Bush initiative speeds up process for churches starting credit unions
Associated Press
TEMPLE HILLS, Md. — Most federal charters for credit unions arrive with little fanfare — a simple package sent through the mail.
Associated Press
But when None Suffer Lack Credit Union was awarded a charter last month, it was hand-delivered by Dennis Dollar, acting chairman of the National Credit Union Administration, with a heavy dose of gospel music.
From left, Dennis Dollar, acting chairman of the National Credit Union Administration, Norman Romney of From the Heart Church Ministries and the Rev. John A. Cherry of the African Methodist Episcopal Zion congregation celebrate as Cherry's church receives its charter.
The public show made of the usually mundane process was part of the administration's push to promote President Bush's faith-based initiative in an unlikely area — banking.
None Suffer Lack is sponsored by From the Heart Church Ministries, a 26,000-member African Methodist Episcopal Zion breakaway congregation that threw the high-spirited ceremony for Dollar.
It joined the nearly 500 religiously affiliated credit unions across the country that manage about $2 billion in assets.
There soon may be many more. As part the faith-based initiative, the NCUA has streamlined the process for churches to apply for charters, and is encouraging existing faith-based credit unions to expand beyond church memberships.
"As a result of the president's initiative, we're going to make faith-based credit unions a higher priority for our agency," Dollar said.
Since most faith-based credit unions are in lower income areas, they provide banking and lending to people whom many traditional banks shy away from because of their bad credit or low bank balances, Dollar said.
A shortage of banks also means many low-income people have to rely on payday lending outlets, such as check-cashing shops, that charge high fees and interest rates.
Credit unions would be a welcome alternative, he said.
That worries opponents of the faith-based initiative, who say it is another sign of the Bush administration relying on churches to provide social services that government should take care of.
"It just drops another social service problem on the steps of the church because the government is unwilling to deal with exorbitant lending practices in the inner city," said Barry Lynn, executive director of Americans Citizens for the Separation of Church and State.
Credit unions are nonprofits that offer banking services to a specific group of investors — employees at a company, alumni associations or members of a particular church. There are more than 10,000 nationwide with assets of $438.2 billion.
Faith-based credit unions aren't a creation of the Bush plan — they have existed for several decades.
A law that took effect in 1999 during the Clinton administration allowed church-based credit unions to grow beyond church memberships.
But Dollar wants to speed the application process for church-based credit unions by relaxing the filing requirements for federal charters. All credit unions will be eligible, but the NCUA is specifically targeting faith-based groups.
Rather than require fledgling church credit unions to outline plans for credit cards or other services that may be years away from reality, the agency now only asks for a start-up business plan.
Added services will be evaluated when they become available, he said.
Dollar estimates the new approach will cut the average application time from as many as five years to less than one.
None Suffer Lack was started with a $1.5 million investment by From the Heart Church Ministries.
The money will pay for administrative costs and the lease of a former bank that also has a drive-through window.
It will be open to all members of the church and their families, said Clinton Jones, the credit union's president and CEO.
He plans to have 1,000 members after the first year and $5 million in assets after the second.
The first savings account will be opened Oct. 1, and None Suffer Lack will eventually provide checking, loan services and credit cards to credit union members.
