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PACOIMA, Calif. – Roberto Barragan would like nothing more than to shut down the check-cashing businesses and payday lenders he says prey on and exploit the low-income immigrant community here. And he’s hoping to do just that when he throws open the doors of the Pacoima Development Federal Credit Union (PDFCU), a new CU that not only has the backing and support of one of the largest credit unions in the nation, but the backing and support of two major banks in the community as well as the City of Los Angeles and a U.S. congressman. “It’s been an incredible partnership between institutions that don’t normally work together but have come together specifically to help Pacoima,” Barragan said of the strange bedfellows. For Barragan, the chartering of the credit union caps a 10-year effort of bringing mainstream financial services to northeast San Fernando Valley, a densely populated area which he says has a 19% unemployment rate, a staggering 30% poverty rate and where 55% of the residents are high school dropouts. “If Pacoima was in any other area of the country, it would be a major focus [for assistance],” he said in an interview with Credit Union Times. “But because it’s in LA – and you have south LA and east LA and all their problems – Pacoima has been getting the short shrift.” With the opening of Pacoima Development FCU in its permanent location scheduled for Cinco de Mayo (May 5), Barragan hopes to begin changing all that. A temporary facility housing the credit union is expected to be operational in March. “We are direct competition to the fringe financial institutions that are operating here in Pacoima,” he said, contending that those operations have “victimized” the area. “That’s our real big focus. “I think we’re going to bring a real alternative to the check cashers,” Barragan said. “That’s the way we brought it to Pacoima. We have 15 check cashers and payday lenders in Pacoima right now. They’re the ones exploiting this community. So we’re saying our credit union is an alternative to them.” The credit union’s field of membership will be open to Pacoima residents as well as anyone who lives, works, worships, attends school or owns a business in the northeast San Fernando Valley area. “The field of membership is made up of good, hard-working residents who are striving to attain the American dream of home ownership, save for a brighter financial future and seek financial self-sufficiency without being forced to rely on the pawnshops and check cashing outlets that have proliferated in the neighborhoods of the northeast San Fernando Valley,” he said. “This credit union will give them a chance to see those dreams come true.” Barragan, chairman of the non-profit Valley Economic Development Center (VEDC), which provides finance, consulting, training and workforce solutions for businesses throughout Southern California, will initially serve as president and chief executive officer of the credit union. Barragan has been the driving force behind establishing the credit union, which will be housed in what was once the A&A Pawn Shop on busy Van Nuys Boulevard. He was also instrumental in getting Wells Fargo Bank to open a branch in the area in 2003 and before that in attracting another bank, which after multiple ownership changes, is now Citibank. In an unusual move, both of those banks are financially backing the credit union. Each has contributed $100,000 in capital and deposits, while the City of Los Angeles has kicked in an additional $300,000. The banks have made multiple year commitments at zero percent interest, he said. Spokesmen for both banks praised the credit union during a recent sidewalk press conference announcing the chartering of the credit union by the National Credit Union Administration. “In supporting Pacoima Development Federal Credit Union, Wells Fargo sees the credit union not as a competitor but as a partner to serve the unique financial needs of the community,” said Marla Vasquez, vice president/district manager for the bank. “We all want the residents of Pacoima to take advantage of the financial products and services that are available to them. We welcome PDFCU and know that your presence will make a difference in the lives of Pacoima residents for years to come.” Susan Walters, community relations director with Citibank, echoed those sentiments. “As a global company, we know how important creating financial opportunities for everyone is,” she said. “It benefits all of us. “We’re here because it makes good business sense,” Walters added. “We’re here because it helps our community, our customers and we’re here because it’s the right thing to do.” Barragan said with the financial support of the banks and the City of Los Angeles, he expected the credit union would open with $500,000 in capital and some $1.2 million in deposit pledges. Wescom Credit Union has served as a mentor to the fledging PDFCU, helping it hone its business plan over the last several years. It is helping to design the credit union and will provide technical and data processing services at no charge for at least the first two years. Wescom announced it will open a $100,000 certificate of deposit at PDFCU for three years and waive the interest for that period. It will also provide an ATM to the credit union and provide maintenance and support for two years. “We are real pleased to be able to do this,” said Joe Schaeffer, Wescom’s senior vice president for planning and development. “It’s the right thing to do.” The California/Nevada Credit Union League had a hand in helping Barragan get the credit union concept off the ground. “It’s been a team effort and the league has been happy to play a small role the last couple of years,” said David L. Chatfield, the league’s president and chief executive officer. Chatfield agreed that the Pacoima area was in desperate need of the financial services that a credit union could offer. “This is an area where so much is needed and not available,” he said, noting that the PDFCU would exemplify the credit union credo of “people helping people.” “Nothing represents that more,” he said. “The people in this area who are underserved need services probably more than anywhere else. This credit union will allow them to have those services in a way that’s more needed than in most areas you can think of.” Chatfield also pointed to the “lifeline services” legislation announced by Democratic U.S. Rep. Brad Sherman of California that would allow credit unions to offer low-cost services, such as money transfers, money orders and check cashing, to any person in their field of membership regardless of whether they belonged to the credit union. “The lifeline services bill will allow credit unions such as this one to do things that they wouldn’t be able to do if they had to wait to develop a full membership body,” he said. Barragan lauded Sherman for his support of the credit union. Sherman was in Washington and was unable to attend the news conference. Chatfield, who has been leading the charge against the banking industry’s attacks on credit unions, said the cooperation between the PDFCU and Wells Fargo and Citibank was a rarity. Such banking support is “unusual except in a few cases where banks have really seen the need in underserved areas and have stepped in to be partners in this endeavor,” he said. “We’re pleased that Wells Fargo and Citibank were able to step in with some donated capital and some low-cost deposits to help get things off and running.” “This is really a unique partnership. This is something you don’t often see,” he said. Chatfield noted that it was timely that the sidewalk press conference was being held on Valentine’s Day. “This is appropriate that this is on Valentine’s Day because this is something that comes from the heart to form an organization that does have a heart,” Chatfield said. Los Angeles City Council President Alex Padilla, a staunch supporter of the credit union, also noted the Valentine’s Day tie-in. “Valentine’s Day is commonly known for giving a box of chocolates or a bouquet of flowers,” he said. “But today, I think we’re giving to the community of Pacoima the best gift you could possibly give on Valentine’s Day. That’s a little bit of love and whole lot of respect.” Padilla, standing outside what was once the A&A Pawn Shop, noted the irony that the building would soon become a credit union. “What a symbol, to go from a pawn shop to a credit union where the dreams and ambitions of so many hard-working people who own businesses in Pacoima and who live in Pacoima will become a reality,” he said. Barragan said the opening of the credit union would be a boon for residents of the San Fernando Valley, where he reported there were more than 320 check-cashing businesses in operation, mostly in low-income Latino neighborhoods. “They’re exploiting people here,” he said. “They’re providing no alternatives for savings. They’re providing no alternatives to build assets. They are charging way over what it costs to send a remittance to Mexico or El Salvador. They are charging more for money orders. “People think that’s their only alternative,” Barragan added. He also contended that used car dealers were charging 26% interest for auto loans. The credit union plans to offer affordable used car loans when it opens, he said. Barragan said he expected little difficulty in attracting members to the credit union. The VEDC has been offering free electronic tax return filings for local residents for the past three years, filing more than 500 returns, and has been getting pledges from those residents to become members. VEDC also has been conducting financial literacy classes for the past four years and expects many of the people who went through those sessions to also become credit union members. Barragan admitted the road to becoming a credit union has been a bumpy one. “I’ve been in economic development for 20 years now,” he said. “I’ve done real estate. I’ve done large loan programs. But this is the hardest thing I’ve ever had to do. This is the hardest thing, but is the most gratifying thing that we could have done.” -

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