Where credit is due

Low-income credit unions make the most of megabank mergers

The recent spate of merger mania in the banking industry has often hit minority communities the hardest, forcing residents to look elsewhere for their banking and financial needs as bank branches close.

But like knights in gold-plated armor, low-income credit unions (LICUs) have stepped in to fill the void, providing these neighborhoods with check-cashing services, small business and personal loans, as well as financial counseling.

And while LICUs often have to work with limited resources themselves, using volunteer and part-time staff and insufficient capital to provide for their constituents, a report released last year shows them to be flourishing. The Woodstock Institute in Chicago found that between 1990 and 1996, the number of LICUs rose to 356 from 244. During the same period, their membership also increased, from 343,000 to 850,000, while the number of delinquent loans dropped from 4% to 2%.

This growth is due in large part to technical assistance grants and a $15 million revolving loan fund established by Congress and administered by the National Credit Union Administration, the federal agency that oversees and insures the nearly 12,000 credit unions nationwide. LICUs also have the added advantage of being able to accept deposits from nonmember sources, such as larger credit unions or banks. For a listing of LICUs in your area, log on to blackenterprise.com.

True to their Depression-era roots, credit unions have provided, in their own small way, financial freedom to the man of modest means.

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