Small enough to matter

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[Image source: Grassroots Economic Organizing]

A familiar seed grows amidst the ‘too big to fail’ trees in our financial forest:

After months of anticipation, the East River Development Alliance (ERDA), a non-profit organization established in 2004 to help public housing residents by expanding their economic opportunities, [has] finally opened its Federal Credit Union (FCU) – the first to be chartered in New York City in 10 years.

According to ERDA, three out of 10 people in the Ravenswood, Queensbridge, Astoria and Woodside Houses – which will be served by the new credit union – currently lack bank accounts.  [The credit union] will help change that, ERDA says, by providing public housing residents with a means to build capital, manage their money and achieve their financial goals. Proponents also believe the FCU’s presence will spark economic development in the area.

A credit union is a cooperative financial institutions that is owned and controlled by its members and operated for the purposes of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members.  I call them familiar because they’ve existed for quite some time – the first credit union in the U.S. was founded in 1909 and they’ve been under federal supervision since 1934, backed by the full faith and credit of the FDIC.

The ERDA credit union launch ties in quite nicely with my recent thoughts on microfinance, particularly with respect to its lack of freshness. Here is a centuries-old system of community-based finance, owned by its depositors – sounds an awful lot like a Grameen Bank.  Yet for all the fanfare that has surrounded microfinance, people often overlook the credit union as a tested tool for financial reform in this country.  ERDA’s is the first credit union chartered under the Obama administration, and the first established in New York City in over 10 years.

So props to ERDA for reminding us of the tools we have!  As we contemplate how to regulate institutions that are too big to fail, it’s quite reassuring to know that we might also promote those that are small enough to matter.

* on a related note, check out Raghuram Rajan’s radically provocative thoughts on why deposit insurance should only exist for community-based financial institutions, via Ezra.  It’ll make you go ‘hmmm.’

Posted on April 29th 2010 in news, OrgWatch

One Response to “Small enough to matter”

  1. Florence Says:

    word. now get over to that credit union and become a founding member!

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