L.A. CUs help promote news bank development districts

LOS ANGELES (11/5/09)--Los Angeles credit unions are helping to promote the newly approved Los Angeles City Council measures to establish banking development districts, said the California Credit Union League.

Attending a press conference before the Los Angeles City Council approved an ordinance Friday that would create districts for banking development throughout the city were, from left: Carl Stewart, CEO, Water and Power Community CU, Los Angeles; Josh Stehlik, Neighborhood Legal Services, Los Angeles; Oliva Calderon, New America Foundation; Los Angeles City Councilman Richard Alarcón; Forescee Hogan Rowles, Community Financial Resource Center Los Angeles; Lucia Moreno-Linares, Family FCU CEO, Wilmington, Calif.; and Leticia Rodriguez, board member, Pacoima (Calif.) Development FCU. (Photo provided by the California Credit Union League)

The ordinance, which was proposed in May, would provide property tax relief and expedite land-use approval for credit unions and banks to open branches in underserved areas. It is modeled after a similar measure passed in New York City (News Now Nov. 3).

The ordinance would guarantee municipal deposits for credit unions and banks. The city treasurer also will create a task force to work with department heads and council members to determine how to model the Los Angeles program after the New York City program.

At a Friday press conference before the motion was approved, Carl Stewart, CEO, Water and Power Community CU, Los Angeles, and Lucia Moreno-Linares, CEO, Family Federal CU, Wilmington, Calif., spoke about what the program will mean to those in underserved communities.

"While credit unions operate in many communities in these proposed districts, we hope that this program will educate people about the options that already exist and incentivize financial institutions to do even more in their local neighborhood," Stewart said. "Credit unions look forward to working with the city to bring our communities back on track and look forward to being part of the financial success of our communities as part of the Banking Development District Program."

"I think being 'at the table' when our city looks at ways to use its considerable influence to encourage delivery of financial services to the undeserved or unbanked is very important but also an exciting opportunity to create partnerships where we as credit unions help draft the language," said Moreno-Linares. "It's a great opportunity to be able to give direct feedback to city officials about why something will or will not work for us."

An estimated 300,000 households in the Los Angeles area are without a checking or savings account. These families rely on expensive alternative financial services, said the league. The Brookings Institution estimates that the average "unbanked" household in Los Angeles pays more than $700 each year to cash checks and use money orders to pay bills.

More than $100 million of income is lost every year by families paying for expensive financial services. The fees translate into more than $54 million in check-cashing fees and $88 million in payday loan fees in Los Angeles every year. In Los Angeles, there are 944 check-cashing outlets and 312 payday lenders, but only 694 bank and credit union branches.

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