Do Americans Want or Need More Credit Union Charters?

The answer to the first question is easy.  On May 24, 2024 NCUA replied to Denise Wymore’s FOIA request for the number of new charters in any phase of the application process.

The response: “In June of last year it was reported there were 51. . .(Now) There are a total of 63 applications.”

Where is the Need?

NCUA did not provide details of the chartering efforts. Two broad examples of innovation by those looking for alternatives to the for-profit banking system have been covered in the genral press.

One example is the growing interest in “public” banks chartered by cities, counties or states to manage their funds and to support investments in local housing and other priority projects.  This is an example of an Oakland, CA based effort.

The second are those groups and/or communities not being served by existing financial options.

A long description of this demand is reported in this recent Washington Post analysis, Community crowdfunding is built on trust for immigrants.  The article gives two organic financial creations.  One is the Korean self-funding and self-help practice called Keh.  First developed in Korea following the Korean war, the financial practice was adopted in America by immigrants who were limited in the amount of funds they could take from to their new homes in this country.

The Post has followed this form of financing for the greater DC area over several decades.  In an article in 1990, it reported the Korean Association of Greater Washington estimated 80% of Korean American households belong to at least one keh.  It is the source of financing for local grocery and convenience stories, and more recently the ubiquitous food trucks serving the community.

The article states that Korean-American banks began to meet some of these local business finance needs in the late 1990’s with traditional SBA and other finance options.  “But the tradition of community-based microfinance has evolved and flourished in the years since-just as the economy has been reshaped by fresh waves of newcomers.”

“Unlike a traditional investment, the keh lenders earn no interest and no equity and have no say in the business. . .Instead, it is best understood as a trust-based financial support network that’s held together by concern over reputation.”  These efforts sound much like the original credit union model.

Financial Networks in the Latino Communities

The other example in the Post article is the creation of tandas among the Mexican community on both sides of the border.  Like keh, the immigrant communities rely on mutual trust; “the last thing they want is to be ostracized by their own community.”

One organization that is addressing the variety of financial needs of the immigrant community and those left behind is the Mission Asset Fund in San Francisco.  It is a 501(c)(3) tax-exempt organization that in 2022 had revenue of $7.7 million.  Its Annual Report describes programs of micro finance, startup funding and training programs involving almost 20,000 individuals.

The Credit Union Challenge

There are multiple organic, people-centered financial solutions for individuals and communities which are not part of America’s financial mainstream, including the credit union system.   They serve those at the outer boundaries of financial experience who lack the history and resources demanded by traditional institutions.

Instead, they rely on an individual’s character and local community when extending financial services.  The solutions are diverse, experimental, dependent on good will and trust.

In theory the credit union charter in all its diversity and potential should be an ideal fit for these circumstances.  But for that to happen there is going to have to be a reawakening of purpose and priority for the cooperative community.   The charter interest and economic needs are there—but is anybody paying attention to these groups and their potential  as new startups?



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