How 3 Credit Unions Tackle Systemic Issues

Special loan programs at cooperatives across the country address equity, financial deserts, emergency aid, and climate change.

 
 

Credit unions have long provided affordable, responsible financing for basics like housing and transportation to people who have limited access to such resources in their communities. But today’s credit unions are tackling other issues, too.

When problems or biases are so ingrained in systems that ill effects occur on a grand scale and across an entire body, credit unions respond with solutions that meet the needs of hundreds of millions of Americans across the socioeconomic spectrum. In addition to affordable finances, credit unions like Seattle Credit Union, Wright-Patt Credit Union, and Jesús Obrero Cooperativa are tackling systemic issues such as diversity, equity, and inclusion (DEI); financial deserts; emergency aid; and climate change. Here’s how these three are making their communities a better place.

“It’s a challenge to enter an area that has been financially abused and ignored. As a financial institution, we’re part of the system that caused these economic hardships. Asking them to trust us is a big ask.”

Richard Romero, President and CEO, Seattle Credit Union

A Focus On Financial Deserts And DEI

Seattle Credit Union ($1.1B, Seattle, WA) is in the midst of addressing a financial desert in a Tacoma neighborhood and creating an internal DEI board for which it will pay participants for their work.

Richard Romero, SCU’s president and CEO, says his nine-branch operation hopes to open a 10th by the end of this year inside a low-income housing building in the Hilltop community, a historically predominantly Black neighborhood in Tacoma.

Richard Romero, President and CEO, Seattle Credit Union

“They have no financial institutions and lack many basic services that are needed for a community to prosper,” Romero says. “It’s a challenge to enter an area that has been financially abused and ignored. As a financial institution, we’re part of the system that caused these economic hardships. Asking them to trust us is a big ask.”

Along with plans for a physical presence, SCU is addressing that challenge through community listening sessions, connecting with community leaders, and partnering with housing agencies to help restore and build wealth, Romero says.

Internally, the credit union is taking what Romero calls a completely different look at how it has been managing DEI issues, placing that responsibility with a new board rather than a single person.

Informed by his own service on several boards, Romero has led the creation of the Diversity, Equity, Inclusion, and Prosperity (DEIP) Board, which comprises a dozen employees elected by staff from across the enterprise.

“This ensures all levels of the organization are represented,” the CEO says. “We also decided to compensate this board because, all too often, people of color are asked to go beyond their normal duties to prove they contribute. We felt it was fair to ask them to perform a heavy lift if they’re paid fairly for it.”

The DEIP board — led by a DEIP manager who reports to the CEO — reviews hiring practices, policies, and procedures and also will be working on refreshing the credit union’s mission and vision statements, Romero says.

Read More About Seattle Credit Union

Fast Cash For Life’s Problems

With 456,000 members and 45 branches, Wright-Patt Credit Union ($7.2B, Beavercreek, OH) might be the Buckeye State’s largest financial services cooperative, but it’s not too big to pivot when it sees a problem it can address.

Devastating tornadoes on Memorial Day weekend in 2019 and the COVID-19 pandemic highlighted the need for members to access cash quickly and easily. In response, Wright-Patt has partnered with QCash Financial — a CUSO launched by WSECU — to offer loans of $200 to $4,000 through fast, contactless applications available online or by an app.

Wright-Patt launched QCash in September 2021. Within the first eight months, the big cooperative made 15,539 loans totaling $25.5 million, according to Eric Bugger, WPCU’s chief lending officer.

Eric Bugger, Chief Lending Officer, Wright-Patt Credit Union

“Members love the convenience,” Bugger says. “They love that they’re rewarded for things they can control, such as how they use the credit union, and not punished if they’ve had bumps with credit in the past.”

The 36-month loans currently carry an interest rate of 15% and are part of a lineup that includes a payday loan alternative, another that focuses on getting members out of payday lending traps, and a disaster relief loan.

“QCash was a natural fit for the services we were already providing,” Bugger says. “It’s also turned out to be an extremely convenient way to serve our members.”

Another way WPCU serves members and addresses systemic issues is through its affordable, reliable transportation program.

When a board member reported making the occasional loan to members who had been turned down for a WPCU auto loan, an experienced collection manager and loan trainer at the credit union created the Wheels 4 Work program. It’s a labor-intensive affair that relies on care and consideration from both the credit union and the borrower.

The credit union takes the application, then one-on-one with the member reviews their credit qualifications, loan options, and the pros and cons of the vehicle they want. The credit union also runs a CarFax report on the vehicle before closing the loan.

“We don’t do any of this through indirect dealerships,” Bugger says. “We control the entire process to be sure the member understands what’s going on with every step and not being put in too much vehicle or a loan with too much payment.”

Wright-Patt launched Wheels 4 Work in September 2020; however, the program got off to a slow start. Lenders learned members needed a fast process or they would go elsewhere for their loan, including to pay-here lots. So, WPCU sped up the application process and has since provided approximately 1,200 members with nearly $20 million for vehicles they need for work and life.

“The need for members to quickly get help when they need it is never going to go away,” Bugger says.

Read More About Wright-Patt Credit Union

Powering People With Green Loans

Jesús Obrero Cooperativa (JOC) serves approximately 11,500 members in and around Guaynabo, Puerto Rico, the U.S. territory whose utilities infrastructure has suffered terribly from recent super-charged hurricanes.

The $110 million institution, a member of the Inclusiv credit union network, has responded with financing for residential and commercial solar panel systems. The cooperative’s green loan program offers low interest rates and extended terms for systems installed by JOC-qualified contractors.

Aurelio Arroyo, CEO, Jesús Obrero Cooperativa

The loans begin as an interim line of credit and then convert to a term loan when the project is complete. The members then benefit from dramatic savings in their own net energy costs while at the same time helping their island home build sustainable and resilient energy resources, says JOC’s CEO, Aurelio Arroyo.

JOC is still working with the local electrical engineer who helped create the program, which was the first of its kind on the island when it launched in 2014. Since then, the credit union has disbursed approximately $7 million in the loans, Arroyo says.

The issues this program addresses are clear. Puerto Rico has sunshine nearly every day; however, energy costs are high and less than 3% of the island’s energy comes from sustainable sources, Arroyo says. And that notoriously weak infrastructure further inhibits resilience initiatives.



“Puerto Rico has to take aggressive initiatives to face the challenges of climate change because we’re one of the jurisdictions in the world that is most exposed to its risks,” Arroyo says.

Of course, real change begins at home. That’s why one of the JOC’s first projects was on its own headquarters. Its roof holds a photovoltaic system that has saved the credit union up to 86% on its energy costs since its installation in 2015, offsetting what would have been about 649 tons of carbon dioxide that would have otherwise been needed to produce that much electricity through traditional generation, Arroyo says.

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