October 23, 2009 | 
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Let’s all help responsible people get needed loans
Imagine policy initiatives designed to support access to responsible and fair financial services for low-income families. Hold onto your hats, wonderful readers, as we explore a campaign to provide direct, responsible, financial services to 200,000 under-banked households in our great state of California.
A week ago, some of us drove from Sonoma to Stanford University to hear a talk by the founder and CEO of my favorite financial institution, the Self-Help Credit Union (SHCU.) We were so inspired by not only the words but the entire demeanor of Martin Eakes that all the way back to Sonoma we could not, even if we’d wanted to, come down off the high of hopefulness we’d experienced.
Eakes told us if you ask whether he’d prefer to loan money to a rich person or a poor person, he’ll answer without hesitation that, strictly on the basis of credit risk, he’ll chose to loan to a poor person – every time.
The credit union he founded in 1984 has become one of the largest lending institutions anywhere because, as Eakes says, “Self-Help has been there when people needed help.” During its first 11 years, SHCU focused on single mothers with small children who wanted to make life better for their kids.
Some called Eakes a crazed-fool, telling him he would surely go under. When the CEO asked the audience to guess how many of those loans had defaulted in that 11-year period, his self-effacing manner stepped aside for a moment as his soft North Carolina drawl proclaimed with obvious joy that there was not one single loss in all those 11 years.
Today the Self-Help Credit Union has loaned nearly $6 billion to people generally consider not credit-worthy, with total losses of less than one percent.
When this lending professional speaks of “being there when people needed help,” he’s speaking of not only a checkbook. Self-Help has been there with the know-how, the training and the support needed by the home-buyers, small businesses and nonprofit organizations who receive the loans.
That’s why the success rate is phenomenally high. Investments in training personnel to offer classes in home management and entrepreneurship and further investments in solid but neglected buildings to remodel for service as centers for new businesses have paid big dividends
An interesting additional result of such successful lending appeared after about 10 years; people sought another loan so they could send their kids off to college. “Family wealth,” Eakes espouses, “allows folks to make long-term choices.”
An important element of Eakes’ presentation was a thorough explanation of financial inequities among populations and cultures in the United States. There is far too much information to provide here – perhaps another column.
Eakes saw severe problems in 1999 in the way subprime loans were being structured. So he led a successful fight in North Carolina for anti-predatory-lending laws and then helped 23 other states to also pass such legislation.
You may ask, “Just how does Self-Help intend to help a significant number of low-income households in California right in the heart of economic crisis?” And, “Is there a way I can help?”
California’s Credit Unions are struggling: 17 percent are at or below capital requirements and 88 percent lost money in the first quarter of 2009. Meanwhile, SHCU has more than a billion dollars in assets besides its proven record against predatory lending practices. Also, Self-Help is positioned to work with challenges of today’s economy due to a long-standing policy of setting aside 10 percent of earnings for “rainy days” like today.
Self-Help wants to bring together California’s struggling credit unions for mutual support and success and has been making progress since 2006, through an office set up in Oakland. They’ve merged with People’s Community Partnership FCU (West Oakland) and Community Trust CU (Modesto, Riverbank, East Palo Alto.) The opening of a SHCU branch in East San Jose is planned for late this year and new depositors as well as philanthropic support are actively sought.
This is where you come in. I asked Eakes what he’d say to my readers.
“Well, we’d love to have your support,” he began. “We believe this is a terrific opportunity for California. And someone outside the state trusted us enough to provide a $30 million grant. We have so far $75 million in assets for the project with a goal of $300 million by the end of 2010. We depend on people willing to entrust Self-Help while putting their assets to work for good.”
I’ve never lost my trust though I’ve never stepped foot into any SHCU office or branch. Yet this organization has been handling most of my banking needs (including bank transfers from foreign lands) for some 25 years. I get beautiful satisfaction from knowing my puny assets help achieve SHCU’s mission of connecting low-income folks to the healthy side of our financial system.
You’ll receive competitive dividends, enjoy the fee structure for a checking account, bank by mail postage-free, get a good return on your investment in a CD, what else can I tell you? Only you can rest easy when your money is doing good; so much good for so many.
For more information: self-help.org or call Steve Zuckerman, Managing Director of the Oakland office – 510.379.5511. Tell him you want to be a member just like just joan.
Special note: To join current classes on NonViolent Communication, show up Monday at Sonoma Hills, 405 W. MacArthur St., at 6:30 p.m.
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