<p>WASHINGTON-The Treasury Department announced May 1 the First Accounts grant awardees for 2002 totaling $8.35 million for 15 different projects to help the `unbanked.’ Five credit union organizations made the list. In conjunction with the announcement, Senate Banking Committee Chairman Paul Sarbanes (D-Md.) held a hearing May 2 to discuss ways to bring more American consumers into the banking system. In testimony at the hearing, West Texas Credit Union Manager Rufino Carbajal, Jr., speaking on behalf of CUNA, told the committee, at least the three Senators who attended, that credit unions are working hard to serve the `unbanked.’ Many credit unions, including his own he explained, offer programs such as First Accounts and Individual Development Accounts through Treasury, financial education, affordable housing, low-cost wire transfers, and `payday’ lending alternatives. “I believe there is a niche out there.There is a lot we can do out there for those people and it can be profitable,” Carbajal commented. Another on the panel added that programs for the underserved have to be profitable in order to be self-sustaining. All some low-income and unbanked individuals need is the opportunity to grow wealth, the panel agreed. “In conclusion, I have witnessed first-hand that poor people want to work and know even with a little bit of savings they can grow and thrive,” Carbajal said. West Texas received funds from First Accounts through the Affordable Housing Credit Union Service Organization with help from the National Credit Union Foundation (NCUF). NCUF President Gary Officer said that the foundation worked with the state leagues to drum up interest in the program. NCUF issued a press release in January to alert credit unions to the grant possibilities and find out the level of interest in the new program. He reported that 25 credit unions and 13 states stepped up. Credit union organizations had initially asked for $3.7 million in grants of which they received more than $2.8 million. About $1.4 million of that went to NCUF-associated applications. “The system can now deliver local programs designed to meet local needs that can reach out to people who are currently unbanked and who will manage these banking services plus other sorts of financial literacy training,” Officer commented. “It’s a major coup for the foundation; it’s also a major coup for the industry” because some of the credit unions that responded to the foundation’s press release in January but decided to apply on their own did not get funded. The best news for credit union members is that while the federal government said it expected only 10-15% of the grants to go toward administration, the NCUF recipients capped their administrative fees at 8%, so 92% will be going toward the actual programs. “I’ve done several of these federal applications and the formula for success in a nutshell is you have to ensure that the vast majority of funds coming through goes to the program,” Officer explained. Later this year, Treasury will issue another Notice of Funds Availability (NOFA) for $2 million for a national organization to perform an evaluation of the First Accounts initiative. Officer stated that NCUF, jointly with the Filene Research Institute, will apply for these funds once the NOFA is made available. NCUF has already decided not to fund and complete its own study because they would have to raise the administrative fees, which would make the applications “less competitive in eyes of Treasury.” Ultimately, five credit union groups received funding for programs through First Accounts, including: Members First Federal Credit Union, Louisville, Ky. – $130,000 to connect 600 unbanked low- and moderate-income individuals in 64 census tracts in Jefferson County, Ky. and Belle, W.V. to insured accounts at insured depository institutions over one year. National Credit Union Foundation, Washington, D.C. (in collaboration with the New York Credit Union Foundation) – $765,806 to connect 2,100 unbanked low- and moderate-income individuals in rural and metropolitan counties of New York State – Albany area; New York City; Buffalo/Niagara area; and Tompkins, Washington, Warren, and Saratoga Counties – to insured accounts at insured depository institutions over two years. Latino Community Credit Union, Durham, N.C. – $1,334,000 to connect 6,600 unbanked low- and moderate-income individuals in two North Carolina regions to insured accounts at insured depository institutions over two years. National Credit Union Foundation, Washington, D.C. (in collaboration with El Paso Credit Union Affordable Housing, El Paso, Texas) – $92,504 to connect 4,000 unbanked low- and moderate-income individuals in El Paso and El Paso County to insured accounts at insured depository institutions over two years. National Credit Union Foundation, Washington, D.C. (in collaboration with the Washington Credit Union League ) – $532,570 to connect 14,100 unbanked low- and moderate-income individuals in California, Nevada, Washington, Oregon, Idaho, Montana, N.D., and Utah to insured accounts at insured depository institutions over eighteen months. “We were very pleased at the large number of high-quality and innovative proposals we received,” Assistant Secretary for Financial Institutions Sheila Bair said. “Our hope is that these projects will serve as models for others in their efforts to reach the one in 10 American households that are unbanked.” “These grants have the potential to greatly assist these credit unions in their efforts to extend affordable financial services to folks from all walks of life.I commend the Treasury Department for recognizing the role that credit unions can play in these underserved communities and we are pleased that so many credit unions applied for participation in the First Accounts program, NCUA Chairman Dennis Dollar said. The agency issued a Letter to Credit Unions (02-FCU-03) notifying federal credit unions of the potential funds. The letter, signed by Dollar, noted the 1998 Federal Reserve Survey of Consumer Finances’ finding that almost 10% of American families lack either a checking or savings account. The other grant recipients included nonprofit organizations, depository institutions, and faith-based organizations. The 15 were selected from 231 applications from 38 states. Awardees have pledged to open banks accounts for 35,400 unbanked people across 25 states. The awardees will implement projects that provide financial literacy training, connect individuals to insured accounts, develop low- or no-cost products and services, and increase access to financial services through installation of automated teller machines. The projects focus on a wide variety of unbanked people, including youths, new entrants to the workforce, recent immigrants, residents of low-income communities, residents in rural areas, native Americans living on reservations, public housing residents and families using child care facilities. Congress appropriated money to Treasury for the First Accounts program to provide grants for the development of financial products and services that can be used as models for other underserved communities without the need of ongoing public subsidies. The funds are also intended for financial education efforts. Aside from insured depository institutions, the grants are available to employers of unbanked low- and moderate-income individuals, community development financial institutions, nonprofit organizations, states, local governments, Indian tribal governments, faith-based organizations, and labor organizations. Groups that participate in `lobbying activities’ are ineligible. [email protected]</p>

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