NFCDCU cites microlending and technology as means of hope

DENVER-Delegates attending the National Federation of Community Development Credit Union's 26th annual conference here had reason to celebrate their successes in providing financial services to low-income Americans while discussing ways to meet impending challenges that may threaten CDCUs. "The Federation has grown so much in the past several years," said one board member, "and we've been through a rather turbulent recent past. That happens with any organization made up of volunteers, many of whom are running very small credit unions. But we've come a long way." The learning curve has been steep, and a real trial for some not fluent in the sophisticated balance sheet management, grant procurement and accounting and reporting procedures of a growing trade association. Sometimes, things can fall through the cracks. Insufficiencies in bylaws need to be addressed and communications can be a hurdle, too. But the work they've set out to do remains as compelling as ever, their mission as imperative, as Woodrow Keown, chairman stated: "The historic growth of the `90s has not helped our communities in the way it could have and should have. Instead we see an increased divide between the `haves' and the `have-nots.' " Now with nearly 200 member CUs, the Federation is groping with the problems of growth that may come with success, but has laid out an ambitious plan to forge ahead with programs that may help struggling CDCUs cope with prompt corrective action (PCA) field of membership expansions and the promise of technology. This year marked the first exhibitor's room at the conference, where Computer Consultants, cavion.com, FedComp, Inc., the CUNA Mutual Group and other vendors showed their wares. For the first time, all three members of the NCUA Board made an appearance at the NFCDCU conference, an accomplishment that Executive Director Cliff Rosenthal referred to good humoredly as a "trifecta." But he was clearly pleased that board members felt an obligation to show up, even if briefly, to the organization's meeting. Dennis Dollar spoke to attendees during the opening reception, telling them: "It doesn't take long in the Washington environment to lose sight of life in the real world outside the Beltway. But folks like you keep reminding us what it's all about." He touted his "Reg-Flex" proposal as a means of cutting paperwork and other administrative boondoggles and asked to continue a dialog with CDCU members. Yolanda Wheat visited with the NFCDCU Board on June 8, seeking their input on predatory lending and other issues. "Credit unions can and should be in a leadership position in the public debate about predatory lending practices," she said. Wheat also attempted to soothe the board's feelings about her proposal for community chartered CUs to develop and periodically review a community action plan (CAP), to show its service to the entire community. This would not pose a "significant burden" on them, she assured. The big news at the conference was clearly the signing of a letter of agreement with the Small Business Administration which expands an initiative with CDCUs to participate in the agency's small business loan guarantee program. Fred P. Hochberg, deputy administrator of the U.S. Small Business Administration, told delegates that while growing up, he worked for his mother, a refugee from Nazi Germany, as she started a mail order catalog business from home. He knows small business, he said, and has seen how even a small amount of seed money can grow an entrepreneur's idea into a blooming success. The company, started on a budget of only $2,000 became the Lillian Vernon Company, which now has assets of $250 million, 1,400 employees and some 5 million customers. Hochberg's transformation of the SBA into a more responsive and adaptive agency is symbolized by what he called a philosophical outreach to community development credit unions. "Credit unions really understand making small loans of say, $5,000. Banks don't. So credit unions are a perfect partner for the SBA." Citing Vice President's Al Gore's view of an "economic ecosystem" to describe the value of how small businesses can help a community to flourish by creating jobs, which "revitalize neighborhoods and restore homeownership," Hochberg said his goal was to have 50 CDCU's become SBA lenders over the next year. (There are presently only 12.) Another signing of interest was NFCDCU's extension of its working agreement with the Community Development Financial Institutions Fund (CDFI). This go-round is for $1.75 million to enable the Federation to continue the work of the CDCU Institute, which started in the spring of 1999. The Institute's two-track training program-one for CU managers and staff, one for CU volunteers- is the only one of its kind geared specifically to CU's serving low-income communities. NCUA Chairman Norman D'Amours delivered the luncheon address to delegates on June 9, telling them he was once again pleased to address what he felt to be " the heart, the soul, and the conscience of the credit union movement." Saying they are "plain folk" who are living the best of CU philosophy, D'Amours pledged his continued support for their work. Small CUs are challenged, he said, by taking in SEG groups, even though the agency's new chartering manual streamlines the process, because of their ability to serve new members. To help that effort (in handling growth) he said he wanted NCUA to increase the number of economic development specialists (EDS) from 12 to 60. "We could fulfill this need in July, when we do our midterm budget. Why isn't it in the budget? It's because I can't get two votes," said the chairman. "It's a problem of will, of belief. I'm tired of waiting, and if you're tired of waiting, please convert that impatience to action by trying to convince other board members to do what must be done." The NFCDCU agenda of breakouts included methods to fight predatory lending; qualifying for CDFI grant money; how to become an SBA lender; technology options for CDCUs and workshops on faith-based relationships and developing microenterprise partnerships. A site visit to Zion United Credit Union proved a big draw, as delegates witnessed a successful $3.4 million asset CU with some 1,300 members that provides savings and loans plans for low-income members that restores their credit and readies them to start businesses, buy homes, send their children to college and save for retirement. "We're just getting started," said CEO Sally Edwards. -caburger@cutimes.com