NEW YORK and WASHINGTON -- Three years ago when New York Police Department Deputy Inspector Paul McCormack and Retired Sargent Kevin Madden traveled with their Gaelic Football club to play the Dublin Guards, they did not imagine they would come back with the mission to establish a credit union.

St. Raphael's Credit Union backed the competition and the whole experience "really opened our eyes and got the ball rolling," McCormack said. The duo and a handful of other volunteers researched other police credit unions in the United States and, in New York, there were not any credit unions offering products specifically tailored to meet the unique needs of law enforcement and their families. "We really want to gear something very distinctly toward NYPD and other law enforcement and their families," McCormack explained. The Finest's TIP--trade, industry, or profession--charter has a potential field of membership of 100,000 within the five boroughs of New York City.

"We have a very unique membership that have very unique needs--work all kinds of crazy hours, days off change."

Specifically, Madden said, the potential membership "didn't express any interest in just checking and savings. That caused us a great deal of concern at the beginning." What they found the potential members were in dire need of was financial planning for everyone from cadets, who do not make a lot of money but have to purchase uniforms and Kevlar, on up to retirement planning. Due to their erratic work schedules, members wanted online banking as well.

"Our goal from day one," McCormack said, "was to have a financial institution--a credit union--that would have all the financial services, not just a basic start up."

Enter veteran credit union chartering facilitators, Venable Partners Bruce Jolly and Bill Donovan, in the chartering process of The Finest Federal Credit Union. "Basically, there was a concern about how we were going to support the activities we were proposing to offer and curiosity because they just haven't done it before," Jolly said in submitting the application to NCUA. He emphasized that they wanted to approach this credit union charter just like a charter for any other type of financial institution.

"On the deposit side, we are very clearly breaking the mold," Jolly stated. "The organizers have asked to have immediate authority to offer a share draft account. They've asked for immediate authority to offer a debit card. They've asked for immediate authority to offer home banking and Internet presence...That is not the norm." If everything receives NCUA's blessing, members of The Finest will have access to five Consumers Federal Credit Union branches through CO-OP Financial Services and Consumers' ATM network; all parties involved said that Consumers has and will continue to provide institutional knowledge and back office support. Consumers Chief Operating Officer Keith Stone will serve as CEO of The Finest.

Jolly continued, "In addition, on the lending side, normally credit unions are limited to small, unsecured personal loans. We've asked for authority for everything from first mortgage lending to business loans, simply because that is what the members have indicated that they need." He pointed out that police officers often retire at a relatively young age and many start up their own businesses; the organizers identified more than 1,000 small businesses owned by current and retired NYPD officers.

"The heavy lifting has been done by organizers," Donovan commented. They identified very finely tuned needs, such as looking at a policy to forgive debts of NYPD killed in the line of duty. "That is certainly a very unique characteristic of their field of membership that speaks to the guys and women that are organizing this credit union," he said.

Jolly added, "Again NCUA is not accustomed to granting that kind of flexibility." He said he is confident the organizers have provided NCUA with enough information to "warrant its full consideration."

"The truly beautiful thing for us as credit union lawyers," Jolly said, "was to work with a group that understood the benefits of this form of financial service provider and the fact that they really do understand how you can take a discreet group of employees in law enforcement and craft something that meets their needs. That's just so absolutely credit union-ish if you will--what it's all about. Made it easy for us to put the effort in."

The credit union has been pre-approved by NCUA for a low-income designation, according to Donovan, which was key to the plan. McCormack, Madden, and others rounded "extensive and exhaustive" data from each of the law enforcement agencies in New York City to determine where they lived in order to receive the low-income designation.

"The ability to access secondary capital and nonmember deposits frankly was a critical part of the plan," Jolly said. While the Venable attorneys could not name names, Donovan said. "I think it's fair to say there is a significant expression of interest and some verbal commitments." However, nothing comes in the credit union until the day the doors open.

In addition to that capital, a CUSO has already been chartered to help fund the credit union as well as provide services that the credit union may not be able to perform on its own.

McCormack, Madden, and the others have spent long hours and traveled around to learn more about the credit union movement and get the application prepared. However, they agreed, it likely would not have been possible without the support of many working in the credit union movement from Consumers Federal Credit Union to Venable to Membership Marketing Support Services (which Madden said has basically worked pro bono so far). St. Raphael's Credit Union Chairman Dermot Hobbes even traveled from Ireland to New York City to meet with the organizers in the beginning and NCUA has offered up advice through an economic development specialist, who also ran a seminar the entire seven-member board of The Finest FCU attended. The police unions and organizations have also lent their support to the plan.

Additionally, the credit union charter application got the endorsement of nine members of the U.S. House of Representatives, including House Financial Institutions and Consumer Credit Subcommittee Chair Carolyn Maloney (D-Manhattan, Queens), House Financial Services Committee Member Peter King (R-Long Island), Jose Serrano (D-Bronx), Vito Fossella (R-Brooklyn, Staten Island), Anthony Weiner (D-Brooklyn), Tim Bishop (D-Long Island), Yvette Clarke (D-Brooklyn), Tom Reynolds (R-Rochester), and Brian Higgins (D-Buffalo).

McCormack and Madden said they were pleased to see light at the end of the tunnel. "We're a little nervous but very excited as well..." McCormack said. "This has been a dream of ours. We're basically still living it right now." He added that he hopes it becomes "a shining example."

That is exactly with Jolly and Donovan are hoping for as the chartering of federal credit unions has slowed from 563 in 1970 to 17 last year, according to NCUA's 2006 Annual Report. Over 200 charters were cancelled last year.

"There's very likely a direct relationship between the limited array of services that a newly chartered credit union can offer and the decline in the number of credit union charters awarded in recent years," Donovan said.

Jolly pointed out that about 130 new bank charters were granted last year. "The [credit union] charter's vitality depends upon being able to create new credit unions," he said. "We're looking for ways that can be duplicated that will allow us to responsibly charter new credit unions." Jolly said he believed The Finest has done that but the final test will be obtaining NCUA approval.

"If we can do this here, there is no reason why similarly motivated groups of organizers can't take this pattern we're establishing and duplicate it."

Jolly said there are three key ingredients to getting something like this done: 1) dedicated organizers with a solid FOM, 2) a partner credit union, like Consumers, to help with the learning curve, 3) finding a way to creatively fund, within bounds, the new entity. "They have a degree of drive and determination and commitment that is seldom seen," Donovan said of McCormack, Madden, and the others.

"This is no less difficult than a bank application," Jolly said. "To justify the products and services that we've sought to put on the table and ask NCUA to approve, these guys have had to go through the exercise of putting together financial statements, putting together a business plan, putting together a marketing plan, putting together policies and procedures for a de novo institution, which basically match those that you would find in a full-service credit union. And, frankly, volunteers aren't accustomed to doing that, yet they've been up to the task, each and every time we've said 'you've got to do this.'" While de novo banks can offer an excellent return to investors in a few years time, credit union organizers can only reap the benefit of credit union services.

Donovan cautioned that while submitting the charter application is a significant milestone, there will be a lot back and forth with NCUA as they review the application. McCormack said he hopes the credit union will be opening its doors in January.

Jolly concluded, "When you stand back and look at it, everything that comes together in this charter application just simply says, 'This ought to be done.'...Nobody yet has put together the pieces that allow a new credit union to offer all financial services that members would expect, and this application breaks that ground."

--scooke@cutimes.com

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