Credit Unions and Justice

By Steve Waring

Credit unions, a longtime ministry within the Episcopal Church, will become more prominent if General Convention approves Resolution A084. That resolution calls on Executive Council to “authorize the establishment of an Episcopal Credit Union” and present a report to the Standing Commission on Social Justice and Public Policy by August 2014.

Before 2001, when Executive Council condemned predatory lending institutions, involvement in credit unions had been primarily restricted to dioceses and parishes, which experienced mixed success. Credit unions (member-owned, not-for-profit financial institutions democratically controlled by members) have existed for more than 150 years. They originated in Europe.

“There is a long history of church-affiliated credit unions,” said David Morrison, senior staff reporter for Credit Union Times. One of the first in the United States was chartered in New Hampshire in the 1930s for “people of modest means to pool their resources and have access to capital.”

In 2011, after suffering six-figure losses for two consecutive quarters, Florida Episcopal Federal Credit Union, a joint organization chartered in 1974 by the four Florida Episcopal dioceses, was acquired by Insight Credit Union, which was originally formed for employees of Bell Telephone. At the time of the merger, Florida Episcopal had 1,400 members and $3 million in deposits. A credit union affiliated with the Diocese of Newark was also absorbed. Once it is acquired or merged with another credit union there is no guarantee that its original intent will continue to be honored.

The Episcopal Community Federal Credit Union, an economic justice ministry within the Diocese of Los Angeles, was founded in 1992, after violent protests shook the poor South-Central neighborhood. Episcopal Relief and Development provided initial funding. It provides financial services in a professional, personal environment, said Urla Gomes-Price, manager and CEO.

“We offer accounts and counseling to second-chance accounts,” she said, “people who have had problems with banks before and have been shut out of the financial system. We can also offer start-up and small loans to help members re-establish credit.”

Gomes-Price said Episcopal Com-munity Credit Union also offers ATM and credit cards. In specific instances it has helped free individuals who have become entangled in debt to predatory lenders at interest rates so high that the debt, which might originally have been less than $1,000 in order to replace a broken appliance, is virtually impossible to retire.

Episcopal Community Credit Union is small with about 2,400 members and $3 million in assets, but the model has successfully been adapted elsewhere, perhaps most notably in the Diocese of Arizona. In 2009 the Rt. Rev. Kirk S. Smith saw a vision come to fruition with the creation of Episcopal Federal Credit Union, a division of an already established United Methodist credit union. Prior to his consecration in 2003 Bishop Smith had served for 12 years as rector of St. James’ Church, Los Angeles.

In three years Episcopal FCU has attracted more than 400 depositors, including 46 congregations. It holds about $3 million in assets, but its 65-year-old United Methodist partner holds more than $70 million in assets and a charter to accept new deposits from more than half the United States, according to Janet Kaiser, member development and member services specialist. It offers members full-service banking, interest rates above those of banks, and personal service.

The Arizona diocesan credit union might not exist were it not for a suggestion by an examiner from the National Credit Union Association who proposed working with the Methodists, said the Rev. Canon Timothy M. Dombek, Canon to the Ordinary and an associate director on the board of the United Methodists’ credit union.

Canon Dombek said that after Bishop Smith asked him to research establishing a credit union he learned that regulations vary by state and it was very difficult in Arizona. Canon Dombek said that when the examiner initially proposed the idea of a partnership, he was concerned about the loss of an Episcopal identity and objectives.

“She said we could call it anything that we wanted as long as we disclose that it is operating as a subsidiary of the UMC,” he recalled. “The Methodists went out of their way to ensure that our denominational identity was clear. We have a very good relationship.”

The United Methodist Church calls its judicatory regions conferences instead of dioceses. The credit union includes conference members in New England as well as every state in the Mountain and Pacific time zones with the exception of New Mexico.

Arizona supports a churchwide credit union and Canon Dombek said he hopes to give testimony when a committee decides which resolutions will proceed to the houses.

Last year at its convention the Diocese of Maryland approved a resolution to prepare a feasibility study on a diocesan credit union.

“A diocesan credit union could offer loans for debt consolidation; business start-ups; a used car; and appliances. They can offer credit to people who only have a job and the leverage of their word,” the resolution said. “Credit unions change lives every day.”

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