More details about the opening of Second Federal Credit Union in Chicago have come to light.

Particularly how replacing a failed, 130-year-old thrift with afederal credit union testifies to the steadfastness and optimism ofthe institution's organizers who persisted in the face of apparentfailure.

When the Great Recession carried away the Second Federal Savingsand Loan in 2010, community leaders recognized that the potentialfinancial catastrophe for Chicago's low income and underservedsouthwest side.

“Even though it was a savings and loan, Second Federal hadreally acted like a community development credit union, like aCDCU,” explained Randy Chambers, chief financial officer at the 40,000-member,$586 million Self-Help Credit Union in Durham, N.C., who headed upthe effort to replace the failed thrift with a division of theSelf-Help Federal Credit Union, a Self-Help CU subsidiary inOakland, Calif.

Second Federal had long made a point of helping the waves ofdifferent immigrant groups which have moved through the area duringits history, often changing its staff and culture to meet the needsof the latest group, Chambers recounted.

In each case, the thrift had provided the members of thenewest-arriving population their first steps into financialservices and their very first loans, including housing loans. Asthe latest group is primarily from Latin America and Mexico, manyof Second Federal's staff was bilingual, Chambers said.

But as necessary working with immigrant groups was, it was thatexposure, Chambers said, which in the end had helped overwhelm thethrift.

“In other parts of the country, the Great Recession tookunemployment up to 10%” Chambers said. “But in this communityit was already at 10% and the Great Recession took it to 20%.”

When the thrift failed, Chambers said Self Help FCU partneredwith a community organization which had a lot of experience workingwith area residents to buy the thrift's portfolio of more than 1,100 home loans worthroughly $141 million.

But while the purchase protected the homeowners from the impactsof potential foreclosures, it was really on a partial victory,Chambers explained. Self-Help FCU had been in negotiations with theFDIC to also take the bank's deposit accounts as well, but thosehad fallen through.

Despite the setback, Chambers said Self-Help FCU and theResurrection Project kept working with both the FDIC and the bankwhich had taken the deposits and when it became clear that the fitbetween the areas depositors and the new bank was not the best,Chambers said Self-Help made another offer and this time the offerwas accepted.

But that was not the end of the challenges. Even though thecredit union obtained the housing finance loans at a discount,there were about 200 of the notes that were in delinquency andwhose homeowners needed help with restructuring or refinancing theloans.

The credit union also welcomed the 13,000 additional depositors,but Chambers noted that their deposits arrived with no additionalnet worth attached. Fortunately, the John D. and Catherine T.MacArthur Foundation provided $15 million of secondary capital tosupport the Second Federal acquisition.

“Buying the loans at a discount from the FDIC made sure that wewouldn't have losses, but unlike a normal merger with a healthyinstitution, the $150 million or so of deposits came with $0 networth,” Chambers explained.

But it also meant that those 13,000 depositors needed to becomemembers of the credit union, and fortunately the vast majority ofthem have done so by joining an association which is the primarysponsor of Self-Help Credit Union and which offers credit unionmembership

“Keeping Second Federal in the community as a viable, ongoingfinancial institution is a crucial part of helping our residentsweather the recession and keep moving forward,” explainedResurrection Project CEO Raul Raymundo.