On December 18, 2015, NCUA announced the liquidation of Bethex FCU in the Bronx, New York. Bethex founder and former CEO, Joy Cousminer, and the Bethex staff served and supported very low-income consumers of the Bronx for the past four decades. Their commitment to service and cooperation have served as an inspiration for countless community development credit unions across the country. The loss of this iconic credit union is a significant blow to our shared mission of helping low-income consumers achieve financial independence.
A combination of legal and regulatory challenges stemming from providing account services to check-cashers and money remitters, the impact of the prolonged recession on small business borrowers in the Bronx, and the challenges of creating a new business model took its toll on Bethex. The Federation worked with Bethex's management to raise support, exploring every option to prevent conservatorship.
Once placed in conservatorship, the Federation immediately sought out a strong, minority CDCU to bid on Bethex to ensure that safe and affordable service to the Bronx continued. We advised during the due diligence process hoping to influence an outcome that would not only sustain, but grow credit union service to the Bethex membership and the Bronx community. The Federation was disappointed to learn that this bid was not accepted.
We immediately responded with the following:
- Engaging NCUA at multiple levels to express our concerns, question the review process and seek more transparency in future.
- Raising concerns about the lack of clarity in the review process to ensure that NCUA meets its obligations under Dodd-Frank to preserve minority credit unions. We are encouraged by preliminary discussions with Chairman Matz's office, who took a personal interest in preserving minority credit unions wherever possible.
- Initiated discussions with the acquiring credit union, US Alliance FCU to frame the importance of Bethex to our movement and the community. While US Alliance is new to community development, their leadership stated a strong desire to work with the Federation to develop the best possible outcomes for the Bethex membership and service to the broader Bronx community, maintaining flexibility in underwriting critical small consumer and business loans and rolling out some creative ideas for savings programs.
- Finally, we are providing concrete recommendations to NCUA to provide greater clarity in the review process for minority credit union mergers.
What can we learn?
I have heard from several of you with questions about Bethex and the implications for other small CDCUs. There are many lessons for us all. The key takeaways I hope to impart to our members is this: engage the Federation early if you are facing challenges with your credit union, business model and/or examination process.
Other CDCUs face challenges and struggles. In response, the Federation Board and staff have put initiatives in place to ensure that small credit unions get help if they need it. These include:
- Free Technical Assistance Hotline
- Accounting and Compliance Services
- CU Mentorship program
- rFaith Network, supporting small faith-based credit unions to develop revenue generating activities and increase service to members, grow the membership base and get more loans on the books
- Small Credit Union Board Committee, created to address the specific needs of small credit unions
- A series of workshops for small credit unions in locations across the country; these workshops will focus on the training needs of staff, board and supervisory committee members
- Workshops with a focus on small credit unions planned for this year's Annual Conference
For our growing CDCU members, we offer a range of initiatives to improve your service to members and grow your bottom-line:
- Immigration and Payday loan alternatives: to provide members with small loans when they need them most
- CDCU Spark Platform, providing support to package SBA loans to ensure the guarantees are solidly in place when you need them
- CDCU Mortgage Center to purchase non-conforming fixed rate mortgages
- Capital products, including non-member deposits, risk sharing deposits and secondary capital
The Federation is fully committed to providing support to small credit unions. We may not win every battle, but we can provide guidance, support and independent review as we continue in our shared mission of achieving financial independence for all. Small credit unions should contact Pam Owens at email@example.com and Nachi Abood at firstname.lastname@example.org with questions about our small credit union initiatives or for support today!