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CEOs testify for inclusion in NY underserved areas
ALBANY, N.Y. (4/15/09)--Credit union CEOs from throughout New York State provided testimony on behalf of the Credit Union Association of New York and state credit unions at a series of regional hearings recently held by the state Banking Department. The hearings are part of the department’s review of the Banking Development District Program (BDDP), a program created in 1998 to encourage banks to set up branches in under-banked and underserved areas. Credit unions currently are not included among the financial institutions authorized to participate in the program.
Click to view larger image Linda Levy, CEO, Lower East Side People’s FCU, New York, provides testimony at a public hearing in New York City on the Banking Development District Program.
Linda Levy, CEO, Lower East Side Peoples FCU (LESPFCU), New York, gave testimony last week in New York City at the first hearing. Levy provided an overview of why credit unions are experts in serving low-income and underserved areas, and as such, are uniquely positioned to help the state achieve the goals of the BDDP. LESPFCU was founded in 1986 as a result of the closing of the last commercial bank within a 100-square-block area. The credit union opened with $350,000 in assets. Today it has two branches and has grown to $22 million in assets. “We found a way to serve this underserved community against tremendous odds,” Levy said. “We have over $14 million out in loans for affordable, income- and resale-restricted cooperative apartments, maintaining affordable housing across the five boroughs of New York City. Imagine how much larger we could have been, how many more affordable housing loans we could have made, had we been part of the BBDP.” In the Capital Region and Central New York area, the banking department requested written testimony be submitted. Susan Commanda, CEO, Hudson River Community CU, Corinth, and Ron Ehrenreich, CEO, Cooperative FCU, Syracuse, provided written testimony.
Click to view larger image In Buffalo, the New York State Banking Department listens to testimony on the Banking Development District Program from Al Frosolone, CEO, Niagara’s Choice FCU, Niagara Falls. (Photos provided by the Credit Union Association of New York)
Al Frosolone, CEO of Niagara’s Choice FCU, Niagara Falls, gave his testimony at a hearing Monday in Buffalo. “Membership in state and federal credit unions in New York is limited by law,” Frosolone said. “It may be based upon a common employer, association, school, union, or community. This local-ownership component created another aspect to their mission--namely reinvesting in and the betterment of local communities they serve. “Credit unions can also provide benefits to the state’s municipalities,” he continued. “By enabling credit unions to participate in the BDDP, municipalities have the option to invest in not-for-profit financial institutions that keep investments local. In turn, the municipal deposits would be used to provide much-needed lending capital to potential borrowers in the community.” Each representative countered bank arguments that credit unions’ tax-exempt status should keep them out of the program. They testified how, like any other not-for-profit organization, credit unions do not pay income tax because they have no income to tax. Credit unions do pay income tax, and members pay tax on any dividends they receive. They also pointed out that since 2002, about 131 underserved (low-income) areas have been added to the charters of 60 credit unions in the state. Each one of the 131 areas now has a credit union branch where members can get low-cost financial services. Credit unions want to serve more underserved communities, which is why the Credit Union Association of New York supports current legislation sponsored by State Rep. Francine DelMonte (D-Niagara) and State Rep. Hakeem Jeffries (D-Metropolitan)--A.166 and A. 168, respectively. These measures would authorize credit unions to participate in the BDDP.


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