Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON – Funding for the First Accounts program, under which the U.S. Department of the Treasury made grants to financial institutions to help people without bank accounts to establish relationships with financial institutions, is stalled in the federal budget process and may be significantly cut from the level the Clinton Administration provided, according to the Treasury Department and congressional sources. According to the Treasury, the National Credit Union Foundation (NCUF) received almost $1.4 million of that allocation on behalf of credit unions and credit union projects around the country. Members First Federal Credit Union in Louisville also received $130,000 and Latino Community Credit Union in Durham, North Carolina, received just over $1.3 million. The Treasury Department has reported that the Bush Administration requested no money for the fiscal year 2002 appropriation for the program but that Congress appropriated $2 million for the program anyway. In the pending fiscal year 2003 budget, the Administration requested $2 million. The full House has appropriated $4 million dollars and the Senate Appropriations committee has approved $2 million. The appropriations bills have not been reconciled as of press time. The Clinton Administration appropriated $8 million for the program, which was distributed in May 2002. Treasury officials would not speak for the record about why the Administration has been reluctant to request more money for the program. But off the record one said that some in the Administration had “ideological differences” with a program that “provides money to financial institutions to do the marketing they should be doing anyway.” The program has also been hurt on Capitol Hill by perceptions among some lawmakers that it costs too much to achieve its goals, said one congressional source who said that the member she served would not likely back a large appropriation for First Accounts. The nation’s check cashers, 5,000 of whom are members of the Financial Service Centers of America (FISCA) are also on record as opposing the program, but representatives of the firm that handles FISCA’s government relations effort denied that their opposition had been enough to cut the program’s funding. “It’s no secret that our members oppose the program,” said Larry Sabbath, vice president of Sellery and Associates, a governmental affairs firm based in Washington. “But I think the Congress was able to come up with opposition to it on their own, on purely fiscal grounds.” Sabbath reiterated the observation members of Congress were disturbed by the relatively high cost per added account holder that some of the program grants carried. Sabbath said FISCA favored an approach which would integrate check cashers and depository institutions more closely, pointing out that the underlying reasons people don’t have bank accounts have yet to be addressed. “Even the Fed has found that 50% of the people who don’t have bank accounts used to have them,” he pointed out. Bill Crawley, director of program and grants for the NCUF, said that it was too early for critics to begin objecting to how efficiently the program spent its funds. “The program is really just getting off the ground,” Crawley noted, adding that “the best sign of how efficient the program is doing will come when the credit unions who got money in May meet or surpass their goals for new members that they put in their applications.” Two credit unions that received large grants under the program in May report already putting into place a number of the developments they anticipated in their grant applications. The $12 million Latino Community Credit Union, based in Durham, North Carolina, will open its third branch on November 22, according to the credit union’s chairman John Herrara. The funding necessary to jump start the branch opening is coming from the $1.3 million grant the credit union received from the First Accounts program, Herrera said. The credit union pledged to the Treasury Department that it would be able to add 6,600 members between two new branches over the course of the grant. The second branch funded by First Accounts will be in Winston Salem in about six months’ time, Herrera said. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.