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MILWAUKEE-In a bid to combat rising volume at payday loan shops and steer low-income borrowers and savers into credit unions, the Wisconsin Credit Union League has formally debuted a partnership with Filene Research Institute to produce a new “service model” – going beyond check cashing and wire transfer – that could eventually be expanded nationwide. The league said it expects some 30-50 Wisconsin CUs-particularly those serving large minority markets – will sign up for the Filene training and service package over the next 12 months as the industry seeks “alternatives” to payday business. Eventually, more state leagues will be asked to join Filene’s “Real Solutions” project which seeks to “educate and encourage” low-income residents to switch to a CU because of services unavailable at payday lenders or check cashers, said Filene. The Wisconsin League, however, said it is seeking a new “brand” that might resonate more with consumers than “Real Solutions” and on that point the league staff is working with Filene to come up with a marketing vehicle. In the meantime, the league said it plans to start a series of “information” and training meetings to educate CUs on the Filene project with the first sessions slated Oct. 27 and Nov. 1 in Milwaukee and Madison. The partnership was announced during a press event at Brewery CU, a $23 million institution in a black/Hispanic area on Milwaukee’s north side that will follow so-called Filene “guidelines” in approaching the low-income market. And on that score James Schrimpf, president/CEO of Brewery, said Brewery for starters expects to lower wire transfer and money order fees ($1.00 to .50), as well as start offering stamps, envelopes and bus passes – all products available at payday shops. “When we ask our members why they even go to these places with those rates, they tell us because they can get these extra services that they can’t get here,” said Schrimpf. Brewery, he said, is considering offering non-member check cashing services, which has been tried in recent months at several Milwaukee and Madison CUs under Filene prodding. “I’m not sure we’re ready to hang out a neon sign that says check cashing,” said Schrimpf. He acknowledged, however, that Filene’s overall work on the “unbanked” over the years “has certainly opened our eyes on what we should be doing.” Schrimpf said for CUs like his it has long been a matter of survival and on that point Brewery is an example of an institution that survived an ill-fated branch expansion some eight years ago when it opened and later closed a facility in suburban Menomonee Falls. “With losses reaching $100,000 a year, we needed to stop the bleeding and realize that we had to serve our core members,” said Schrimpf in discussing a remarkable turnaround with Brewery earning $300,000 in 2003. Joining the Filene/league news briefing at Brewery were CEOs from some 18 Wisconsin CUs, including some of the state’s largest, who joined in the “kickoff” announcement and then took part in a Filene reception. Also on hand was Suzanne Cowan, director of the Wisconsin Department of Financial Institutions, and Mark Marotta, administrative secretary to Governor James Doyle, who said the state encourages and supports the initiatives of the league to reach out to low-income residents in offering alternative services to payday lenders. Brett Thompson, president/CEO of the league, said the goal of the Filene partnership is to draw low-income consumers into the mainstream banking system, where they can begin to save money. Thompson said Wisconsin “can no longer afford to let citizens with the desire and ability to be self-supporting drown financially because they lack the wherewithal to get on solid financial footing.”The league noted that about 80 of the state’s nearly 300 CUs offer check-cashing services to non-members.Thompson said CUs would be willing to make short-term loans while also offering guidance to keep people from amassing too much debt. The league cited Wisconsin’s growing Hispanic and Hmong populations as possible targets for the newest outreach. It was noted at the briefing that some Wisconsin banks already are making inroads with the Hispanic population, offering flat-fee wire transfers and programs that allow immigrants to open accounts even if they lack Social Security numbers The league noted that every one in five Wisconsin families, roughly 22.8%, are considered low income and on that score, CUs in the state “have been working to divert people from predatory institutions. “The payday lenders and check cashers “prevent low income families’ ability to accumulate assets and establish a credit history,” charged the league. Filene officials said back in September that apart from Wisconsin it has lined up several other state leagues, which it did not identify, as joining “Real Solutions” and ready to sign agreements. Filene debuted its “Real Solutions” package to Wisconsin and Wyoming CUs in September in a chapter and annual conference swing by Filene’s new project director, Lois Kitsch, a former aide for the World Council of Credit Unions. Kitsch, who spoke at the Brewery briefing, was joined by representatives from CUNA Mutual in Madison and by CUNA staffers. -

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