Consumer Alert: CEO says a public bank would allow her credit union to help more low-income borrowers

Consumer Alert: Credit union CEO says public bank would mean more low-income borrowers helped

Consumer Alert: Credit union CEO says public bank would mean more low-income borrowers helped

It is the 11th hour. State legislators were likely drinking caffeine by the gallon Friday night as they tried to get bills passed before the session ended. One of those bills would establish a public bank in Rochester.  It’s a concept I shared with you on Tuesday, and supporters say it would be the vehicle through which the more people of color could get loans.

After that story aired, Melissa Marquez, the CEO of the Genesee Co-op Federal Credit Union, contacted me and shared her very interesting perspective. Unlike other local leaders of financial institutions, she strongly supports having a public bank.
The New York State Community Equity Agenda coalition released a stunning analysis of mortgage data in Monroe County. It revealed that in 2022, banks in Monroe County loaned would-be homebuyers five cents in communities of color for every dollar loaned in white communities. 

its findings echoed that of the New York Attorney General’s report on homeownership.

But the Genesee Co-op Federal Credit Union has a special designation from the U.S. Department of Treasury because the majority of their members are from Rochester’s low-income households. So the credit union focuses on people who are looking for that first mortgage loan, a loan for a start-up businesses or folks hoping for a second chance. Marquez says the institution also helps people re-finance predatory loans from other banks.

:”I’ve seen a borrower at 31 percent interest, at 44 percent interest,”: said Marquez. “It was a loan from a bank in Delaware. it was an African American young man who had gotten out of prison. and that was the loan he got for a car that he needed to be able to get to work.”

She says she’s often able to help the borrower refinance for half or less than half of the interest rate of the original loan. While it’s not possible for every borrower, that’s always the goal. Marquez says a public bank would help them help even more people. The public bank would be a wholesale bank, which means it wouldn’t provide services to individual clients. Instead, it would work with large clients, like Genesee Co-op Federal Credit Union. For example, the public bank could buy a package of loans from Genesee Co-op.

“These would be seasoned loans,” Marquez explained.  “So, the public bank isn’t taking the risk. These are loans that have been performing. And so, we pass those along. We get money into our institution to do more lending.”

And that’s why she so hopes the public bank bill passes.  It would allow her $40 million institution to provide loans to even more low-income borrowers.

But the majority of executives at financial institutions in our area are deeply opposed to having a public bank because they believe it would weaken our area’s banking community by competing with private banks.

Assemblyman Harry Bronson is one of the sponsors of the public banking bill, and a representative at his office told me the bill was still being discussed as of Friday afternoon. Discussions about that bill and a slew of others could go well into the night. And of course, we’ll be watching.  

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