Call to Action: New Orleans Disaster Requires Creative and Collective Solution

In the wake of Hurricane Katrina, restoring capability to help the over 230,000 members access their savings is paramount, and achieving this requires a collective response.

 
 

As the daily news reports from Louisiana and Mississippi attest, Hurricane Katrina has had a devastating impact on the lives of innumerable people. In the face of one of the nation's worst natural disasters, credit unions need to re-establish their presence in the affected areas as soon as possible to provide members and their families access to their savings.

In the New Orleans area, at June 30, there were 54 credit unions with 94 branches that were most likely all closed by Katrina. Over 230,000 members do business with these credit unions, holding $874 million in share drafts and nearly $600 million in loans. Many of these members depend upon their credit union as their primary financial institution. 85 percent of these credit unions (46 of the 54) operate from a single branch, many of which are completely inaccessible..

Credit union staff and their families have been affected as well. Over 617 employees worked for these New Orleans-based credit unions and many may be without work or shelter for weeks if not months. The number of credit union employees and members is significantly larger when you include the damage from the greater Louisiana and Mississippi.

According to Bucky Sebastian, chief executive of GTE Federal Credit Union ($2 billion, Tampa, FL), which operates four branches in New Orleans through a 2004 merger with NOME FCU, the paramount issue for the credit union community is to meet the people's immediate needs. "The credit union community must try to establish a presence near the affected areas as soon as possible to show that we are here, here to help, and we are not leaving you." The solution requires the credit union community to "think big" and act quickly, says Sebastian.

While Katrina has had devastating effects on individuals and communities, it has also adversely impacted the credit union institutions themselves. In New Orleans alone, much of the collateral backing the $264 million in auto loans and $163 million in real estate loans has been destroyed. In total only $367 million of the total $1 billion in assets are in investments, creating a half billion shortfall between members' total savings and immediately usable assets.

The issue becomes how are the members and credit unions alike going to resume service and rebuild themselves without start-up capital. With the majority of the affected credit unions operating with a single branch, how can they restore member service in the quickest, most effective manner? What services are going to be necessary to meet the unique needs of these members as they put their lives back together over the next weeks, months, even years? How do the credit unions recover as institutions to meet these needs and restore themselves?

In addressing the challenge from this event, credit unions should seize the opportunity to collectively use the resources and uniqueness of the credit union system to rebuild and create an even better credit union option for tomorrow. For example why not charter a greater New Orleans community credit union right now, subcontract the operations to an existing credit union, and transfer the shares and any recoverable assets to this new entity? One place to go, one name, one operation. The key will be to put an operational capability in place NOW.

 

 

 

Sept. 5, 2005


Comments

 
 
 
  • Hello, My sister live and work in New Orleans,LA as a nurse at one the local hospitals. She was leaving for work on Sunday, gathering all her personal belongings (extra clothes, important papers, etc...) before she left, and forgot her state idetification, and ATM Card. She has her Bank Account # but, she has no access to the funds available in her account. She's now in Atlanta, Ga with her daughter and son, what steps she take to get access to her funds at one of the Credit Unions in New Orleans. My name is Darren Stewart and live in Lawrenceville, New Jersey
    Anonymous
     
     
     
  • Good Idea. I wonder though what is going to be done to help these people when they obviously will have no means to repay their debts any time soon. I'd like to know what the banks, credit unions and creditors intend to do to help these people. My suggestion is forgive their debts since they obviously are going to be going without for a very long time, with no fault of their own.
    Anonymous
     
     
     
  • Innovative idea!
    Anonymous
     
     
     
  • It is possible I have access to a newly constructed auto dealership that was not damaged very badly in Slidell. Is it an idea that the credit union might be set up inside that dealership to launch it's organization? If interested, my e-mail is TLaugesen@cscu.com. or 719-482-7710
    Anonymous
     
     
     
  • It's hard to imagine the extent of the devastation. Collectively we can help to aleviate some of the loss.
    Anonymous
     
     
     
  • You are so right Bucky, we ALL need to put our heads together, work together and provide viable solutions to the employees and thier members. I had heard through one of the media resources that someone was trying to get a mobile home park set up near New Orleans to provide some housing for these folks. It's a wonderful idea but they are obviously going to need some funds to do that. I think this may be a wonderful opportunity for our spirit of "People helping People" to come alive and provide some low rate or no rate financing to the companies who are wanting to do this. In addition, those credit unions in the outlying areas as well as the areas in which people are being relocated, who are in the market for additional staff need to seek these employees from the devastated CU's out and hire them.
    Anonymous