Consumer Alert: Credit union CEO says public banks will help more low-income borrowers
It’s the final stretch. State lawmakers were probably drinking gallons of caffeine Friday night, trying to get bills passed before the session ends. One of the bills would create a public bank in Rochester, an idea I told you about on Tuesday, and which supporters say will help more people of color get access to credit.
After the news aired, Melissa Marquez, CEO of Genesee Co-op Federal Credit Union, contacted me and shared a very interesting perspective: Unlike other local financial institution leaders, she is a strong supporter of creating a public bank.
The New York State Community Equity Agenda Coalition Surprising Analysis Monroe County banks lent 5 cents to homebuyers in communities of color for every dollar they lent to white communities in 2022, according to Monroe County mortgage data.
The findings were consistent with those of the New York Attorney General. report About homeownership.
But Genesee Co-op Federal Credit Union has a special designation from the U.S. Treasury Department because most of its members come from low-income families in Rochester. So the credit union focuses on people looking for first mortgages, loans to start a business or to get back on their feet. Marquez said the institution also helps people refinance predatory loans from other banks.
“Someone borrowed at 31 percent, 44 percent interest,” Marquez said. “It was a loan from a bank in Delaware. It was an African-American young man who had just gotten out of prison. And it was a loan for a car that he needed to get to work.”
Marquez says he’s often able to help borrowers refinance for half or less of the interest rate on their original loan. That’s not possible for every borrower, but it’s always the goal. Marquez says a public bank could help even more people. Public banks are wholesale banks, which means they don’t serve individual clients. Instead, they work with large clients like Genesee Co-op Federal Credit Union. For example, a public bank could buy a package of loans from Genesee Co-op.
“These are loans that have been worn out,” Marquez explained, “so the public banks are not taking the risk. These are loans that have proven themselves. So we turn them around. We put money into our institutions to make more loans.”
That’s why she’s so keen to see the public banking bill pass, which would allow her $40 million institution to provide loans to many more low-income borrowers.
However, the majority of financial institution executives in our region are strongly opposed to the establishment of a public bank because they believe that it will weaken the local banking industry by competing with private banks.
Rep. Harry Bronson is one of the sponsors of the public banking bill, and a representative from his office told me the bill was still under debate as of Friday afternoon. Debate on this and many other bills could continue well into the night, and of course we’re watching it closely.
