National Federation Aiming Squarely at New Low-Income CUs: Print Preview
Under the leadership of a new chief executive, the National Federation of Community Development Credit Unions has set its sights on helping the n early 700 credit unions that have accepted the NCUA's offer for a low-income designation take advantage of their new status.
“We expect to be able to explain to them both the value and opportunities found in working with lower income members and with the low-income credit union designation,” said Cathie Mahon, the National Federation's newly hired CEO.
Mahon takes the position of former federation CEO Clifford Rosenthal who left in May to take a position with the Consumer Financial Protection Bureau.
Credit unions that are designated as low income have the ability to accept nonmember deposits, offer secondary capital accounts, receive exceptions from the aggregate loan limit for member business loans and participate in the Community Development Revolving Loan Program.
Over 1,000 federally chartered credit unions, which the NCUA identified as qualified for low-income designation based on their membership, were offered a streamlined path to the designation in August and efforts have commenced to offer the same procedure to state-chartered credit unions that might qualify. Of that original 1,000, over 623 accepted, according to the most recent agency numbers released in September.
But the low-income designation does not bring experience working with lower income members or expertise in reaching out to those members. Nor the techniques for discovering the opportunities those members represent. The National Federation has experience in both those areas, Mahon said.
“One of the things I have most admired about the federation is its ability to call out best practices from its members and from credit unions at large,” Mahon said, “and then help translate those best practices for other credit unions to use.”
The federation and Mahon also have experience working with credit unions to solicit nonmember deposits and establishing secondary capital accounts, which also might be unfamiliar to credit unions which had not had those powers until recently.
Mahon, a former executive and board member at several different credit unions as well as former director of policy and program development for the National Federation, acknowledged that she stepped into a position that Rosenthal had made instrumental in the credit union industry. But expressed confidence that she would help the National Federation continue to build on the progress it had already made.
“I think this is a very exciting time for the federation members and for credit unions generally,” Mahon remarked. “The challenges are more intense but so are the opportunities.”
Mahon came to her new position most recently from a term as the deputy commissioner for financial empowerment for New York City's Department of Consumer affairs, a position that she said gave her an even stronger appreciation for the role credit unions can play in the lives of lower income people. While in the deputy commissioner position, Mahon helped the Office of Financial Empowerment, the first such effort in the country, to develop programs to help lower income New Yorkers build savings and improve their financial futures.
For example, under the Opportunity NYC program, lower income people were able to open transaction accounts at 10 New York financial institutions, five of them were credit unions. The accounts carried a $50 opening deposit as an incentive to opening them, as well no fees or minimum balances. Other ideas for similar accounts included special matching accounts that could be created with all or part of the funds from the federal earned income tax credit, which members access through their federal tax returns.
Mahon also has extensive experience in both the public and private grant-making world and served a key role with the federation when the organization was helping to establish the Community Development Financial Institutions Fund at the U.S. Treasury Department.
This experience helped her more deeply appreciate the way lower interest government loans as well as corporate deposits can help credit unions ensure their financial stability so they can more effectively launch products and services which benefit lower income members and help them succeed financially, she explained.