People Power and Democratic Banking? Look No Further Than Your Local Credit Union
Photo Credit: GRITtv.org
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Editor’s note: This is a transcript of Laura Flanders’ interview with Linda Levy for GRITtv.org.
A financial institution you can run? Better than that, a financial institution you and your neighbors can own and manage in your neighborhood? Credit unions are exactly that and they’re getting a fresh look since the so-called Great Recession, which they weathered a whole lot better than many private banks. What’s a credit union? How is it different from a private bank and what laws hold credit unions back? To talk about that and more we’re happy to welcome Linda Levy, CEO of the Lower East Side People’s Federal Credit Union. It has been serving people and businesses on the Lower East Side and Central Harlem in New York since 1986.
Laura Flanders: So, tell us how much money have you lent out since 1986?
Linda Levy: Amazingly enough, we have lent out $65 million.
LF: Sixty-five million dollars! Who has it gone to?
LL: It has gone to the people that live and work on the Lower East Side and since 2005 also to people in Central Harlem. It is mostly low-income people and local small businesses.
LF: Describe for a little bit the scene on the Lower East Side when you started. You were there at the start in 1986, right?
LL: The East Village, Lower East Side back then was a lot of drugs, it was very impoverished, the city had basically abandoned the community, the banks had abandoned the community, which is why our credit union got started. So it was a very different place than it is now.
LF: So you had been working in co-ops but mostly food co-ops, consumer co-ops.
LL: Yes, before that I had been working food co-ops and got to the point where I felt that the food co-op movement was not really able to make major social change because of a lack of capital. So I thought, let’s see about getting access to capital for low-income people and then I found out about credit unions.
LF: So how do credit unions do that for people and what makes them different from a private bank?
LL: Credit unions are owned by their members and only lend to their members. Our credit union started and served only people who lived between 14th Street and the Brooklyn Bridge, from Bowery over to the East River. The only people who could borrow from us who would join the credit union and were owners of the credit union. So all the money that they put in went back out into the community and never went anywhere else. So Bank of America, City Bank, they may have a branch in a neighborhood but their money can go wherever they choose to invest it.
LF: On this question of ownership, who owns it and how is it run?
LL: Credit unions are democratically run: one member, one vote. Every member has the right to vote for the board of directors, the board of directors sets the policy, we have an annual meeting every year at which the members come and exercise their vote, but the main point of it is one member one vote, which is very different than how it is done in banks where you get more votes if you have more stocks.
LF: Are they voting on who to lend money to?
LL: The membership at large doesn’t vote on who to lend money to, but we do have a credit committee which is elected by the membership.