Neighborhood credit unions could become an alternative to big banks for Chicago residents, if Second Ward Alderman Bob Fioretti is successful in passing an ordinance he introduced yesterday to the City Council's Committee on Finance.
In his remarks, Alderman Fioretti acknowledged the role of Arianna Huffington and the Move Your Money project in coming up with the idea for the credit unions. In a dramatic moment, he played the project's George Bailey vs. Mr. Potter video for the Committee members.
Concerned about the number of homeowners under water in their mortgages and the number of foreclosures and abandoned properties in Chicago, the Alderman said after he heard about Move Your Money the idea occurred to him: "Why not create credit unions within TIF districts as a way of addressing our abandoned property problems caused by this foreclosure crisis and also establish a financial alternative in areas of the city that have been previously under-served by these behemoth banks?"
Alderman Fioretti added, "This ordinance will also serve as a venue to put people back to work in an industry known for economic growth stimulus as well as add to our affordable housing stock."
I testified in favor of the ordinance, and echoing a certain presidential candidate, said that the neighborhood credit union plan is a "99-99-99 Plan."
I told the Committee:
It benefits the 99% of us who use banking services by giving us better terms for holding our money, both lower costs and higher returns.
It benefits the 99% of us who are or want to be workers, by putting more of us to work, which also benefits local businesses.
And, most important, it benefits the 99% of us who are taxpayers and users of City services by increasing City revenues without raising tax rates.
In further testimony, I said:
Increased economic activity boosts revenues from sales and property taxes, but there's another important way these credit unions could provide more income to the City.
Banks have investors, and have to pay them a return from the bank's profits. But credit unions don't have that obligation. The charters of the credit unions could be structured so that not only do the depositors and borrowers benefit from what would have gone to investors, so could the City of Chicago...
And there's no limit to the kinds of financial services the credit unions could offer, depending on how their charters are written--check cashing services for non-members, payday loans, micro lending, and even providing credit cards to members. All of these services can add revenue to the City's coffers.
With interest rates at historic lows, there will be no shortage of depositors to a credit union that offers a higher return.
Also testifying in favor of the ordinance were a bank financial analyst, a realtor/developer, and a realtor/ATM vendor. They, too, see benefits in spurring neighborhood economic activity and offering Chicagoans a banking alternative.
Action on the ordinance was deferred, but now that it has been proposed, it may provide impetus for similar measures in towns and cities across the nation.