer and possibly credit cards by year's end, Mr. Griffith said.
The spur for creating the credit union was the flight of banks from Bed- Stuy, Mr. Griffith said. He referred to closed bank branches - "bank carcasses" - the "ruins of a lost civilization."
Although many banks have left the neighborhood, the credit union has gotten a helping hand from institutions that earn Community Reinvestment Act credit for assisting community development credit unions.
Concrete evidence of bank support is the credit union's office on bustling Fulton Street: The building was a Manufacturers Hanover branch slated for closing after the merger with Chemical Banking Corp.
After several years of negotiations, Chemical turned the building over to the credit union about a year ago.
"Instead of selling it to us, they basically gave it to us," Mr. Griffith said.
Chemical and other banks also have plowed money into below-market- interest deposits in Central Brooklyn Federal, which it can accept due to its "low-income" designation by the NCUA. With $1.5 million in such deposits, it has more than any other community development credit union.
Mr. Lewis, who previously worked with the National Federation of Community Development Credit Unions, said the key to getting support was demonstrating why it was a good investment for the bank, the credit union, and the community.
"We don't go in and say give us some money," said Mr. Lewis, the credit union's manager. "We jointly determined that while banks might not find it profitable to stay in Central Brooklyn, a properly run credit union probably could."
Mr. Griffith said that the credit union is still at a fragile stage. He hopes that within three years, it will become a larger player.
The credit union's biggest challenge now is "to move to the next level where we're beyond being a mom and pop credit union and are a credit union with more branches and a larger presence," he said.
Mr. Griffith said he believes that if Brooklyn Central Federal is successful, it can counteract stereotypes of minority-run organizations.
"There's a perception out there that black institutions aren't as strong or well-managed as, quote, 'mainstream white institutions,'" he said. "This institution will rise or fall based on the ability of this population to get itself together. That puts pressure on us and the people themselves."