 with ideas and relationships. So the agenda, we're very aware that we're just touching on some sort of the topics that could fit under today's agenda title. But even so, it's a very packed agenda and a lot to talk about in one day and recognize that. So we'll try to make sure that in each panel that we both listen to what panelists have to say and stop in time for there to be questions and discussion. And then at the end of the day, at between five and six, the plan is, and I hope that many people can stay, the plan is to break into groups sort of by subject area, roughly, of the panels and to have, you know, for a conversation that's not an amount of time to make a plan. But for people to share further questions and ideas about plans that they may be making or thoughts they have about what direction I think things might go in the future. So the first panel of the day is on postal banking, a longstanding practice and major one in many parts of the world. And once upon a time, there was a little bit of the US but really recently rekindled and we sparked idea here with present interest touched off in many ways by a report this year from the Postal Inspector General's office and Williams the Postal Inspector General will be our first speaker. After a very brief break, we had a second panel focused on what proteins and community development financial institutions are doing and could be doing. Then lunch, I have one minor just made on lunch having done conferences in this room before in addition to the tables outside. And we're gonna also have lunch set up on the tables in the back so that everybody can get it sandwiches without too much crying. And then after lunch, a panel on public banks were inspired by North Dakota Public Bank. They've been very interested in policy and campaign work under the last few years. Conversation on municipal finance, including the serious problems for cities and the public created by relying on law straight to raise money and possible alternatives. And finally, a panel that includes a few different takes on questions about making capital available for equitable mainstream development or local economies. All right, when we turn it over to Anne for any other logistics that people need to know and then Marvin who's a far as outreach director to get the first panel started. So just really briefly, I'm extremely interested in the wifi information in the room is EPIS and the password is designer with a capital D and a dollar sign for the S. So the password is designer with a capital D and a dollar sign for the S. And if anybody needs to post it, let me know. Bathrooms are in the back and as Lisa mentioned we're gonna make a little bit of a screen for lunch. We also ask for your patience with the Skype. So that was coming out. One of our panelists is participating from Laos. So be patient. We expect it to be a tiny bit buggy but hopefully it will go off. Ignore my face. He's probably like, who is this person? Thank you. Hi, Hans. I don't think he videos. Hans, can you do this? Thank you. Thank you for joining us, Harrods. We'll be with you in just a moment. Good morning, everyone. Good morning, you can do a little bit better than that. Good morning, everyone. I know everyone has had their coffee by now so you should be nice and energized. Why don't we go ahead and jump right into this panel on exploring poster baking. Let me first let you know that we do have about an hour and a half for this. So we have more than enough time to hear all of these great panelists but then also hear all of your great questions and get into a lively discussion we are hoping. Let me first just give you the order of our panelists this morning. David Williams will be starting out in the Inspector General of the U.S. Postal Service following that Mark Dimonston, President of American Postal Worker's Union. Then we have Mezra Bawadawan, she's the associate professor at University of Georgia Law School. After her, we have Lauren Sanders. She is the managing attorney at the National Consumer Law Center. And then following that, technology works quite well. We will have Hans Bull Manager, Director of Post-Finance International Development. Why don't we go ahead and jump right in. After the panelists, we're gonna have questions and I'll come back up and just give you the instructions on how to present your questions and comments. Amen. All right. David Williams, why don't you go ahead and start. Thank you, Marvin and Lisa. It was very nice of you all of you to come rushing in after a long weekend. I think I can still smell some suntan oil in the room. Very, very nice of you to come today. In today's economy, if you would like to be poor, you'd better have a lot of money. We discovered as a result of the study we did. If you walk into a gasoline station or a convenience store and buy a prepaid card, you need to look hard at that. There's a charge every time you add money, spend money, transfer money, and if you don't use the card, there's a charge. And those fees can average for sort of a constant use or $400 a year. If you'd like a payday loan because you ran into trouble on it, unexpected expenses. The charge on that has the average 400%. A fee of the mafia would be embarrassed to charge you. It'd be terrified to charge that in track for be afraid of a government crackdown. Many of the financially underserved get benefits from the government, are they increasingly paid their salaries with a debit card. But to pull cash off their cards, it costs $2 or $4 every single time they pull money off from an ATM. In California, for instance, CalWorks, where you get your benefits from the state, have noted that for $19 million a year in ATM fees, in order to access those funds, and if you don't use an ATM, currency exchange is far higher. Up the street from our office, the charge is 15%. Unfortunately, these are among the options for 68 million Americans that don't have a bank account or have no access to a bank at all. And yet, completely avoiding digital currency, or credit card or debit card isn't really an option. You really can't participate in the day's digital economy, be it commerce, any government, any health, without one. It's an unintended consequence of the digital age. The segments of the population have been inadvertently cut off from the expanding e-commerce industry. It's bad for citizens and it's very bad for commerce. One of the Postal Services founding missions is to support people as they try to engage in commerce. There are three elements of that. There's communications about the transaction, there's the actual transaction, and then there's the delivery of the goods. The Postal Service is so strong in two of those areas. And it's been a leader in with regard to payment. We ship $103 million, I'm sorry, 103 million money orders a year. But money orders are insufficient for today's economy. For that you need some sort of digital currency, a debit card or a credit card. Not paper, not cash, not checks, not money orders. The Postal Service also has a mandate to bind the nation together. It's a public institution and it has the public's trust. It's beholden only to the citizens of the United States, not to owners, not to shareholders. So in the interest of better serving the citizens and increasing access to commerce and to banking, my staff looked into the possibility of the Postal Service updating its financial offerings. It has a few of them, updating those to the digital age. And to serve those that have been cut off from the mainstream financial system, that is more than one quarter of the Americans who don't have bank accounts. And it will rely on costly services like payday loans and check cashing services. The average underserved underbanked American spends 10% of their income on the financial fees in interest to get the services that we get without a charge. That's the same amount they spend on food. In 2012, that amount totaled $89 billion, like in Pearson, the Postal Service functions on about $70 billion. That's a huge amount of money. Americans were greatly benefit from having financial options. Many of them already rely on money orders and international remittances from the Postal Service. The Postal Service can provide additional financial services, or partner with financial institutions who've withdrawn from many of these areas to provide prepaid cards. And also we do prepaid cards, maybe more important, bill paying, check cashing, international remittances. And even financial advances for unexpected emergencies. All of this can be provided at affordable prices using the Postal Service's enormous existing network. This could help the underserved so billions of dollars in exorbitant fees. Many of these could use to pay their grills, feed their families, and strengthen American commerce. Such offerings would not only reduce the economic friction of high transactions, but could also defray the overhead costs of continuing to offer universal access to areas that are underserved. Financial institutions are also struggling. They're withdrawing from a very large number of locations away from the large cities that are more lucrative. In addition, government payments to individuals, either benefits or entitlements or tax refunds, are often sent by check and increasingly by debit card. And yet citizens need to redeem these for cash. Converting these forms of payment away from check cashers and high fee ATMs, it represents a tremendous expense and would present a remarkable service. Tax payers in the United States are pretty generous, but they never intended, with the money that they're trying to give to people to help and to support, would be siphoned off in these amounts. No one would ever agree to that. Postal financial services aren't a radical idea of many postal operators abroad offer financial services. Now, postal global leaders and financial inclusion around the world, second-hand in the banks. And the US Postal Service is a notable exception. Most of these financial services are in the world post, so part of their income that allow them to provide universal access and delivery, 14% of their income, we would not need nearly as much of that to get out of the financial problems that we're currently in. They're the single largest provider for revenue growth in one world post. The Postal Service ran the bank for 50 years until 1967 when the interest rates really began climbing, crazily, and the Postal Service dropped down. And the Postal Service already complies with the Bank Secrecy Act and other kinds of compliance, so they're in a pretty good position pretty well. This is a strong opportunity for a mutually beneficial partnership between the Postal Service and financial institutions to push out or provide, at least provide the kind of competition that would provide affordable rates to the payday loan industry. So the Postal Service would bring its public trust and its unmatched physical network. 59% of the postal offices, 17,000, are in the areas where there are no banks or where there's only a single bank branch. They would bring financial access to millions of people, a million income people, and younger, and people that live in remote areas. And in addition, postal customers would become more financially stable and would qualify for mainstream bank accounts and credit cards and mortgages. We at the Postal Service seek financial services as a solution for both the underserved and to address the Postal Service and Banking Universal Access challenges that we can't act for the Postal Service. And we are considering the options and this option right now, but we suspect that this could be an opportunity that the Postal Service and the American people may not be willing to pass up. Thank you again for being here today. Hans, can you hear us? Okay, great. Sure, yes. I'm just going to minimize this while the other speakers can do it. Okay, that's great. At this time we'll have Mark Diamonstein and we give this presentation. Before we let the panelists just come on for it. Okay. Either one. I may hit these keys though. Can I have a hug? Good morning. We certainly appreciate the invitation and the opportunity to come to this gathering and support Americans for financial reform, having a topic that's or a day of topics that deals with banking without Wall Street. That sounds pretty good to me. I'd like to do a lot of things without Wall Street. We have a much more peaceful world of clean environment, a lot less union-busting. And all the good things that come to life with Wall Street might even have a fair tax structure, but we're not here to talk about all of those things. But I'll start with a quick story. I think it was 2006. I was visiting with my sister in Vermont. I saw something about Vermont out there. I wanna read now. And I was with a bunch of nooses and nephews and a couple of our daughters. And something came up around banks, getting loans or whatever it was, how good it was to be in debt and letting off other people's money and all of this stuff. And I challenged these many people in the next generation about why they thought that we had to have a banking system that was based on period. And they couldn't get it at all. They just couldn't fathom the idea that you could have a banking system that was not based on profit, but was based on public good. And I raise it in the question of the Postal Service, which is a system for the public good and a service for the public good that's not based on profit either. And when I'm younger too, that conversation, in the banks of Wall Street buried this economy. And those very same young people were stretched out with underwater houses and so on and so forth. So, I thought of that story last night when I was thinking about the topic of this meeting's panel. I was asked to talk a little bit about why the Post Office is so suited to do this work and maybe some ideas on how to accomplish it. And I think that Inspector David Williams gave a pretty good breath and scope of why the Post Office is so suited. But I think that just so all of you understand and you might. Whoa, and many of you have been involved with this long before. I recently became the President of American Postal Workers and I always knew my heart when you passed these paid-day loans, check-action places, all over Greensboro, North Carolina, where my wife and I lived for 35 years. You know there's something wrong. And we even talked about it when I was installing the office, about the meeting for the Post Office and the Postal Banking. But until I read the outstanding report from the OIG, the United States Postal Service, I had no idea that people are spending as much on fees and services and these alternative financial services, what many initial credit called move-in loan-sharking, than they do on food. And that is an absolute outrage. So the Post Office is set up so well because it seems to me without having fully studied it, the reality is that the people are unbanked and underserved. It's the inner cities and we're on the mark. And what's in every one of those places? It's the Post Office, the most trusted federal agency. Federal agency whose work has already performed certain vestiges of Postal Banking as has already been talked about with money orders, which is a form of check-action where people bring money orders and so on. We have our bank tellers already in place. And we have an agency that not only has the mission that David Williams talked about about binding the nation together, but is in the need of better serving the people who is of this country. And is in the thrills of a manufactured financial crisis, manufactured by Congress. I won't get into the great details here. And certainly can very much use the income that I would like to see in the long run based on non-profit banking. I understand I have a little different position than the OIG report for the long run. I would love to see a true public option and a public bank, I call the Postal Bank of the United States of America. Shorten that, I completed the night with the OIG's report as a huge step forward in this country for an alternative to the too big to fail banking system that we now have. And so here we are in every zip code, 35,000 postal services, an agency that used to perform postal banking, every town, every hamlet, every suburb, every city, and people that had, and it's not, it's largely low income, it's veterans sometimes that have been trying to reintegrate into a system in this country between jobs and from your way. It's students from a very by, two minutes life, very by unfair norms and so on. So I jumped to how, I saw the two minutes sign, I jumped to how we see some ideas in how to accomplish this. The American Postal Workers Union, I can speak some of the three other postal rules as well. So because we have met on this, we've also met with Senator Warren's office on this who's been very outspoken in a great way on the question of postal banking. We're proposing a non-legislative path to the question of the postal service provided by the individual services. The OIG report talked about that the post office has really met authority, the opportunity to perform these new services or reenact these services that have been once performed in the post office. We do not want to see the need for going up against the Wall Street Bank, the lobby and the likes of Darrell, I saw the wealthiest person in Congress who's already rallying against the idea of postal banking. And I think we all know why and what that profit completely in their reach. And we think that with partnering, with millions of community banks, working with people like you that have been out here over the years, dealing with predatory lending, and of course many people who have been doing that, who are not in this room, badly, and that's what we're gonna be trying to do, with your help and as allies. They're the kind of movement that will force the post minister general. And I can't stand banking, but I'll say it, to just do it. And that's gonna take pressure. This is a PNG in the Wall Street problem in relation to the public services of the post office. Because if he wasn't, he would not only be not undermining the service to laying the mail, closing post offices, and cutting jobs, but he would be celebrating this outstanding report of the OIG and saying, let's get to work and do it. And this PNG would not do it unless we put the kind of pressure on him or his predecessor. To say that this is something which time has come or it's time to be reborn and together we can make it happen. So we're planning to build some national meetings that are not academic in nature, but educational, yes, but more importantly, actually where he would to compel the United States Postal Services, to do what's right by the people of this country and workers of the United States Postal Service and adapt and put into place and the OIG report. As a stepping stone, at least in our view, as a stepping stone to a public postal bank in the United States of America. Thank you, friends. I'm very glad to be here and honored and thank you for the suffering by being me. The reason I'm on this panel actually is because several years ago, as I taught and wrote about banking law, I became gathered as ELR by the reports of the growing numbers of unbanked in the country. And by the way, that is reaching 40%. I just talked to the FDIC about the new report and the hint is it may be getting bigger. And the abuses of the payday lending industry. And I'm again thinking and researching about ways that the reasons why banks are no longer servicing the low income and what can be done about it. And I wrote an article several years ago with this far-fetched idea that the way to solve this problem is for the U.S. Postal Service to open the bank. So I was just delighted a few months ago to see what this office is actually considering. So today I want to first discuss the history of postal banking in the U.S. And second, why postal banking, which I also see a public option in banking or possibly a public option is justified to a few other people looking at the banking landscape. First, the history. So postal banking, as David mentioned, started in the U.S. in 1911 and lasted until about 1966. So the concept of postal banking started in Great Britain in 1861 and it began as a way for financial inclusion. And by the way, during that time, in the 1860s to the 1870s, several other countries also had postal banks that focused on financial inclusion, as our next speaker will talk about. So in 1873, President Grant's postmaster journal Prince of Government Sponsor Savings Program modeled after that of Britain. And again, most of these discussions were about how to include people who were not being banked. But some of these supporters of postal banking also saw it as a way to stabilize the turbulent banking system of the time. They saw postal banking as an alternative to federal deposit insurance. But using postal banking seemed like a better idea than deposit insurance because there was less normal hazard involved. A lot of people, we all know now that when you ensure you wouldn't have insurance, you're likely to take no risks. So postal banking would be funded by the government and overseen by less normal hazard. It'd be the government's own minimum risk scheme. And again, we're familiar with these concepts now. And at the time it was proposed by the Republicans, interestingly enough, who favored a more public banking option as opposed to bank-funded deposit insurance. So the issue was discussed by policy makers and Cartoon actually said it was divided for a few years with over 100 congressional bills before it became law. So let's hope that history doesn't repeat itself there. So as is often the case with banking reform, a crisis was needed to shake things up. And the crisis that brought about postal banking in the U.S. was the panic of 1907, which reminded everyone of the vulnerabilities of banking. So Teddy Roosevelt, a few weeks after the sort of main part of the crisis, he endorsed postal banking right away. He said, I commend to the favorable consideration of the Congress, a postal banking system as recommended by the Postmaster General. The primary objective object is to encourage among our people economy and thrift. And by the use of postal savings banks to give them an opportunity to husband their resources, particularly those who have not facilities at hand for depositing their money in savings banks. The view however, from the experience of the past few weeks he's referring to the crisis, it was evident that the advantages of such an institution are still more far reaching. Till the depositors have withdrawn their savings for the time being from national banks, trust companies in saving banks, individuals have hoarded their cash on the working men their earnings, all of which money has been withheld and kept in hiding or in safe deposit box for the detriment of prosperity. Through the agency, the postal savings banks such money would be restored to the channels of trade to the mutual benefit of capital and labor. So pumping back money into the economy through an institution that everyone trusted. So during the 1908 presidential election, it became a major issue and it was William Taft, the Republican nominee and winner of that election that campaigned on postal banking and eventually made it the law of the land. And he saw initially as a way to reach sort of credit starved regions in the West and in the South. He said, I believe postal banks to be necessary in order to offer proper inducement to thrift and savings to a great many people of small means who do not now have banking facilities and to whom such a system would offer an opportunity for the accumulation of capital. He goes on to say how it's preferable to deposit insurance. He sees deposit insurance as sort of a lot in the banking system and that would eventually destroy it. So the postal banks created by the Taft administration were called the United States Postal Saving System, the USPSS and the program was designed specifically so as not to compete with banks and also to keep the deposits local in the regions that they were because part of the problem at this time was fighting sort of the many centers of the money would flow into New York, Boston and keeping it in the South and the West. So as such, the postal banking bill was required to keep at least, the postal banks were required to keep 65% of their deposits local and 5% would be held by a treasury and up to 30% invested in government securities. The interest was also set low at 2% so they wouldn't compete with banks for deposits. And so the main postal banking passbook savings account which was the main product they offered would have a monthly cap of $100, a total savings cap of 500, which was later raised to 2,500 and the funds could be withdrawn at any time. So as it turned out, it wasn't Southerners and Westerners that most needed the banks as it was initially thought, although they eventually used them too. It was recent immigrants in urban areas that immediately took to these banks. The reason, and this is from Congressional testimony in 1913, hundreds of thousands of our newly made citizens distrust banks and will not patronize them. They have absolute confidence in government and know what postal bank savings are. This was also because the postal banking branch was offered information to customers in 23 languages. Consider the corollaries today, like study shows that many low income people and undocumented immigrants do not trust banks and many payday lenders actually speak many more languages than banks in our in-laws neighborhoods. There's that trust and comfort. So these immigrants poured their small savings into the postal banks. At the end of the first year, there was a total of 20 million in deposits, most of which were coaxed out of hiding. These deposits didn't come from banks, but from under the mattresses of these people or were taken from funds that would otherwise be sent abroad. So after a few years, there was about 40 million deposits. In 1915, immigrants owned up to 70% of the postal banks deposits, even though there were less than 15% of the population. By 1934, the postal banks had 1.2 billion assets, about 10% of the entire commercial banking system. Deposits jumped again in World War II, peaking in 1947 at almost 3.4 billion with 4 million users. One reason for the boost in the 1940s is that the UPS, the postal banking, introduced the world to banking by mail, which is an innovation we still use, that is those of us who don't have phones that take pictures of our checks. In the 1950s, deposits into the US PSS began to decline as banks expanded their locations and were able to compete with better interest rates, which the US, which the postal banks were not allowed to compete with by statute. By 1952, two government studies found that the postal banking was no longer justified and the original goals of the program were likely not still applicable. So bills began circulating in the 1950s to end postal banking. Remember, this was the heyday of banking. Postwar, sort of economic boom, threats, credit unions, commercial banks were reaching people that were not otherwise reachable before. So it was the high mark of access to credit. In 1965, the Postmaster Journal even endorsed the ending of the postal banks. In 1966, the US PSS was officially abolished as part of Johnson's streamlining of the federal government. There were fewer than one million account holders and the only opposition came from the Postal Workers Union worried about job loss and their opposition was ignored. When the system officially ended in 1967, there were about $50 million in unclaimed deposits. Many of that actually just lapsed because of the statute of limitations and just sort of went back into the treasury. Seeing that I'm running out of time, I was gonna talk about the public option, but I'll be very quick. It cannot be emphasized enough that the mission of the postal banking was to be, what the mission of the postal banking was to be in the early 1900s. The post office inspector Carter Keane declared in 1913 that the postal saving system was not meant to yield a profit. He said, in 1913, it is not a money-making adjunct to the post office department, nor was it intended as such. It is infinitely higher and more important. Its mission is to encourage thrift and economy among all classes of people. It stands for good citizenship and tends to diminish crime. It places savings facilities at the very doors of those living in remote sections and it also affords opportunity for safeguarding the savings of thousands who have absolute confidence on the government and will trust no other institution. So let me just sort of quickly say that, run through the rest of it. I think we'll misunderstand the nature of mainstream banks if we're going to rely on them to fund these services. There have been many attempts at doing so in the last several years, and all of which ended in failure because when you have institutions whose primary purpose is profit-making, it's very difficult to lend small. Lending small does not yield large profits. I also, I believe that the postal banking, as it has in the past, has potential in the future to really be the instrument of financial inclusion and this public option in banking is justified considering how heavily subsidized the mainstream banking system is. I think this is just equaling the playing field by allowing, and it would be, if anything, a soft subsidy as opposed to the heavy subsidy that the other banks enjoy. Thanks. I find the idea of postal banking an intriguing idea. My own background is I work a lot in prepaid cards, mobile loans, payment systems, sort of all the things that are on this list, and certainly I'm eager to have a new actor enter the space with a real public motivation. Like the previous speakers, there are a couple of obvious reasons why it's an intriguing idea, leveraging the vast reach of the post office. Not only in the rural and inner city areas, but even in more urban areas where there may be lots of banks, but are those banks interested in serving lower income people or can lower income people, you know, pay the increasingly high monthly fees that are harder to get away from when you don't have a lot of money to put into the account. The second obvious attraction is an entity with a public mission that could really raise the bar on these services. That said, it's not an idea that's not without its challenges. The areas we're talking about are challenging areas. They tend to be thin margin areas where there's not necessarily a lot of excess profit. The prepaid card area is increasingly competitive or more and more banks getting into that area. You're not gonna get away from the profit making entities. A lot of these products are complicated. You're gonna have to have a bank there to hold the money. You may need to have a program manager. You may need to have a payment processor. The post office is gonna have to contract with other companies to do most of these services. So you're not gonna completely eliminate profit making from the picture. So the question is, you know, is there gonna be a balance of being able to leverage the reach and the scope of the post office in a way that enables these products to come together in a way that they function and they work, but they're also low cost affordable. And I think it's worth pursuing, you know. Personally, I'm not sure how to view yet about whether it's gonna work. Obviously a lot of these services are ones that you could do today from your computer at home. And, you know, even in low income areas people have internet access of some sort. Maybe at a library, maybe on their smartphone. But not everybody has great internet access. And sometimes you just need a physical location. So what do you need that physical location for? Well, depositing cash or getting cash. One of the most difficult parts of prepaid cards right now, they work pretty well for direct deposit. If you can get your money direct deposited and you can spend that card. But if you have cash that you wanna put on the card you're gonna have to, you know, pay. For most cards you have to pay for a load pack unless, you know, like a bank card like Chase you could deposit it in an ATM. Checks also, if you have to pay to cash it and then pay to load it, you know, that can be expensive. If there's an ATM you could just stick it right in. That enables you to get money onto the card for free. You can print statements, you know, for people who are trying to get away from the cost of, you know, increasingly bank accounts, you know, wanna charge for statements, certainly prepaid cards do. But you could print one at an ATM. And for me the most intriguing idea is having a little bit of human touch, a little bit of that human customer service. There are, you know, services out there that are available to low income people but they increasingly rely on making things entirely self-service, entirely through automated systems. And sometimes you need to talk to somebody. Even if it's, you know, just sort of getting you started, figuring out how to work it. But of course that can be expensive too. And, you know, beefing up expensive personnel or the training to handle that can be difficult. But to the extent that there's, you know, somebody can at least answer a few basic questions, get somebody started. Or maybe it's through a video teller. You know, ATMs, there's a lot of talk about making ATMs more and more sophisticated. Maybe, you know, the customer service isn't somebody physically there, but at least you see a face. And having a broad network of surcharge free ATMs, we've done a lot of work on the area of unemployment prepaid cards. And Pennsylvania about two years ago, renegotiated its contract for the way it delivered unemployment benefits to people who didn't have direct deposits. And the person in charge of the program was on a mission to make that card the best that he could. And he really wanted to reach every remote corner of Pennsylvania, worked really hard and ended up having to contract, I think eight or nine different ATM networks, including some small credit union networks to try to get at least one surcharge free ATM in every corner of the state. Even with that effort, I think there was one county he wasn't able to reach. So there may be a bank in some of these counties, but is it the surcharge free ATM? You know, that's another question. So being able to get people access to a service that's not gonna charge them. That said, things like the $19 million that people in California have paid from surcharges for their CaliWorks cards. A lot of those are actually people who don't understand how to use the free ATMs that are available. California has found that there are people who will go to a mall and take money out of an ATM and pay a surcharge when like right there there was one they could have gone to. So it's not necessarily something you can easily convert. There are those challenges. And then of course the idea that the post office would really, even to the extent they're contracting with private entities, if their leverage and their name is going to enable a lot of competition, people are gonna want that contract. It does give you the opportunity to really raise the bar and have the best possible product. Looking at the products that were listed in the report, a lot of them make sense. Certainly, money orders is something that the post office does today already and making that more digital, turning that into the option of also money transfer, domestic as well as international makes sense. The one that makes me most nervous is small dollar loans. Of course the report, I think, was just setting out illustrations of possible products that wasn't necessarily proposing this is exactly what it's gonna look like. So I take that with a grain of salt. But small dollar loans are extremely challenging. Finding that sweet spot of somebody who actually does have a little extra income that they can make a payment, even a small one is difficult. Doing the proper underwriting without that being too expensive, to find that person makes small dollar loans hard and then keeping the price down at the same time. All that is a huge, huge challenge. And there's some aspects of the illustration that worry me. Prepaid cards I think are a great service for people who have been shut out of bank accounts, trouble with overdraft fees, trouble with credit. I'm not comfortable with any loan no matter how affordable, having the right to take the first cut of somebody's paycheck before you pay necessities. And without that auto repayment, it may make it more difficult for the loan to be self-sustaining. I am extremely uncomfortable with the idea of the federal government's debt collection powers getting into the small dollar loan space. Anybody in DC has seen the headlines about all sorts of old debts and mushroom over the years and come out of your social security check when you're elderly. And the federal government has more debt collection powers than any other lender out there. It's a problem in the student loan area. So it's not something that I would be comfortable turning over to small dollar loans, even affordable ones. And the idea that somebody with a really low income could borrow up to half of their paycheck without really sophisticated underwriting to make sure that they've got money left over is a tough nut to crack. That said, the details of course are all debatable. A lot of the purpose of this meeting is to get together those of us who think about the products and those people who think about the delivery and the end of things so we can all talk. I think this is all a very interesting concept worth exploring and look forward to your questions when we get to them. So Hans, can you hear us? I hear you, yes, sure. And we can hear you. So why don't you go ahead and begin. Thank you for joining us. Thank you very much. First of all, very much for the invitation to join you and I'm happy to connect you from Gentana and Laos where I'm currently working on a project to reform the Laos Post and the Postal Service Institute into a Postal Banking Institute that's more effective in inclusion. And I just wanted to highlight that I think much of the discussion that is taking place today in the US about the role of the post office in financial inclusion is a discussion you'll find in many other places around the world. Here in Laos, but also in many African countries, in Europe, in other Asian countries, in Latin America. And I think this is part of the financial sector of the financial sector development to include the Postal Network as a very relevant and low access, low threshold access infrastructure. I think the merits that they're being all highlighted in the white paper, but the fact that the US Postal Service has an existing network of more than 33,000 post offices across the United States is a very relevant network and we could see the similarities with other countries where dense network is an existing asset and existing infrastructure and by using this better and more effective for financials to financials, especially for the young bank, the underbank, but also for enhancing and improving the cost efficiency in the payment system in being able to mobilize saving small deposits to make a more productive economy and to provide small entrepreneurs and households with access to credit is a very relevant element. That in the description, it would be very good to highlight that the Postal Banking Services and I think that the issue in both the United States as well as elsewhere is not much related to the meal oration which is in the US enormously large, but in many other countries in the world is small and diminishing, but to maintain the postal network, the post offices as a social fabric and as a front office to provide services to the public, this is a very relevant factor. It's also in many cases the main or the most critical factor to maintain the postal network, but especially to increase financial access. If you look worldwide, it's nearly two billion people who are using post offices for access to financial services and this is still the largest number in terms of access or financial inclusion. It's very large and although often and also I see in the discussion that emerged after the publication of the right paper, very often references made to the more historic cases of postal bankings, such as Japan, Germany, Austria, you know, Kingdom, it is especially we see in emerging markets a rapid development. In China, there are more than 800 million postal savings accounts and imagine that this was less than 20 years ago, a very different figure, about 15 million accounts. So growth is in this field very rapid. In the case of Brazil, which may be known with the Banco Postel and which has been triggering financial inclusion via the postal network. I think that about 15 years ago when the project started that most of the established banks were very opposite and also the central bank and it took quite a struggle to establish the first steps in moving forward. But I think that these experiences and also again in emerging markets in parts of Europe, in again in Asia are very relevant lessons to look at and to benchmark what can be done to make it more work. I think at least the typical success factors in operating the financial service to the post offices are relevant, I think in decreasing or reducing the financial exclusion in the US. I think critical factors for the post office is it's not, it's open, it's very accessible, it has a different, may have a different atmosphere than a typical bank branch and especially if the bank branch is for higher financial income. The easy access are more threshold and the fact that it is offered in combination with postal products and other retail products may be more attractive to those who are unbanked and hesitant to enter a bank. A very critical element which has been already mentioned is effective pricing. It's not only about being low cost and maybe providing really cost-affection products but it is particularly important that the financial services are offered in a very transparent way and this might be a difference with established banks and other financial institutions where a newcomer or a person who is not really fully using the banking service and not very familiar with the banking services is not understanding exactly the conditions and I think that in addition, therefore, to select a truth in lending, there might also be more truth or transparency in the prices or the actual cost of using payment services and other financial services. The role of a post office, therefore, is maybe not only in providing access to financial service but also in supporting financial literacy and setting certain standards or at least industry standards for consumer protection and I think this would be a very relevant contribution of providing financial services to the post office. Another element that would be very important to help make work is that as the services are rather, should be rather simple, basic, easy to understand that makes it perhaps a little bit different from banks or from other providers that might be able to offer more complicated services or might be able to negotiate certain services. I think the critical element of the providing the financial services to the postal organization is that they need to be extremely easy to understand both for the postal staff and for the users, easy to compare with other ones and therefore having also good customer service backup but that could again also contribute to increased competition for the unbent and I think that would be an element of rationality to support and to focus on further steps in going ahead with a postal banking concept. It also means that, and this is not a very critical element in providing financial service to the post office, it needs to really have operational excellence. I think that many of the unbent or underbent really will not look at any bank financial statement or will want to be interested what is the capital or equity behind this entity. They just won't, that it exactly works when they need it. And this means indeed for USPS but also in many other cases around the world to look into a very strong adequate and very cost-efficient operation but also means very often to look at partnerships in building this operation both in operations as well as in management of the financial services. And that's perhaps one of the biggest challenges in building the success case for postal financial services. It is very different from the historic model that was referred to which has been established in 1861 and has been used and applied in many other countries. It has also collapsed or has disappeared in a number of countries but we see in fact the last few decennia much more a model of partnership between a part of the postal service namely the retail network, the post offices and the financial sector. And then it is, and this I think could be seen as a lesson learned from many other places to build up the partnership is not a matter of a few weeks or a few months but it takes several years. And again the challenge maybe also in the case of the United States as well as in other countries is there really one single entity, one banking institution, able and capable to partner and to work with the postal service and using also perhaps the postal brand. It may be that in reality the partnership is a partnership with many and that at the site that it is a matter of building a brand and a strong marketing concept to not to have in postal service many different labels and many different names but there's this really sort and proposed as one concept, one standard proposal. I think that with the first steps that have been made in publishing the white paper this has been that has attracted a lot of attention and discussion. I think it is very worthwhile to continue discussion. I think this conference is an important step but it will be useful to look at what can be the next steps in further progressing and advancing with the stakeholder approach to build the stakeholder consensus. And I think also it is a challenge for the OIG and especially for the PMG to look how to go forward in practice it would help I think also in a discussion not to launch immediately major projects but to look at small steps, a small pilot to build up further strengthening the credibility and the strength and the possibilities of this to go forward. So I think that that would be major issues to look at and to discuss what could be the value or what can be the next steps to make a more informed and coordinated decision about the future of postal banking in the United States. Thank you. Thank you, Hans. Thank you. And thank you to all of our panelists this morning. We want to start our time now for Q&A and what we want to do is we have a mic in the back and we're gonna ask those in the room here. That as we, as you offer your questions that you please tell us your name, what organization you're with and if you're from out of town just tell us briefly what city and state. Please direct your questions directly to the panelists that you're directing them to. We ask for those who would like to offer comments to please keep them short. And Hans, we want to see, are you able to stay along? Stay with us for a while for some time. Sure, yes, yes, absolutely, yes. So the mic is right here for anyone who has a question. The floor is open. Who would like to start out? Great. Hi, Jared Gardner from Oregon. Thanks, Lauren, for the comments on some of the unique challenges of the business model. In Oregon, we've had challenges getting any sort of consumer protection laws passed. So my mind's thinking of the organizing model here and there's definitely, it sounds like a unique opportunity. Is there any progress been made with community banks and credit unions to identify that gap and enlist them as allies to talk about how this could be a partnership or at least a collaboration rather than a perception of what's going on in the future? At this point, we are aware of conversations going on within banking and within the credit unions. There seems to be a level of interest, particularly on the part of the credit unions, to embrace the idea. And I think the banks are trying to decide if it's a good thing or a bad thing and what kind of existing relationships will be severed if these are taken over. So it's mostly at the thought stage at this point, which was that that was the nature of the paper that we presented and it has not done further than the early conversations. It's one thing I would add to that is the banks by and large that are behind prepaid cards right now are small banks, but they're not necessarily what we think of as community banks. They're really more internet banks. They're banks that don't have big branch networks and don't do most of the banking through that branch interaction. They're more through the virtual world of the card. That said, part of building a broad, surcharge-free ATM network could involve not only putting the ATMs in the post office, but also having alliances with credit unions and others who might be part of that network. Sometimes building a network means cobbling together different pieces of it and having people be able to get their cash not just at the post office, but somewhere else in the community that's willing to be part of that and it would be something worth exploring. I'm Rob McHara from the AFL-CIO's Office of Investment and I wanna thank you for that. This is an excellent presentation and it's important that we move in this direction. One of the things though that we've encountered in the work that we've been doing is that companies like Walmart, for example, have, Walmart made an unsuccessful attempt to get into banking with a charter a couple years ago. They're now moving into the whole money order business and cash transfers between Walmart stores. They recognize this as a significant market and then from the other side, we see a development where Staples, the big office retailer, is moving in to try to engage essentially to run postal services right in the Staples stores. And I wonder if the panelists could comment on these developments as essentially potentials or opportunities and pitfalls that we need to encounter as we go forward with this. Because those are big players in the capital markets and also frankly, here in Washington. You know, I think one thing that's important to recognize probably in both of those examples, certainly in the Walmart one. On the one hand, you can say, well, Walmart can sell money services in their stores. Why can't the post office? But Walmart has different motivations. I think they're not making much of any money on some of these services. They're just getting people into the store, to the shop. I think the American Express Bluebird card is probably losing money, but both American Express and Walmart just have different motivations than even a break-even product. The American Express wants to spread their brand and wants people, you know, more merchants to start accepting American Express and Walmart gets people into the store. I suspect for Staples, it's probably something pretty similar. You know, I don't know how it's pricing out for them, but certainly they're probably hoping that people are gonna be shopping for their paper and their envelopes and everything else. You know, there's not gonna be as much of that with the post office. So it wouldn't be the same cross subsidies. Let me just address that for a second. I was involved, I was a Davis Polk attorney when Walmart made the bid for the bank and I was at some of those hearings for the Walmart Bank. And I think the one thing that's really instructive there and will be replicated is how many groups joined forces and accumulated power to oppose that charter. I mean, essentially the ILC, the Industrial Loan Company, that Walmart, I mean, it's a loophole in banking that allows a commercial giant or any commercial company to own a bank. It's the only way that historically that it could be done and the loophole was created, I mean, through lots of political circuses and Bob Bennett saved that for Utah. So there's this loophole, it's from the 1970s until now and the loophole was shut down just so Walmart could not open a bank. And what you're saying is true, Walmart wasn't, first of all, Walmart didn't say that they wanted to do banking services, they just said they wanted to keep their two to 3% sort of surcharges that they paid to credit card lender. So there was no intention, but people saw Mexico and Canada and said, well, you've got national banking there, you're gonna do it here. And so it was the American Bankers Association, it was every Wall Street firm. It really was a concerted sort of movement against Walmart. So having experienced that, I can see that a similar thing happening with the post office, but as I'll say, I mean, this happened in the 1900s too, these customers are not the banked, right? Walmart customers are part of that 40% who are not banked. And so there really isn't a direct competition and if that can be an argument to be used here, look, we're not infringing on your industry, we're just getting the people that you do not want. And it is, economically, those people are not profitable to banks, but they are to Walmart because they come in, they cash their check there with, and Walmart is offering actually fair prices. I mean, maybe in this room, it's not popular to back Walmart here, but their prices are way lower than everyone else. They can't give loans, but they can do these small services and it's just a loss leader to bring people in and if a company with that much scope can lower costs, which is another reason why the Postal Service can offer lower products, right? Scope allows you to lower the cost of credit. I'd like to weigh in briefly on staples and tie it back in, see. For those who don't know, the USPS and staples have reached what we call a dirty deal to put post offices into staples, but that's privatization. The beauty of what we're talking about, about postal banking is the public option and the opposite of privatization. And that's the way we would like to see the financial service slash postal banking go. That's one of the reasons we oppose the staples deal so hard is along with privatization comes not just an undermining of the services, but a transfer of living wage jobs to non-living wage jobs so that somebody can make a profit in between. I also want to make it clear that the post office doesn't need a bank charter to be able to do the kind of things that the OIG report talked about. And that's very important. And that's why we're very clear that we don't want to get hung up in this hassle about legislation to do this or that. We want to work with the people in this room and beyond, like I said, to make sure that this happens for the public good. So staples and Walmart represent, even if the products are at a reasonable price right now, they represent how to make a quick buck. And the question of postal banking in some form, the question of postal services in all forms, is about the public good and not having to make a quick buck, having to break even over years and then still provide those good services and those needed services. I think the only thing I would add to these really good comments is that these kinds of fees merely add friction to the economy. An interest buys absolutely nothing. These are losses and sacrifices for the economy as well as for the people. This kills jobs. Even if you're only interested in American enterprise and you don't care about the people at all, this is a bad deal. Even for those people who are only looking at how the nation's doing, the nation's businesses are doing, this is as bad for them as it is for the people. Jason Collette with the Lines for Justice Society in Seattle. I appreciate the panel's mentioning the student loans and the collections of that. I was curious about the servicing of these loans. We've recently seen the fines for Sally May and acting like much typical Wall Street banks. We've seen just large fines, abuses, just forever federal law. Curious that the federal postal service banking concept is thinking about servicing these student loans as well I have given absolutely no thought to this at all. And I'm looking at the team that did the report for help and they're telling me there's no help there either. This is just, wasn't on our radar. I can tell you when the four postal unions met, it was on our radar at least in terms of concept and would like to talk with you more maybe on break. But I think it would be a great way to deal with the plundering of our youth. We'll call it the Wall Street plundering of our youth and find a way that student loans can be financed on a non-profit public option basis as well as they should be. So it has been bended around in our quarters. We're just in the early stages of getting that going and that obviously will need more conversation. But I appreciate you raising it here. It's a very important point. Yeah, I do too think it's a great idea. Hi, my name's Gwendolyn Hall-Smith. I'm from Montpelier in the Independent Republic of Vermont. And I just had a couple of comments. Mark Armstrong from Bank Act, I believe you know him, couldn't be here. And he wanted to pass on that the mayors of Lansing, Michigan, Madison, Wisconsin and Oakland, California are introducing resolutions at the US Conference of Mayors in late June to support post office banking and public banking. One is to help fund the National Infrastructure Bank, which is an interest of municipalities with the deposits from post office banks, which is one of the questions that comes up. Gosh, if people are putting their money in the post office, where is it invested? How do they do the investments necessary to pay the interest? And I believe National Infrastructure Bank might be one way to do that. And the other reason that they're supporting it as mayors is because the predatory lending and the predatory payday lending practices cost so many of their citizens so much money that could actually be funneled back into necessary consumption. And by the way, sales tax revenue for municipalities. So they are introducing two resolutions, one about predatory payday lending and the other about the National Infrastructure Bank to support postal banking later this month at the U.S. Conference of Mayors. So there's a real potential ally there with municipalities. Thanks, that's really very interesting. Your ideas are starting to go beyond the ideas of the paper, which is exactly what we'd hoped, but we do wanna capture those and stay abreast of those developments. So that's kind of you and kind of him. Hi everyone, Dave Zuckerman with the Democracy Collaborative. I guess to just quickly build off of that of the previous comment, the Bank of North Dakota actually just got into the process of servicing student loans and helping consolidate them. So it is already beginning to be a shift in the public model there, but just a couple of, I guess, larger questions and whoever want, I'll throw them out quickly and whoever wants to tackle them can go about how they see fit. You know, there was a concern raised regarding doing small loans through the public up through the postal service. I'm always thinking about these are all liabilities coming into the postal service. We also want people to have an opportunity to build credit. So if they're just doing deposits and there aren't, say, the loans, then people really don't have a chance to then build that credit and maybe step up to the mainstream financial system or to credit unions or other types of lending institutions. So are there being thoughts given if, say, small loans are not given, maybe allowing people to build credit through paying their bills, utility bills, intersecting that with credit unions or other types of banks? And unfortunately, I think that the main narrative you hear around the post office these days is its financial viability. And I think with any kind of financial institution, and that's what we're talking about, you need to have confidence in the fact that that institution is gonna continue to be around. And just thinking about how do we, I guess, do this because you want people to trust the institution. And I think the final point is the reality that younger generations are simply not stepping into financial institutions anymore. I personally cannot remember the last time while there is a significant amount of the US population that does not currently, well, that is unbanked and would appreciate in-person banking options I think the, where history is going is that that's not necessarily the interactions that people are gonna have in the same type of way. So just giving thoughts to all those types of activities. And I'm just curious to hear about how that has affected the conversation today. Thanks. Actually, the idea of building positive credit histories is extremely powerful and compelling. I hadn't given any thought to that at all. With regard to the Postal Service's survival, most of the world posts are starting to make money again now. I think they're sort of through the crisis. Some of them optimize their size a bit. Some did not. But they're generally beginning to recover. It wasn't really computers that gave the Postal Service a problem. They reached their greatest volume of letters during that era. It was the combination of smart devices and social networking that threw it forward to pre-fund all of our benefits for the next 75 years, which is something, it's an experiment that it's the cure that chills. No one else tried it after we tried it. Everyone talked about how great it was for us, but they wanted no part of it. Not Congress, not GAO, not OPM. Everybody wanted the hell away from what happened to us. And now the legislation is thinking of moderating or ending, completing that. We now have $330 billion. It's been taken away for this effort. So I don't, there isn't anyone that could be profitable from that. Sorry for the advertisement. The, we're not gonna be the only nation on earth without the Postal Service for God's sake. The, and the Postal Services are beginning to do well again. Let me say something about the loans. I'm actually a little bit on the opposite side of Lauren on this issue. Actually, I think post office lending is the most exciting offering that they're giving. And the reason is because there is huge market demand. I mean, look at the profitability of the payday lending industry. There's huge market demand. And this is a way, I mean, to loan, you have to, you have to compete with the payday lenders in a way, right? And you can't give out the money. And so there has to be an institution that can lower these costs naturally. And this is where the post office can do it through scope, through the federal establishment. So this is where we can offer loans, credit, right? Credit allows people to sort of, you know, get through the hiccups of their lives. Most people that use payday loans until we can raise wages and, you know, until we can take care of poverty, which I don't see happening on the horizon, we need these sort of small loans that very importantly allow people to build a credit history so that they can enter mainstream banking, right? As it is, the CFPB just released last month, a survey on payday lending. Most loans are rolled over 10 times, right? Payday lending is more likely to set you into bankruptcy than not. I mean, there's so many reasons why a loan option is good. And the second thing you mentioned, the confidence and trust, that I think goes a different way. You're saying maybe we don't trust the post office. So you're saying maybe are we confident that it can be around? So let me, go ahead. Right. Well, yeah, I mean, just to say, as a counterintuitive or a flip side of that, the federal government still, as much as we may not trust Congress or whatever, but it's the only institution that can support banks and instill trust in the financial sector. That's why you have treasury and federal reserve bailouts. That's why you have federal insurance. For any country in the world, the only stable banking systems they have are those that are federally supported. And so here's an institution that linked with the federal government. No matter what you may think of, are they inefficient? Are they bloated, blah, blah, blah? It is linked to the treasury in one form or another. And that, I think, gives confidence that other institutions just can't. But it's a really good point, I think. I have two quick responses as well. One is on the small loans. I agree with the last comments. If we don't pursue the question of the small loan, then we're helping to condemn the people to deal with small loans with the legal loan sharks. So however it works, we need to find and can't find a way. And the question of confidence, I would submit that part of building the confidence is to expand and enhance postal services to the people of this country. And postal banking or postal financial services is part of that. I would also submit that people trust the post office far more than they trust the banks. And far more than they trust payday lenders, loan check cashing places, and pawn shops. I don't think the unbanked are gonna be that worried about the financial condition of the post office when it comes to being able to get services with small administrative fees versus loan shark fees. And I think that in turn will also help the postal service grow and become that much more relevant to the people of the country. So I think the question of the unbanked and building credit and the question of people using payday loans are two completely unrelated for the most part topics. Payday borrowers have to have bank accounts and they have very thick credit files. So they aren't people who aren't on the credit map. They aren't people who would need, maybe they need more helpful banking services, but they've got bank accounts. On the credit building side, there are a lot of people in the prepaid card industry and others right now giving a lot of thought. Is there a way to use utility payments, rent payments, the activity that happens in a bank account, but that's not credit to build a credit profile? I would tell you right now, I think maybe not the consensus, but the dominant view in the industry is that it's really not very determinative in terms of somebody's credit quality. But those conversations are going on with all the talk of big data, people are trying to figure out whether they can crack that nut. And to the extent that the post office did offer a loan product, a longer term one with installment payments, I would certainly hope and expect that credit reporting would be an aspect of that. And so for those people who don't have a credit profile, it would potentially be useful in building credit. For those who are using payday loans, first of all, we've got to recognize that a huge chunk of that is people whose expenses are higher than their income. And a persistent gap just can't be solved by credit. And even a good high quality credit product for people who aren't making ends meet, they need a living wage, they need to get their budget under control. If they have an unusual expense, they need to go somewhere like their mom or their dad or their employer who you can only go to if you've really got an occasional emergency. But for the most part, credit isn't the answer to a lot of the problems where people go to payday lenders. I'm not against the idea of a loan being part of this whole package. There are elements of it. The idea that it looked to me that there wasn't necessarily their expense side of it is, for me, not an appropriate approach to lending. And yet, when you start doing underwriting, that's expensive and it's difficult to pencil out. And like I said, I mean, federal law already prohibits any lender from requiring automatic electronic repayment as a condition of credit. There's a loophole that payday lenders fit into, but this loan would not. So I think that's an important element. People have to have a choice of how to repay and expenses need to always come first. The way we won't have much feedback. Are you able to do that on your system? I think he's out of it. Okay, great. Let me just mute it. Hi, I'm a community organizer with a statewide community organization in California. We've been taking on Wall Street in many ways for many years, including in Richmond, California with our eminent domain campaign. Anyway, I think we're particularly interested, we in many groups we work with nationally, are particularly interested in this as a path towards a public option, as you said. This may be particularly for the Postal Workers Union, but for anyone on the panel, be interested in hearing your thoughts on what the campaign looks like. What's it going to take to win this? Well, I'm a pretty simple person, so our thoughts are pretty simple. We want to build a nationwide, help build a nationwide coalition. It's which will coalesce sometime in the fall, set up an ad hoc steering committee with some of the folks in this room and the people who've been out in the trenches fighting predatory lending for years, but now that we think we have a concrete solution or a partial solution on a nationwide scale, try to bring folks together in the fall around action and then try to pressure the postmaster general and the Board of Governors to begin a process for those who, I think it was Hans who talked about some pilot programs when we met with Senator Warren, she also talked about some of the same things, that you don't necessarily start overnight, say here it is, but get some key areas of the country, not necessarily small, and put some of these into place. In that coalition, it's gonna be very important not just to have labor unions, but to have immigrant rights groups, civil rights groups, rural organizations, people that are most deeply affected by the predatory lending system that's in this country. And I have to believe that it's not that the banks don't wanna go into all these areas, the banks are in these areas, they're just in these areas to check cash in places and pay their loans and they have to be reaping. Huge profits from what's going on there as well. So, and then that we have enough pressure. And by the way, there's a number of, and not just organizations, but key allies. Who said they were from the Independent Republic of Vermont? Bernie Sanders is a key ally in this question. Elizabeth Warren's a key ally. Other people in Congress like Keith Ellison from Minnesota are key allies. People are very excited about this idea. We had a meeting with Danny Glover around a number of issues around the post office. But one thing that certainly resonated was the issue of public banking. And I don't mean for him to be quoted on that. I'm just saying there are people like him all over the country that are very intrigued and excited about these prospects. So that's gonna be both organizations and personages, so to speak, are gonna be part of this coalition. And we hope that it will be a grand coalition and that it has to be a grand coalition. There's already been some folks that think maybe they ought to have the franchise on this. And we don't think that that's the way to go. We think that a lot of people out here that are very interested in the issue, have been working on the issue, have a lot to contribute on the issue. And that kind of united effort and having all those streams come into a mighty river is much more important than who might have the franchise. So we'll be talking to many of you and you may be talking to us and we're open to all ideas. But we hope by the fall to be really up and running on this piece. And there's a lot of really important pressure points from the civil rights community. And I was told, I think it was by Bank Act. Sister raised Bank Act. I was told that the number one group of people that go to have to are stuck in the payday loan industry are women. And if that's accurate, that was news to me. So there's a group that we definitely have to reach out to. Veteran groups we have to reach out to as well. So when we build that coalition, we'll be moving and I'm sure a lot of people have a lot to contribute on that. But the key thing is to make the post office do it. We shouldn't have to make them. If I was the postmaster general and this fine gentleman next to me produced a report like that, I'd say thank you, let's go. Because the PMG should be entrusted to champion the institution that the public hasn't trusted to them. And that's not happening. And part of championing that institution is to take this on in a mature, planned way, but to take it on and help make it happen and help lead in making that happen. So when somebody like that won't lead, we're gonna have to lead them. We have about five minutes left. I wanted to see if anybody had a particular question for Hans, he's been listening in intently, I'm sure. But does anybody have a question for Hans that you may wanna offer while we have him with us? Well, what I wanna do at this time is give each panelists a minute to give a final statement on the topic. And Hans, why don't we start with you? You wanna go ahead and unmute your mic? Sure. There you go. Well, thanks again. I think the discussion indeed proves again that there are more steps to be made in the postal banking venture. The project, there are many issues that are of relevance of interest. And this is a very relevant step to go forward. I think there's a lot of value for the unbanked, for the policy and financial inclusion and for the venture to do it. But there's also a very relevant step for the universal service. And indeed, it's for things, it's brand to work, it's assets to complement in gaps that are left and not just gaps, but the fact whole deserts that are in the financial sector. I think this proves, gives evidence, let's go forward with this steps in the proper stakeholder approach, any if possible smaller test to see how it works. Thank you, Hans, we appreciate it. Thank you. You can mute your mic again. Panelists here in the room, if you give us a brief final statement and then we conclude our time. Well, I think it's an intriguing idea, it's worth exploring and in addition to exploring with folks like us here in the room, I think it's probably also worth talking to the prepaid card industry and the money transfer industry. I see it most likely to the extent it's workable as being done in partnership with the institutions who already have expertise in these areas, rather than is building it completely from the ground up, but exploring whether having this network of post office branches as part of the delivery channel for these products is definitely worth exploring and obviously continue to talk to those of us who have worked a lot on the other end of these products as well. So thank you for having me and thanks for all of you for listening. So let me finish with what I was gonna say about the public options quickly. So I've written about the social contract that we have with banks, right? The state, the government provides banks with public trust, right? Through insurance and through implicit bailouts and this trust is necessary for their survival. Banks do not survive, have never survived without the state support and in return, the reason why we support them is that they give us credit, right? Banks sort of lubricate the money channels and the economy and allow us to do the thing, businesses and individuals to do these businesses that we do and as it is, as you all know, a few large and powerful banks control 70% of those assets and those credit markets and that credit is just not reaching down very much. It's just not trickling down to the portion of the population who needs it the most, I think. And look, we all face financial emergencies and we need these cushions and those at the bottom of the income scale have to pay the most for these credit options and the market answer to that, which is payday lending, the status quo that we have now is not sustainable. It's financially crushing. It's too high of a burden and in so far as the banks can be forced to take this social contract, if we can say, look, we're funding you, we're subsidizing you, you must pay back. We've tried this. I mean, this rhetoric has been bounced around through the CRA and all sorts of initiatives that we've attempted and in my view of this, in my study of the last 30 years of trying to force banks to lend, it just hasn't worked and when they have lent, or lent, or I don't know, whatever, when they have offered these products, they've been harmful products. They've been to benefit the demand that they face and not with an eye toward what can help the poor the most and so that's why I'm such a fan of this proposal. Yes, it has hiccups. It does have bumps and there will be significant opposition but I think it's time and it's definitely worth a try. Thanks. This is an idea that's good for people, especially the most vulnerable sectors of society. These small loans do either free or enslaved people. We have to decide what kind of country we wanna be. It also expands the reason for providing universal access to people. It's one more, it's one more service that can be provided that's a valuable service. It's good for commerce. It reconnects the people that were accidentally broken away from e-commerce and it removes friction, deadly friction from transactions and empowers more transactions to occur. It is, it's bad for a tiny but powerful and violent group. I'm not an organizer but I can tell you that if you want this, you're gonna have to take it. And I think we just have to keep our eye on the price. I'm not an economist. I could be a little bit like the Wizard of Oz when it comes to some of these instruments and just say I don't know how it works. But I know what doesn't work. And the too big to fail banking system in this country does not work for the people of this country. I think this is a simple solution. And I don't think that we're gonna win it without social pressure. And I'll end on Frederick Douglass. Well, before I end on Frederick Douglass, I just wanna emphasize the public option nature of this, the service nature of it. And I'll end on Frederick Douglass when he said, power concedes nothing without a demand. We will not get postal banking or postal financial services without a powerful demand. I'm glad to be here to be part of a piece of that demand. And as it grows, I think this is a demand that we will win. Let's give all my panelists a round of applause. Thank you, Hans. As we prepare to transition, we're gonna take about a 10 minute break and we'll have our next panel after that. I was thinking, you know, I'd love to know what it is. My own was at 100. It was my car. My car. Is that a 33? How was this? If I was doing the timer, we'd catch up. Yeah. Okay. Okay, we're gonna get started again for our second panel. And I am barely gonna introduce it and leave our first panelist really to set the stage. This piece of the discussion is on credit unions and community development financial institutions and what they are doing and what they might be doing. And the way that we decided to organize this one was to have everybody speak really for just five minutes with a couple extra moments for Diana and I going first. And then ask a couple questions. We'll ask people to send us questions in advance. So we'll take a selection of some of the questions we got in advance and ask the panelists to speak to those and then open the floor for conversation and question going from there. Our speakers not in the right order. Our Randy Chambers, who's the president of the South Health Credit Union in North Carolina. Paul Phillips, who's the president of the Freedom First Federal Credit Union in Roanoke, Virginia. Dianna Del Rio, who's the board chair of the Louis side people's federal credit union and also the co-director of the new economy project. Carla Decker, who's the president and CEO of the DC government employees federal credit union. And Allison Basile, who is the organizer with the DMV for credit union democracy. And the last thing I'll say before turning it over to Dianna is that we tried to have a little bit of a mix between, a little bit of a mix of geography with some emphasis on closer at hand for obvious logistical reasons. And also a little bit of a mix between institutions that were born with a community development financial institution focus and institutions that have a different history and are moving in new and interesting directions just to help think, help all of us think about because as we were talking about organizing this panel and I was getting advice from the panelists part of what folks urge me to do and part of what I think is interesting about this conversation is thinking about not just what the very best and most interesting models are that's really important and interesting but also how to make things happen on a broader scale and not just in one or two sort of best possible places. So with that, let me turn it over to Dianna. Hi everyone, good morning, if it's still morning. Late morning. So I wanna just do a little bit of framing about the panel and the work of credit unions that are represented here and then talk a little bit about some opportunities for change and for really scaling up and expanding the impact of credit unions and communities across the country. In the last presentation, one of the questions posed was why do we need to have a financial system that's based on profit and the answer is we don't. We actually have an entire parallel financial services industry or movement as some of us would call it that's not for profit and that is based on principles of a cooperativism and democracy and community and those are and specifically community development credit unions. So maybe we could just start there. I wanna kind of frame what we're talking about. I imagine if I ask how many people here know about credit unions, would a lot of hands go up? How many people are members of a credit union? Oh, not bad. And how about the difference between community development credit unions and low income credit unions and CDFI credit unions? Okay, that's where some confusion happens but I see a lot of hands still. So basically, I wanna touch on a couple of points and my first point is that not all credit unions are created equal. So the credit union industry as a whole holds about a trillion dollars in assets across the country is made up of about 7,000 credit unions I think around 90 million members. 99. 99 million, okay. That's what the marketing says. That's what the marketing says. I deferred a poll on that. So it's not a tiny movement. It's, you know, we're dwarfed obviously by the big banks but it's a significant part of our financial services system. All credit unions share certain things in common, the fact that they're structured as cooperatives. That means that everyone who opens an account is not a customer, they're actually a member and an owner of that institution. And the board, the members themselves elect the leadership, the board of directors, the credit committees, people who make decisions about the credit union and what kind of work it does and who it's going to serve. And those bodies, the leadership bodies are actually made up of members themselves. So, you know, only at a credit union you have someone like me as the board chair, you know, highly uncompensated, all volunteer-run committees and boards that meet monthly and do committee work in between and are very active and engaged in their institutions. They're also not for profit. So in spite of banks' efforts to impose taxation on the credit union system, they're still tax exempt. They're not charitable, however. And they're regulated institutions. So we're full service institutions. We don't only make loans, we take deposits, we help people save, we offer loans, credit cards, pretty much whatever you can find at a bank at this point in time. And as a result, we're highly regulated. The agency that regulates credit unions is the National Credit Union Administration. And there's also a separate share insurance fund that ensures deposits at credit unions equally, the same to the same degree as bank deposits. And there's also state chartered credit unions that are also subject to state regulations. Now, community development credit unions, which I think are the ones that we're most interested in, people in this room, are different in that they have a very explicit community development mission. And what does that mean? It means that in addition to thinking about our members, who we want to serve well, and help promote their sort of financial self-sufficiency and economic advancement, we also care about our neighborhoods and communities. And we're trying to really focus on taking our members' deposits, which they put in our institution, and using it to invest locally for jobs, for affordable housing, for other community kinds of needs. So people have stable, strong, healthy communities in which they live. So you have some credit unions like an AT&T, let's just say. I don't even know if they have a credit union, but they probably do. And while their mission would be to serve their members and so forth, they're not necessarily focused on the neighborhood or community development at all. They're really focused on sort of serving their employees. Credients come in all shapes and sizes. I think you'll hear a little bit more about that through the examples that are on the panel. I want to just say that the communities that we, that community development credit unions focus on are those that have been historically redlined and otherwise poorly served by mainstream banks. So low-income neighborhoods, immigrant communities, neighborhoods of color, sort of the obvious kinds of, what you would expect. And they're also the neighborhoods that are, I would say, excessively served by high cost and predatory lenders and other financial institutions. Many of the credit unions have grown out of civil rights movements and so forth. Others are sort of bigger credit unions that had a more mainstream membership but that are increasingly shifting and focusing on serving underserved populations in their communities because they've realized that competing with sort of mainstream banks for the most profitable customers is not what they want to do or it's not what they're effective at doing and they've decided to sort of shift gears and really meet the unmet needs. We were, a bunch of us here are also members of the National Federation of Community Development Credit Unions, which is kind of an umbrella organization that represents our type of credit unions. We were at a conference in Detroit where we did a site visit to one such credit union that said, you know what, why are we competing for the few profitable customers that the banks want? We're gonna go into this sort of Highland Park area that's completely underserved and we're gonna really focus on supporting businesses and residents in that community. And I think you'll hear some other examples that are very similar here today. So, what does it mean to be community development? I think, you know, since others are gonna talk about their work, I just wanna highlight a little bit about some work that our organization, my organization where I work, new economy project, as well as the credit union on whose board I serve, Lower East Side Peoples does. And, you know, in terms of the Lower East Side, one of the things that our credit union happened to grow out of an actual CRA challenge to a bank in the 80s, there was one bank left in the neighborhood, which at that time, if anyone's familiar with Lower East Side, looked very different than it does today, completely sort of economically distressed, lots of problems in the community. The last branch left the community and there was gonna be a hundred block radius where people had not a single bank branch to use. And so, the community residents organized, challenged the bank, which wanted to open a branch elsewhere in the city using the Community Reinvestment Act as the sort of leverage point and was able to win, not that the bank would stay, but to win concessions from them, including the building in which the bank was based. And so, that was sort of the inception of that credit union. They decided they wanted to have a community-owned financial institution. And so, through the years now, I think like many other credit unions that grew out of redlining campaigns, our neighborhood now is flooded with banks, but we see that they're not serving the membership that we are serving. So, we actually have routinely members at banks around the corner send over to us if they're low income or if they wanna start a business and need a loan that's too small for what the bank is interested in, for example. We also do things that banks would never do, like for example, we make loans to these low income housing cooperatives in New York City and New York State have called Housing Development Fund Corporations. And it's a form of very affordable, restricted, non-speculative housing. I think hundreds, if not thousands of buildings that are around New York City that are cooperatively owned by their members but are restricted in terms of resale and things like that, you can't flip that property. So, a bank doesn't wanna really make a loan to someone to buy their apartment for $6,000, but how incredible is it that in New York City, someone can buy their apartment for $6,000. We make those loans to people who are very low income to be able to afford home ownership and really to sort of stay rooted in communities where they would otherwise be displaced because of gentrification. And we also make loans to those buildings themselves to make sure they continue to be maintained and so forth. And that's one way that we preserve truly affordable housing in our communities. Another example I wanna throw out from the Lower East Side Credit is that we've actually sort of really struggled to take positions on advocacy issues and especially consumer protection issues that are counter to the rest of the financial services industry sometimes where we actually sort of have testified in front of Congress, for example, in support of the Dodd-Frank bill. We were on a panel where there was the Texas Bank that was suing the CFPB, if you recall that. There was someone else from the mainstream kind of credit union association that was testifying about how terrible Dodd-Frank was for credit unions and really just undermining the work that credit unions were doing in their communities. And we were there testifying in support and talking about how we embraced fair regulation and a fair playing field so that institutions like ours and our members and our communities wouldn't sort of be devastated again by predatory lending practices. And it's something that I think is another way to distinguish community development credit unions from mainstream credit unions that we often take different advocacy positions to support sort of fair lending and financial justice whereas there's a richer conversation to be had there but I think that's something that we all kind of struggle with. Really quickly, a couple of trends that are happening in the credit union movement right now that I think have implications for scale and impact are that like in the rest of the financial services industry there's a lot of consolidation. You have fewer credit unions that are getting bigger. One of the things that we've seen is that small credit unions are struggling more than ever before. We'll talk a little about that. But I think there's also potential in the fact that more large credit unions are interested now in serving low income populations. We've seen for example that more credit unions that are large, even many billions of dollars in assets are seeking from the federal government this designation as a low income credit union as well as applying to the Treasury Fund to become certified as a community development financial institution. There's many reasons for that but certainly a major factor is that there are all these benefits that those credit unions can get by getting those designations. With low income designation you can attract non-member deposits as well as secondary capital and other kinds of financial support CDFI fund. Obviously it's a way to bring in CDFI investment dollars into your institution that then you can lend back out to promote affordable housing and business development and so forth. But I think that it's driven by those factors but there's really, and you'll hear more about this from other presenters, I think there's a lot of opportunity to take advantage of that kind of scale to really reach more people. There's also a couple of other efforts underway to for example, sort of promote better technology and support for credit unions so that some of the challenges that smaller institutions face can be addressed in that way. So if you think about credit unions they're highly regulated, sort of they're subject to the same regulations essentially as banks and yet they're much smaller, they're serving communities that have, they have far fewer resources, they're serving populations that have less money, they're making less money off of their members. It's a constant struggle to sort of deal with staying afloat and some of the initiatives that are underway in our world are trying to help lift some of that burden out of smaller institutions so that they can really focus on frontline, serving their members, having an impact in their community, identifying and needing the real needs of people. And so efforts to support that I think would be really important. There are a lot of opportunities that I think we'll get into in the discussion of the Q&A about how people from sort of the advocacy world as well as community-based institutions can interact with and support financial cooperatives, these credit unions. And there's, I think they're one of the things that I hope happens out of this, which is a conversation about how to strengthen advocacy that we're collectively doing. So both using credit unions, sort of engaging them in coalitions to promote fair regulation, needed reforms and so forth, which has happened to some degree, but also supporting credit unions, which right now, unlike banks, they're sort of the regulator in COA is pretty much disconnected from the public and really has very little interaction and very little accountability. Because CRA and other kinds of laws don't apply to credit unions, they haven't really been sort of put under the microscope. And I think that unlike, it would be a different kind of advocacy, sort of pressing the regulator to support smaller credit unions and credit unions that are based in communities of color, which right now feel very threatened by their regulator. So it's a little bit different than trying to press the bank regulators to crack down on the banks. It would be a different kind of advocacy that I think there are real opportunities for to make sure that community needs are met. And I know I'm out of time, so I just want to say one other quick point. I think that one of the things about the credit union world and the financial services and financial access debate that I think is important to highlight is that I think there's a lot of conversation about products and services. And in some ways, the sort of for those of us that believe in community development that are doing this work for a broader kind of, as I come at it from a broader perspective, I think some of that can be really disheartening because it's like people are looking for this magic bullet, this magical product, the right paid loan to meet someone's need instead of recognizing that it's about living wages or the lack of them. I think that there's real opportunities, especially with the growing recognition of the failures of our financial system, the mainstream banking system, of what this growing demand for a new economy that's based on democracy and other principles that are right now are completely lacking in our economy. I think there are real opportunities for our types of institutions to sort of be a model and show the possibilities of what a just financial system can look like. That is rooted in communities, that is not for profit, that is owned and controlled essentially by the public because it's members. And I look really forward to having the conversation about how some of the other initiatives we're talking about today, the post office banking, public banking can sort of intersect with cooperatives and support for our credit unions because I think for some of us hearing the idea that a post office would sort of just provide another venue for a for profit prepaid car company to hang up its products is a little bit low bar setting. Are there ways that credit unions can intersect with that and can support that and offer a real meaningful, a full spectrum of services, credit and other needed services for residents and for their communities. So thank you very much. Good morning. I'm Carla Decker with DC government employees, federal credit union, very soon to be just DC federal credit union. My credit union was started in 1954 by DC government employees to provide basically just an alternative form of access to credit from the predatory rings that existed within the district buildings. Our history is rich in terms of being a minority owned credit union. And again, we've been in existence for a number of years, 60 years. For the about the first 50 of those years, our focus was very internal, very just centered within the municipality and serving those individuals who worked in just various jobs around DC. For the most part, the individuals who were most attracted to the credit union were those blue collar employees who didn't really have any other options in terms of obtaining banking services from other mainstream financial institutions because they either had problems with check writing and overdrafts or perhaps they just did had colorful credits, colorful credit background, sorry. So the credit union, again, did its job in terms of providing affordable financial services and access to credit, particularly small dollar credit loans to its members. In the late 90s by accident, by pure accident, we were, let me back up, in the 80s, our sort of our mission or our focus shifted a little bit. And that is that the Reeves Center was being built in what is now the Byron U Street and what was then just a deplorable part of town on the corner of 14th and U. And the DC government invited the credit union to be housed in that same building. It was very much a risk for the credit union because the members were elsewhere. And there were only gonna be about 600 employees located in the Reeves building. But the board of directors, all volunteers decided that, you know, it was an opportunity that they just couldn't pass up. It was a nice location. It was more comfortable than where we were. And so we moved to the Reeves building. The neighborhood at the time was very much a neighborhood that was, you know, pre-transition. For the most part, it was the one spot in the city where immigrants could find affordable housing. And where people who wanted to start a business had the facility to actually just rent a little place and start a little mom and pop shop. And so the credit union came into this neighborhood. It is in the late 90s that the regulator approaches the credit union because there was a neighboring community development credit union. Mind you, we were just a mainstream employer-based credit union, but there was a neighboring community development credit union that had been established to serve the immigrant Latinos around the Adams Morgan area that was being liquidated. And so the credit union was invited to basically absorb this credit union and we did. We did so purely from a business proposition. We recognized that the credit union had been stagnant in growth. We recognized also that all of the cyclicalities of the DC government employees, the DC government finances, the municipalities economy very much affected our members' own economic standing. And so, you know, the credit union sort of wavered with the same type of challenges, the same timing as the municipality did. This did not create for a good model. This provided us with a lot of credit risk. Therefore, just expanding into the community became something that was an option that we couldn't oversee, we couldn't pass up. Here's the challenge. At the time, we were $28 million in assets. And at the time, we recognized, based on market research, that we needed to establish a branch if we were actually going to be able to serve the community, to serve others beyond DC government, to serve others outside of the walls of the Reeves building. Particularly others who were immigrant, who had just linguistically, they were either isolated or have barriers, others who had, you know, documentation challenges. And so, establishing a branch became a focus for the credit union. The reality, however, was that we just didn't have the capacity. Financially, we just didn't have the capacity from a perspective of just resources, human resources, we also didn't. And so, our credit union partnered with two other credit unions who were interested in serving the local community in a way that was outside of their own model. These were the credit unions for the Organization of American States and the credit union for the Inter-American Development Bank. Both credit unions very much with close fields of membership, whose membership did not necessarily want to open to community for their own reasons, but wanted to serve or wanted to at least have some positive impact to those Latin Americans living in the district. We partnered with them. This was not a charitable effort on their part. The partnership was one in which they enabled us financially and from a human resource perspective to open a branch in Mount Pleasant. In return, we were to collaborate or participate on the loans made through that branch. So, as you can see, the loans would be priced higher because of a higher credit risk. It also would allow them to, to a certain extent, diversify their own portfolio, right? So, the credit union, just through a very long and very thoughtful process, did establish a branch called Accesso in Mount Pleasant. The branch was opened in the late 90s. Because of the branch, the credit union had to rethink its role in the community. We were really forced to cooperate and collaborate with other community, CBOs, community-based organizations. We took on very much in pro immigrant mantra. We provide all sorts of transactional products that are applicable from remittances to safe accounts to smaller loans. We also now provide voluntary income tax assistance programs. We help individuals obtain IT numbers and ensure that people who are seeking a path to citizenship are meeting their responsibility of filing taxes. The, sort of the offset of all of this or the offset of all of this was that while we did this to expand to community, the result, the result that was completely unexpected was that DC government started seeing us as a partner in creating impact, positive impact into the community so that now we actually are one of two credit unions that banks, DC's summer youth employment program participants before they used to get just the prepaid cards. DC government recognizes banking goes beyond a transaction and so do we. Banking for it to be successful, for it to be long term needs to include the right product mix but it also needs to include financial literacy and it needs to include a mechanism by which people can build asset in the long run. So I know I'm out of time. So I'll stop there but we'll love to continue the conversation later on. Closer I guess. Well good, good morning everybody and thanks for inviting me. I just wanna tell you a little bit about Freedom First Credit Union and the hope of the panel when we were on our pre-call was that it would just spur some questions so I wanna get to that as quickly as possible. Can you hear me now? Okay good, sorry about that. So Freedom First Federal Credit Union is in Roanoke, Virginia. We started in 1956 as a GE employees credit union with $40, seven of them pulled together their money and formed the credit union. At that time and for many, many decades thereafter we were an employer based credit union. Very, very common at the time. We have today about 160 employees or about 330 million in assets. We happened to be the largest CDFI in Virginia. We became a CDFI in 2010. I think what's interesting about the Freedom First story, at least Randy finds it interesting so I assume you all will, is we were plotting along and doing pretty well as your traditional credit union. About seven years ago in a planning session we really started to ask some hard questions and that first question was really what spurred us forward and that is if we were gone today would anybody care? Which is a hard question to answer, easy to ask. And the answer was no, nobody would really care. Our members would go bank at another credit union or a community bank or a national bank and they would go on their merry way. So from there we asked well how can we differentiate ourselves from the market and be unique and really add value in our members' lives and strengthen the community and through this kind of self-evaluation process we found ourselves back at the original intent of credit unions because a non-profit financial cooperative that has the implied mission of serving people of modest means encouraging thrift, responsible use of credit is quite unique, it is quite differentiated. So we decided at that point in time to embrace that fully. At that point in time we started with, we actually hired a youth pastor in town, we thought he'd make a great banker, highly relational and put him in charge of this new community development department, Department of One and he started with financial education and did a great job. The senior management team, we decided to stop kind of pursuing Chamber of Commerce which is largely comprised of bankers and lawyers in our area and really engage the non-profit sector so that we could be much more aware of what the needs were in our community, we could meet business leaders and other stakeholders in a forum in which we could see them really applying their skills and their abilities for the betterment of the community so we were kind of connecting on common ground and that really informed us how we would go forward with the credit union. Well, our community development department grew, I think we have about 10 people in it now but really we consider the entire credit union, the community development department. We established a line of banking products, we call them impact banking and they payday alternative loans, I think was the first one. Credit unions have always done micro loans, these are loans down to $250, I even see some smaller ones slide through every once in a while. We have credit builder, we have borrow and save products, we wanted to address transportation because in our market it's very rural, public transportation only goes so far so we built this program called Responsible Rides in partnership with some community action agencies in the area, Enterprise Car Sales, it involves financial education, car care maintenance, very reasonable product and that's been quite successful, folks have been able to establish credit, get better jobs, work better hours, really engage the services available to them in the community. Most interestingly, most of the applicants under the Responsible Rides program are single moms, largely African-American, I think the average FICO score for that portfolio is about 570 and the average household income I think is about $17,000 a year, two minutes remaining, gotta go. So anyway, lots of interesting products and you feel free to ask questions. I'll end on one point because I think Allison's gonna speak to this. This wouldn't have been possible without our board. Our board, primarily a GE board as you would expect, they've been there a long time and this was a very different discussion to them because we switched from being employer-based to community-based. So while the GE board provided accountability to the initial target market, the GE population, when we switched to being a community credit union, they really did not provide sufficient accountability to that market. So over the last three years, it's been a long time, we've gone through an intense governance renewal project and this has involved really getting accountabilities to the larger community that we serve, opening up elections, whether it be adding, used to have to show up to vote, now you can vote online through the mail other things like that. Open elections, the board created a minimum of two candidates per open position as a goal which is very unique among credit unions and a lot of other pieces to that but I'm out of time so I'm gonna end there and hopefully we can have some more discussion about that later. Thank you. With tradition here in the stand-up, mostly I was told that this was a semi-form, this was a business casual event and I forgot that in DC business casual means dropping the tie. This is what it means in North Carolina so I apologize for my tie but I'm gonna compensate by giving a slightly more formal presentation. Self-help, like Lower East Side People's Federal Credit Union, we really started out as an economic and social justice organization and so for us, even though we actually came out with a cooperative movement, it's really been this mission that drives us which is to create and protect ownership and economic opportunity for all and the cooperative structure for us ends up being a means to do that but it's not the end unto itself and I think that's an important distinction as we continue the conversation. I saw a number of the questions that folks sent out that the cooperative structure is really valuable but for us it's a tool towards providing economic access for folks. We're an odd bird. We're both a family of 501c3 non-profits so you guys in DC are familiar with what that means that we have these charitable organizations. We started in 1980 before we even had a credit union and our goal in that time was during the first wave of offshoring of industrial jobs from the United States. Many of these were to Singapore, Malaysia, South Korea, still continuing to Japan, places like Mexico and North Carolina which many of you are not from North Carolina and in fact most of you are not from North Carolina. I know North Carolina is one of the most heavily industrialized states in the country and nobody thinks of us as heavily industrialized because we don't have GM or GE but we have lots of little textile mills and furniture factories all over the state that have usually been powered by North Carolina's rivers coming down from the mountains and so if you turn over your sheets now they're generally not made in North Carolina anymore. They're made on the Pacific Rim so we were trying to create worker-owned cooperatives to basically allow the workers to take control of the institutions that they were working in and be able to have more financial return. In 1983-84 we thought we had come up with a really great strategy and we would go to banks for financing and they'd basically kick us out of the room saying worker-owned cooperatives is not gonna work, this business plan isn't viable, you're gonna get out competed by these people in Asia and we said that we don't believe you so we're gonna create our own financial institution which I'll touch on as the origin of self-help credit union but also of self-help ventures fund which is our nonprofit loan fund and then finally over time we realized is that you can learn in your local communities about how to do lending and provide financial services but there is a broader world out there and while we would like to bank without Wall Street and we'd like our financial institution to exist without Wall Street, commercial banks have extraordinary market share in this country and the guy that one subprime lender in the state of North Carolina in a week or two could make as many loans to destroy this many communities and families as we helped in a single year so we felt like we couldn't be ignoring the policy sector and so we organized an organization called the Center for Responsible Lending which is part of AFR to really take what we learned as a lender and to leverage it nationally. All right, that's my promo for our policy stuff. On credit union, so self-help credit union was chartered in 1984 and our goal was to provide for these worker-owned co-ops. We quickly realized that if you wanted to serve low and moderate income communities it couldn't just be about working with this relatively narrow sector of organizing worker-owned co-ops but if you provided people with the opportunity in particular to buy a home or start a small business, a childcare in their community, a charter school you were actually providing a big difference. I love Paul's story about the car lending program because it really is providing a tool for people to get and put food on their tables. Since then, we saw a lot of small credit unions in North Carolina, I want to hear about our secondary market bank partnership program. The other thing to think about is how do we leverage not just our experience as a doer in the policy sector about getting responsible laws that chase payday lenders out of the states, that chase subprime lending out of the market, but how do we get the big actors to do the right thing as well? It's good for us to do what we do, but again, this year we're a lot bigger than we were 15 years ago, we made 100 home loans. This year our goal is to make 500 home loans across three states. It's great, I mean literally for those 500 families and you sit across the table from someone and you help them get the keys of the changing event. But Bank of America has more branches in North Carolina than we have across the entire country, so Bank of America to do a mortgage product that serves low income families well for first time home ownership, it's greater impact in the community. So we partnered with banks all over the country, including Bank of America, Wacovia, First Union. Hi everyone, I'm Alison Basile, and we joke that I'm oddball on this panel because I've never worked at a credit union, I've never served on the board of one. I would describe myself as a new economy organizer, so a piece of that being credit unions. And the group I'm gonna share a little story about DMV for a credit union democracy started as a study group, a group of some of the work of our all-purpose, his last name is so hard to say, who you may have heard of out of the democracy collaborative, and he and one of our group members, Keen Botte, co-wrote an article about the 10 things we can do to democratize our economy. And one of those items was not just moving our money to credit unions, but getting involved in the governance. And so a group of us got together, we started to study the local credit union landscape, and we were looking for a larger institution, one that had pretty open membership requirements, one where we thought that we could make a big difference by getting really involved. And so we found a credit union, the Lafayette Federal Credit Union, who fit that criteria for us. We also saw that in 2006, 2007, there was an effort to convert Lafayette to a bank, and that was stopped ultimately by members organizing. And when it was found that tellers were telling members how to vote, so the accountant ended up pulling their certification of the ballot. So that did not go through, but many of the board members were the same from that time, and it seemed like a credit union that could really use an infusion of democracy and the desire to maintain the credit union as a cooperative institution. So the journey began, it was pretty difficult at every step, we had two of our group members, we decided would run for the board of directors. Some of the things that we were looking to do with the credit union, we started to look around at some of the institutions at this table, the best practices, we decided we wanted to focus on increasing transparency in the credit union, increasing democratic participation, looking at the products and services being offered, particularly the new economy, a more equitable and sustainable economy, and products and services for low income communities, and as well as keeping the credit union a credit union. So when one of our members actually in the back here, Dave Sakerman, who's speaking on a panel later, looked to get more involved in Lafayette as a part of the committees, he was told that that there wasn't really an opportunity for him to do that, and actually if he wanted to get more involved, he may want to look for another financial institution. So we saw that as a challenge to really push to get more involved, and Dave and one of our other group members decided to run for the board of directors. So first we needed to get 1% of membership signatures in order to get onto the ballot, and we had to do that without a member list, and also we stood outside of branches for a while, there's a lot of organizing this took, but ultimately we were prevented from doing that and we were asked to leave the branches when member was even threatened to be arrested just for talking to members, but with a miracle and a lot of organizing we ended up getting about 225 signatures for both Dave and Chris to get on the ballot, and we did this also by encouraging our colleagues and friends to join who were looking for another financial institution. So the signatures were accepted, the annual meeting where the vote took place was a couple weeks ago, but ultimately the Lafayette ended up using their staff resources to encourage members to vote for the incumbents, and that was pretty tough to compete with again without a member. The voting took place right before the annual meeting, so members didn't have an opportunity to really hear from our candidates. So Dave and Chris ended up getting 25% of the total votes, so they did not win, but we were pleasantly surprised with the amount of support they got given that the decks were stacked just a bit. But the annual meeting was really interesting and fun, I would say. There is definitely more lively, I think, than past annual meetings that they had, so it was, that was funny to see, but we ended up having some good discussions. A couple of resolutions were passed, and we're looking to continue to stay involved with the credit union, and we'll be planning that in the coming weeks, but some of the resolutions that passed were to look at opening voting, but also by mail or electronically, which would allow more members to participate because right now it's a very, very small percentage who can get to the annual meeting, and also along those lines, to look at having the annual meeting in a place that's more accessible this year was in a kind of not close to public transportation, not with child kinks, again, flee-sized compared to the banking sector, and so I wish that more credit unions would actually realize that their competitive market niche, this is why I like Paul's story so much, is that their competitive market niche is actually serving working class communities, that there's a business case to be made for it, because ultimately in a regulated financial institution, even though we're structured as a not-for-profit, we have to just keep the regulators happy if for no other reason, we have to actually make enough income to cover our expenses, and then some to build going forward, so I think that, you know, so Allison's story, I'd love to have more conversation with those of you guys involved in Lafayette, when they tried to convert to a bank, we provided a little help on, you know, there are credit unions I think who are almost incurable, it's disappointing that that one that the public sector credit union, because I think the public sector credit unions actually get this, you know, again, Carly's example, you know, the people who are using DC government employees, federal credit union for all these years were probably the janitors, the garbage collectors, you know, it's not the executives down at the Reeves building, it's really the folks who keep it clean, and so I think the public sector credit unions get this, but I think a lot of the credit unions that started out with the private sector worker base haven't quite figured out that they can't just open a branch and all of a sudden be able to compete with banks, so I think we need to do a better job of making the business case within our own movement that this is the place to be. Yeah, I agree, I mean, there's a lot of measures to safety and soundness. Our regulator, NCUA, how well we impact our local market is not on their radar. They don't, that's not on their score sheet. Earnings, capital, delinquency, these sorts of things are on their score sheet, so what you get then is a score sheet that's delivered from the regulator to the board, from the board to the CEO, and then that's the score sheet that they operate from, so I think we are over-regulated, or maybe we're not regulated smartly, we could debate that all day and I hope we don't do that, but it does seem odd that a nod for profit on that score sheet impact is absent. That just seems odd to me. But going back to Randy's point, I think he's spot on. We were very fortunate in that we had a very deliberate strategy. We were largely off the radar in our market and when we embraced community development, when we reached out to the non-profits, when we started to come out with unique our story, awareness and relevance grew significantly, so I think that that should be a measure of safety and soundness as well. We were 100% loaned out, which a lot of credit unions would kill for, and even though our membership, 66% of it is considered low to moderate income, our delinquency rate is less than 1%, because we really do a good job underwriting those loans and providing kind of a case management approach when they get into trouble, so I think you can make a very strong business case telling those stories, it's a marketer's dream, and it resonates with people. The other thing that's missing in a lot of credit unions is a younger population. A lot of credit union memberships are getting quite old. Kind of the bank for good strategy really resonates with the younger population as long as it's credible and as long as it's transparent, so we have found that it does resonate with that younger population and we see a lot of membership growth in that area as well. Great, thanks. So I just want to add a couple of things. I think that adding on to what Paul just said, I think credit unions don't do a good job about, don't do a good job telling their stories and talking about the impact that we have. And I've been working with credit unions since 1997, and I remember Ralphinator at a conference saying that credit unions were the best kept secret, and then I was at a conference recently where someone said, it's the best kept secret, and I wish we could stop being the best kept secret because people keep talking about the problems with the banking system and what could it look like? And I do think that in spite of our flea size as a whole compared to the banks that there's really important lessons and models to be looked at in the credit union world. So telling our stories better, talking about the impact, I think one of the reasons is that unlike some of the other CDFIs out there that are sort of not for profit loan funds, they have in-house reserves and marketing people, credit unions are worried, they're sort of under resourced, have their heads down, I'm sure no one here can understand that or relate to that, trying to make sure they can keep their institutions afloat and that sort of can facilitate tunnel vision, unfortunately sometimes. And I think another thing is just, I think more credit unions should embrace this community development mission. And those that do need to, I think, again, step away from the dominant debate about what are the best consumer products and services, which I think is kind of a, you know, can be a real, it can be quick stand, kind of for the reasons that Randy described. You know, it kills me to see credit unions that have done small dollar loans safely and affordably under 18% spread out over six months so that people can actually afford to repay them. You know, going out there and developing a new four week payday loan product so that they can advertise it as a payday loan and compete with the payday lenders. Like why are we trying to validate that model and just offer it at a sort of a friendlier cost? And I think unfortunately some of the sort of broader policy debates and funding sort of priorities, you know, they maybe inadvertently sort of steer the conversation in that direction versus supporting what credit unions do really well, not just to help people meet short term emergency needs, but really to sort of long term, you know, get into a better economic position. And I think that that answer and that path is a much harder thing to tackle. I think all of the challenges that our institutions face are huge. I think scaling up something like this is it would require a whole new policy agenda and you know, sort of funding framework and it's not a quick fix. But I hope that we can sort of start that conversation about how to tackle something like that. Great, anyone else wanna comment on that one? All right, so following up in some ways on the conversation that Alison began, how do credit unions think about what the benefits and drawbacks are of an engaged and active membership? How do you think about engaging? How do you think about what the benefits of that are and what the challenges are? That is such a good question. And we don't have time for that. I have to be, you know, important to understand that my board, as I said, is largely GE. Most of them are retired. But the reason that they got on the board, I won't name names, but one was a new employee at GE. Son was very ill when he was born and needed care that he couldn't afford and the credit you to care for his child. The other woman wanted to buy a car. She'd been a GE employee for a while. She went to a bank and the bank loan officer and told her, your woman, you have no right borrowing money to buy a car. So she joined the credit union and got the money. So that's why those two serve today. So their heart, I mean, it's important to understand their hearts are in the right place. But a lot has changed since 1956 for us, okay? And again, we're not GE credit union anymore. We are Freedom First and we serve an entire MSA and then some. So making this transition with it being very emotionally charged, not always for the right reasons. We engage two different consultants. Bank's board source was one of them who did a great job for us, a little plug for them. And then another consultant who really focused on the legalistic responsibilities for a board member because they wanted to hear that side of it as well. It also took a new board member coming on because somebody left midterm and long story short, he got appointed, but he was very strong in the end. I think that the timing of engaging a governance renewal project is very important. If the house is on fire, it's hard to do that. If you're a strong shop, believe it or not, it's just a little bit easier. And once we all agreed, well, ultimately what the goals were, they agreed to term limits. I mean, they were terming themselves off the board. They agreed to term limits for board officers. You didn't have to show up to vote anymore. You could vote online and you could vote through the self-evaluation processes, management providing feedback into that process of what they need, what we needed on the board, allowing non-board members to serve on various committees. So a whole host of things that occurred really over the course of three years. And now even after enacting these changes, it's gonna take several years for them to be fully ingrained in the credit union. So seven individuals. Our bylaws call for a board of nine. It is by resolution only that we can be at seven. Unlike Paul's experience, usually we don't have a contested election. It is the incumbents who run and re-run. It is also the incumbents who have been with organization and with our board for just a number of years. So on average, my board members have served at least four terms. That's three year terms. So they feel very paternalistic about the board, about the entity that they're running. They are open, obviously, to outside views. And so committees are a great way in which we also engage individuals who are just sort of testing the water and making sure that they understand just what is the responsibility in this whole volunteering effort. Great, thanks. The only thing I would add is I do think, I think I said this earlier, is that the governance is a means to an end. And I think it's important, even those of us who are kind of died in the world cooperativists and care about that structure that the governance is a means to an end. So my agenda would be is if you're advocating for a change in how the credit union does its business, that that is what you lead with, not with the credit union needs to be more democratic. Now there are extreme examples. I mean, Lafayette's been holding its annual meeting in the country club in Arlington for 15 or 20 years and it's an SBA employee's credit union. So they're places where somebody really needs to be whacked upside the head. But I do think that one of the great things about community organizing is it's about bringing the community together to bring about change. It's the change we seek, and the organizing itself is impactful, but ultimately we want to see the change we seek. So I would lead if I were trying to get engaged in the governance of a credit union that you felt had gone awry with what are the things we want the credit union to do differently. And I think Paul's example, there'll be people who will be excited about that mission as a spark. And so I think I would really lead with that rather than with the governance unto itself. And I'll just add, I've been on the board of the Lower East Side credit union for 12 years and I'm someone who actually, they won't let off the board. I'm trying to do some succession plan and talk to Paul because he seems to have it all figured out. We have tried this, so in spite of our name being Lower East Side, we've actually, we serve low income people throughout New York City and we've also unfortunately had to merge with other failing credit unions in the city community development credit union. So we now serve Central and East Harlem as well as low income New Yorkers around the city as well as several nonprofits that we've brought on into our charter so that we can serve those nonprofit employees and their members as well. There's lots of ways to sort of expand that membership. So we have a really sort of hodgepodge mix of members that we serve and that we want to attract into the leadership union. It's a challenge, I think all credit unions that serve low income people, it's, you know, find that it's a real challenge to recruit someone who is maybe juggling multiple jobs, doesn't have time, is struggling to make ends meet. Oh, do you want to serve on a board that meets once a month for three hours? We go too long, we're whittling it down to two hours. But then also does work in between. I mean, it's a lot to ask of people and so we've had some success here and there but what we've also done is bring on the institutions that serve the communities that we're reaching out to and because like I said, we're not just focused on consumer products and services but also on lending to community owned institutions, housing, cooperatives, nonprofits, we're trying to support a community land trust that's, you know, sort of in formation in New York City. Then we bring on also the nonprofit organizations or activists that are engaged in those efforts so that they can help us figure out how to best serve, how to best meet those needs and how to overcome sometimes the regulatory hurdles that we face in trying to expand and do, you know, these bigger, sort of more impactful things. Great, thanks. All right, let me open the floor for questions. Oops, sorry, we're using the mic for folks who were not here at the first panel. So, yep. Or do you, for the interest of time, you wanna go first and then you'll come and do the same one? Sure, I'm Brian Zwitski with the Office of Inspector General for the Postal Service. As I think you guys know, the payday loan industry, there's a tremendous amount of demand for these products that they're offering and in states where they, you know, they ban payday lending, you know, that demand doesn't go away and the folks find somewhere else to get their loans. The challenge, of course, is that there aren't a lot of great alternatives that are really affordable. I've heard some of you talk about you're offering small-dollar loans and I had a couple questions about that. One, could you talk about what, whether these loans pay for themselves or if they're heavily subsidized? And two, whether there is some aspect of how you do it that would be scalable to be able to do it on a much larger scale if there was, you know, the capital to do it or what not? We run economic metrics on all the products and the payday alternative loan, I think ours is 18% and they pay an annual fee, I believe of $35. It functions like a line of credit. That one is a break-even proposition at best. We do more closed-end little signature unsecured loans than we do payday alternative loans now and those come in really three forms. One, where you get the money entirely up, here's your $500, pay it back in six months or a year. That one is profitable. We have a borrow and save product, which is basically, oftentimes to get out of payday alternative loans, we'll give them, let's say it's a $1,500 loan, here's $750 upfront to take care of your payday loans out there and then here's $750, we're gonna put into a savings account, we're gonna secure it and when you pay that loan back, then that $750 is yours. That's a program that's been out there two years. We've done about $600,000 in credit. We've lost about $15,000 to $17,000, I can't remember exactly. So it is, the rates will vary. Some people that get that product have decent credit, believe it or not. They just want that product. I can't tell you that it really drives savings behavior because it's not repetitive enough. So that one is marginally profitable and then the third type that we have is a credit builder product where they have terrible credit and instead of saying, no, we're not gonna help you at all, we take the full amount of money, $1,000, put it into a savings account, secure it, they pay it back, at the end of it, they've established some positive credit and they get the $1,000. So that one we lose money on, believe it or not. No, no, that one is a credit risk is non-existent. So these are small, small, small profits. If we've fully loaded the expenses into them, given the relative loan size, probably not there. We have some small grant money that comes in to help subsidize them. Thanks to everyone else for coming on. How about the scalability? Well, credit unions have the infrastructure to do this now. So as they said, there's a lot of credit unions, they're all making unsecured small loans right now and these just require little tweaks to their system and practices and they could do that. These are not loans of a size that I would imagine a bank would do. Most of them are all less than $3,000 and it seems like that's kind of a cutoff in the banking industry. If you wanted anything smaller than $3,000, they might give you a credit card. So I could see scalability on the credit union side would not be difficult. On the bank side, I think there would be some misalignment with the motives. I do think it gets back to what's the purpose of the product. So I saw some research last week from Michael Barr for financial institutions at the Treasury and is now a professor at Michigan where they'd interviewed low income folks in Detroit and they said, do you know the number one product that folks wanted from financial institutions was? So checking account where they couldn't overdraw. So it meant they couldn't write checks and that if they use their debit card at a merchant or an ATM machine, if they didn't have the money, it would reject the transaction and we think that's a much better product for folks because it gets to this question of income and expenses. You actually have to moderate your expenses which is really, really hard to do when you're poor but poor people are a lot better managing their budget than the rest of us. But to have the discipline of saying, okay, I'm going to the counter and I've got a gallon of milk, a carton of eggs, some black beans and a dress and to have the transaction rejected and you say, oh well, if I take the dress back I can actually buy this stuff. So I think that's really in low income communities it's a question of what is their true demand for products? I actually, I refuse to believe, we're in a state that had payday lending, we banned it. We don't see that there's greater demand for credit that is not being met. What we're seeing is that people aren't having their income used to pay the profits and expenses of the payday lenders. So I think trying to figure out a way to balance and let's not say small dollar credit's not important, we've got a lot of small dollar credit projects like the ones that Paul described, credit builders, savings builders, but it's hard, I'm worried again to go back to the previous panel on postal banking I'm worried about what the profit center would be for postal banking, where would you get income to do it? Really for us, the income comes from the $100,000 mortgage loan, not from the $1,000 personal loan, it comes from the $15,000 used car loan. And that's true, you always cross subsidize, it doesn't, we don't make profits off of checking accounts. It's just, those are very, those are cost centers but they're a key piece of a relationship. So I think one of the challenges you all face as you start thinking about this postal banking is where is the piece that generates enough income to cover the costs? Great, thanks Dave. Can I ask your indulgence to switch the order because you are speaking later, go ahead. I just wanted to make sure people got a chance, you hadn't. All right, so sorry to hog them. I just wanted to ask a question about do you see value in your organizations thinking about really building your constituent base in community organizing type ways so that your members are effective advocates for your organizations in a broader sense, especially if there's hopes to grow the credit union movement and make it more. I know we're talking about a market, a market niche but I mean, I would hopefully like to see it one day grow bigger than it is and how do we get there without community organizing? So yes, absolutely is the answer. But there are some challenges in all of that and at our credit union we're trying to see just what is the opposite of that? What is the opportunity? And let me tell you this. So one example is in terms of serving an immigrant population for instance, a product that we have launched recently in cooperation with an immigrant advocate doing work directly with the community is a citizenship loan. So the citizenship loan is fantastic. It uses some non-standard types of predictors to determine the repayment of the loan. It also ensures or leverages that relationship that the borrower has with that community-based organization in providing additional security for this loan, it's an intangible but it's there. And that's the result that we're getting. We operate in DC. There's an immigrant advocate group in Maryland just in suburban DC that wishes to basically establish the same relationship because of field of membership restrictions, we are not easily able to just take this loan, the same partnership, the same model and replicate it elsewhere. So there are some limitations to just the scalability of all of this but that is not to say that within our field of membership within our own geography that we can't do more. To others, want to comment there? Absolutely, I mean, who wouldn't? I don't understand why somebody would say no to that question. We're opening a branch this week in a very low income distressed neighborhood and it's a block party. We're giving out shirts, we're on social media. We want everybody talking about this. We want as many as we can possibly have because we understand if we are viewed as a bank that's coming into a low income neighborhood, we are going to fail miserably. They have to own it. It has to be, they have to protect it. They have to want it. And in order for that to be successful, they have to be advocates for it. So absolutely we want as many advocates as we can. And I'll just add really quickly wearing my new economy project hat. So new economy project is an economic justice organization that builds coalitions to fight for economic justice and we've done a lot of work building coalitions that challenge banks, practices, press for fair financial services system, reinvestment and so forth. And very early on we're sort of lucky that in New York City we have a strong, handful of very robust community development credit unions that are socially active, they're social justice minded and we've engaged them as I mentioned before in coalitions. We've worked to broker relationships between worker centers and labor unions and other community organizations and organizers so that their members could have facilitated access to these community development credit unions for all of their needs. And in many cases this is just sort of undocumented immigrants, people who have no credit or terrible credit. We also devised at new economy projects several loan funds, a foreclosure prevention loan fund as well as a dreamer loan fund for young immigrants that have the opportunity to apply for deferred action right now. And we've partnered with credeings to service those loans essentially taking advantage of their systems that are already in place. But all of that has really I think helped sort of expand the visibility of community development credit unions with the broader organizing and advocacy world and these are all things that can be easily replicated and we're trying to replicate them around the country. So that's just another way to I think get other organizations that have political power and have that organizing sensibility to feel a stake in these credit unions and not just to see you as like another bank. Thanks. Two questions. One, I would like to hear more about how you interacted with commercial banks because you said in terms of the strategy for scaling up, you were doing that. So I'd like to know really what happened. What did it do for the credit union and then did it change anything with respect to the bank? Was there any purpose to this for the bank? Did it to the bank change its practices as a result? That's question one. Question two, I wanted on this issue of it's the best kept secret and Ralph Nader said it was the best kept secret 20 years ago. It just flashed to me that that's really curious because kind of the most publicized single issue with respect to social oriented banking all over the world is micro credit, which is massively publicized. I mean, the guy who started it got the Nobel Peace Prize and everybody's for it. It's the cure for poverty. I don't happen to agree with all those things. But nevertheless, why is it that micro credit institutions and initiatives have became, it's tamping down a bit, but it became this worldwide sensation whereas you're saying credit unions can't get any notice, any respect. I think I'll try and answer your second question and I'll dive in on the first one. I think part of it is that the term credit union is kind of an odd duck. We're actually both credit and savings institutions. We're not unions. So at least, in fact, in the South, the word union often gets you kicked out of the room. One of the supermarkets that's headquartered in North Carolina actually required their credit union to call itself credit association before they would allow it to serve the employees of the supermarket. So I think part of it is that a lot of it is the fact that we have this historically closed field of memberships. It's the Firestone Employees Credit Union. It's the GE credit union. It's the Portland Teachers Federal Credit Union. So people just think, OK, I don't know what a credit union is and if I do, I'm not eligible to join it. I think that has a lot to do with it. I don't know if other people may jump in. On your specific question, on our partnership, for the banks, what they got out of it was that they got CRA credit for making home loans to low-income families. So the story is that we would make 50 or 60 mortgage loans a year and then we'd go to the big banks, many of which, even when they were much smaller, were headquartered in North Carolina and say, you guys have this great distribution network and people know who Wacovia is and who First Union is and who Nation's Bank is and who BB and T is. Will you make these loans? And they said, well, we're not in the business of portfolioing 97% LTV loans to low- and moderate-income homeowners. And we said, what do you mean? What do you do with them? And they said, well, we sell our loans to these people called Fannie Mae and Freddie Mac. And so what we did is we did a four-part partnership. So the Ford Foundation provided us with some risk capital to take some of the risk of the loans failing. Fannie Mae agreed to buy the loans if the banks would make the loans and we would take the risk with the money that the Ford Foundation had put up and that we had raised for it. And so what we were able to do is say, so you then go to the bank's CEO and say, okay, here's great news. You're gonna get all the PR value of announcing this new CRA home loan product that's gonna serve, again, even if we were just in North Carolina, you're gonna make 3,000 home loans a year for the next five years. Your regulator's gonna be thrilled because you're gonna do great on your CRA test and you're gonna get a 1% origination fee and you're gonna keep the customer relationship. You're gonna service the loan so you're gonna get income for doing that and a business relationship with a person for doing that. So for them, we really thought of their economic and marketing interests and regulatory interests. And then for us, it was all about if we can do this at scale, we can go from making 50 home loans a year to making 5,000 home loans a year because it's not that we envied Wachovia's knowledge of how to make loans to low-income people. We didn't think they knew how to do that as well as we did. We envied their branch infrastructure and their brand name. And so we basically took advantage of the fact that Fannie Mae had trillion dollars of liquidity. Wachovia and Nations Bank had two, three, 400 branches across the state and ultimately across the country and that we had this knowledge base of how to make affordable home loans to low-income folks. And you still see that in other spaces. So Bank of America has recently announced, I forget what it's called, but they've announced a checklist checking account product that costs something like 5.95 or 6.95 a month that you cannot overdraft. You can't go to an ATM machine and overdraft. You can't go to a merchant overdraft and you can't write checks on it and overdraft. So for a low-income person, you know, again, if Bank of America marketing that product for us, that's a grand slam from a mission standpoint. It doesn't help us get a member but it's gonna allow Bank of America to compete with payday lenders, prepaid cards, check cashers to help low-income folks succeed. So for them, they priced it where they think they'll make money because they've got a scale that we don't. So 5.95 or 6.95 for them per month for thousands of accounts is profitable and they're gonna get, you know, essentially CRA credit for doing it. So I think there is, again, there's a space for us to do our community-based solutions but then leveraging it so that we can get the guys who are bigger than we are to do that and recognize there are times where you're gonna punch them in the face. I mean, right, if they buy a subprime mortgage lender, we would challenge a Bank of America or Wells Fargo but if they're at the same time gonna do something that's good for the community, we're gonna praise them. So it's building a real, you know, it's community organizing, right? When your friends do good things, you hug them and you stand at the podium with them on the press conference and when they do bad things, you get in the back room and you chew them out and if they don't change their practices, you get in front of the microphone and chew them out. So. Oh, there's a lot of comment on either of the questions. Only on the best kept secret part of the question about semantics and the whole field of membership connotation. You also need to realize that the credit unions run a whole gamut of sizes, just a couple million dollars to a few billion dollars. And so there will be stark differences there. There are credit unions that are low income designated. There are CDFI credit unions. There are community development credit unions. So there's different credit unions that are all bundled under the same umbrella. And so sometimes it's also just hard to differentiate or hard to identify just, you know, what is a credit union and what do we all call? Thanks. I work with Service Employees International Union. And I guess, you know, I've heard you talk about the difficulty of getting people on the board in terms of time but I've also heard about you talking about how it primarily, you know, you're working for low income communities, communities of color. So I guess my question is to what extent your boards are they representative of the members that you serve? And if not how we can move in that direction and it's not just a question of time but thinking of the board maybe as a leadership development and what are the skills that they need that we can give them and train them the opportunities to learn them so that they can fill those roles. So maybe we'll hear Liz's question as well and let people respond to both at once just cause I'm looking at the clock. It's gonna be tough to do quickly. The issue of regulation came up over and over and over again. And I'm really intrigued by what are the, and I think I'm guessing some of the answer has to do with the different types of credit unions there are. But in particular, what are the kinds of things that you feel like your regulator could do to be better supportive? I'm more interested in that right now just as intriguing that then in the how do we get regulators off our back which is a conversation that is difficult to have from a community organizing perspective. Mm-hmm. So two, two different questions but people can take one or both. On the last question, if we are a strong credit you have a demonstrated good track record of management. If there are underserved areas in relative proximity to where we operate we should be able to serve them. Right now I can't go any bigger than an MSA and remain a community charter. Now if I wanted to reach out into that county I would have to convert back to a selecting employer group sort of structure and go through all these hoops which would just, it's just dumb. Okay, it's just dumb. The other thing is secondary capital. I mean we talk about that a lot as a group. Credit unions can only build capital through earnings. That impedes our growth. There are banks for CRA reasons that Randy mentioned and foundations and other sorts that would likely invest in credit unions through secondary capital but the structure of that secondary capital as mandated by our regulator is not very attractive to them. So if we can modify those regulations discussions now with the regulator to allow that to be amortizing then it would be much more unders and that can provide fuel for some of these other community development activities. So those are just two real quick off the top of my head. Are a lot of you set to talk? The amortizing secondary capital piece does not require any legislative change, correct? Okay, it gets pretty complicated. Everyone check with Randy. I wanted to add in that credit that's a word of where there's no one person sort of on the line and ironically our regulator is not too thrilled with those. So I want to make sure we answer your question. I think it's a balancing act. I think for our credit union we've generally like many folks here who are in the nonprofit sector, we try to bring people who bring expertise and knowledge to our board. Whether it's an accountant, an attorney, a local developer, many of them an attorney, a local developer, maybe even a community organizer, but there's also that balancing act that we are a member governed institution and so to make sure that we've got the engagement of the members is always a challenge and I would confess that for us, as we should be, we try to think a couple of folks and the active members. There are resources to be active in leadership and we're discussing in my credit union ways that we can engage members that don't necessarily involve the huge time commitment of a board of directors but maybe other kinds of ad hoc committees that sort of have ownership of certain things that they can spearhead, but it's hard. It's just a real challenge. Thanks. Do people on the panel want one minute to say anything? I bumped my stake. I bumped your stake. We're gonna hear from all of our panelists and we're gonna keep them to their up to eight minutes no more so that we will have time for questions and answers again in conversation. This is about public banking, potential and lessons learned to date. So I'm not in this order but I'm gonna let you know who's on the panel. Maybe people could raise their hands so people can identify you. San Munger, Senior Associate Center on Wisconsin Strategy. Jason Collette, Organizer with the Alliance for a Just Society. Jared Garner, Policy Advisor for Oregon Working Families Party and on contract with various other good organizations. Gwendoin Halsworth, Founder and Executive Director Global Community Initiatives. Mark Schneider, Professor of Sociology, Reed College Editor, Socioeconomic Review. And Carl Bote, Writer, Scarring Expert on Municipal Banks in my home state of California. Okay, I'm gonna start with Mark, you're up. Thanks folks. I came with both slides and a tie today. And I believe I'm the only sociologist in the room. Which is good to have one sociologist I think. I'm here mainly to, I think the reason I'm here is that I've done a fair bit of research on cooperative, local, state-owned and mutual enterprise systems in the United States. Their evolution alongside or in opposition to corporations and a variety of infrastructure industries from agriculture to banking and insurance to electricity. And the effects of these systems on local communities and local markets, the potential benefits of these systems to local economies and economic development, trajectories of economic development. And I've been asked today to provide a few comments, opening comments providing some context and overview of the public bank campaigns and the Bank of North Dakota. The touchstone for all of this is the Bank of North Dakota, the nation's only state-owned and operated bank. Bank of North Dakota was formed in 1919. It was really emerged as a part of a broader set of movements against corporations from the progressive and from the populace through the progressive, through the New Deal era in a variety of industries that emerged in response to corporate consolidation, independent producers and farm communities and other sorts of community groups and economic groups were increasingly facing corporate consolidation, large-scale corporate consolidation in a variety of industries and in the infrastructure industries in particular during the late 19th through the early 20th century and responded in a variety of ways from regulatory strategies to antitrust to organizing waves of cooperatives. And the Bank of North Dakota emerged as a part of this movement really. In the movement, these are a series of linked movements and these movements really imagined a world or directed main counterbalancing corporate power in a variety of markets, creating possibilities for more decentralized regional economic development around small stakeholder forms of capitalism. And we're all designed to try to capture some parts of the value chain in modern speak, some of the benefits of economic development for all these communities in the plain states the Midwest and the South. The Bank of North Dakota emerges in 1919 as a result of the non-partisan league of the group of populist progressives capturing both houses in the state legislature and the governorship. And we're interested in developing an initiative to cover a broader program of public ownership in grain elevators and terminal marketing facilities and crop insurance and in banking in order to try to counterbalance and capture some of the benefits of the grain trade mostly for its state. The Bank of North Dakota being the most important legacy of that for our purposes today. Three features about the Bank of North Dakota folks who are familiar with this and may be preaching to the choir here. The first is it's the depository for state agencies in North Dakota. The state agencies with some exceptions, public subdivisions are required to deposit their fees and tax receipts and do their banking as depositors in the Bank of North Dakota. That's the source of their capital. The second feature is this money is then used to fund agriculture and small businesses within the state. The Bank of North Dakota does and has done some direct lending. It originally was the direct lender to agriculture. It does not so much anymore that right now it does a lot of direct lending in student loans and some young enterprise and entrepreneurship projects. It's actually more important as an actor in bond markets and municipal bond markets and providing subdivisions, municipalities, counties with short-term finance. But it's main role for our purposes today as a wholesale bank that supports the state's community banks. And it does it primarily by operating a series of secondary markets for mortgages, missy for mortgages and most important by participating in loans with credit, with community banks. Community banks seeking to lend over their limits, over their underwriting limits or over the capital limits can partner with the Bank of North Dakota to increase the size of the loan and so they can stay with large clients. We'll come back to that in a few minutes. The third thing the Bank of North Dakota does is service bankers bank functions for the community banks in the states. Check clearing reserve requirements, that kind of stuff. So housekeeping stuff for the bankers bank. What's important to understand about this Bank of North Dakota model is that it's really not a statist solution. It's not a situation in which the state displaces all of private initiative and private enterprise. It's really a situation in which the state intervenes to create infrastructure and support for the private banking sector in the state of North Dakota. So it's not that the main function of the bank is to provide infrastructural support and to supplement private lending and private lending institutions in the state. And it's run, unless it's an economic development agency and it's run by bankers, not as an economic development agency, but as a bank. And so it's done, a profit making is not quite the right word in this, but it's actually generated a surplus that's as returned to the state for many of the years it's in operation. So why is this attractive? Well, there are four basic things, four basic benefits that have come to the state of North Dakota and its banking sector from this public-private hybrid of sorts. I mean, the first and probably most important thing is this apparatus creates an alternative circuit of capital that basically keeps money from flowing, instead of money flowing out from the state into large, into money-centered banks and being sent off to finance derivatives transactions, the money is actually recycled back into the state. So it's kind of alternative loop of capital. And the function of that is to retie the banking system to the real economy in a way that's clearly quite important and fundamental. The back of North Dakota didn't get involved in derivatives and subprimality, they just passed on it, right? It's boring banking in Johnson and Quack's terms for those of you who truck with 13 bankers. Pretty good book actually I told you this semester. Second benefit, the bank historically functions as a shock absorber for the small stakeholder side, small business and small farms in the state in the face of crises. To tell a lot of stories here, the standard story you hear about banks banking during the Depression and farmers. Farmers, they're dispossessed, they foreclose on the loans, the farmers are dispossessed. And in North Dakota, the bank created a moratorium on foreclosures during the Depression. And let farmers stay on the land and even not pay their rent, the rent-back schemes, as long as they could show they were actually on the farms and try to do something. And when prices recovered they would sell the farms back to the market price. So they functioned as a shock absorber. Also during the Great Recession, there was no credit squeeze in North Dakota. We can talk about that. The third thing that's very important here is that the bank creates and supports a robust ecology of community banking within the state. And I think Sam maybe talked a little more about participation loans and how it does that. But basically what it does is it does not lend directly to commercial industrial markets, but it lends in partnership with the lead community bank and allows those community banks to expand their lending portfolios without fees of their loans being punched by big banks when they do private partnerships with big banks or forcing those banks to grow large in order to grow with their customers. As a result, there were no bank failures in North Dakota during the Great Recession, during the financial crisis. It's one of the most community banked states in the nation. It's first and third in community branch and deposit shows up a fair bit in responding to disasters, right? So the state floods a fair bit on the ground in flooded communities to help rebuild them. And there's great stories of flooding, of what happens to cities on North Dakota, Minnesota side of the border, and how well the North Dakota cities have recovered and how poorly Minnesota cities recover in terms of the population from flooding. And Minnesota is not understood as a place with low social capital. So this is a pretty useful comparison. Okay, so these benefits have proved very attractive. For activists seeking solutions, I got one more slide, it'll be very quick. Activists for solutions, how to deal with the financial from, push to defer the applicable, maybe more. I'm not afraid from state to state, but I'm out of time, so I will step over and let Sandy. I have some slides for you too, way too many now that I think about it. I will talk fast with my ass. You talk time cheaper. Yeah, this doesn't count against me, does it? Is that it? No, I got it. It doesn't count against my time. It can count against me personally. So I'm gonna pick up where Mark left off a little bit and talk about the Bank of North Dakota, and that's not necessarily because we think the Bank of North Dakota is the ideal model or the right model for every state or for every municipality. Quite to the contrary, I think it probably doesn't. Bank of North Dakota has a very unique history and it grew up in unique ways with the financial institutions of the state, the public institutions, and the quasi public institutions in North Dakota kind of molded themselves around the Bank of North Dakota, which has been in place since 1919 or whatever. In other states, the opposite. They filled the void that the Bank of North Dakota occupies to some extent, and it would be difficult to recreate the Bank of North Dakota in those states. You'd be taking on things that the state housing agency does that microcredit institutions do, that CDFIs do. You'd be taking over their space a little bit. So you need to, when actually thinking about what to do in various states, I think it's important to carefully consider what the needs of the state are and sort of work backwards. And I think some of the other folks here like Jared and Jason will talk a little bit about that more. And if we get to Q and A, we can talk a lot about it. I'm not going to talk about it that much. I'm going to talk about the Bank of North Dakota. Oh, real quickly, I'm in public policy. We took a public policy approach to this, which is not in the weed lending and the sort of things that the credit unions and folks were talking about, though I've picked up some of it. Okay, so we were commissioned a few years ago to do what a bank modeled directly on the Bank of North Dakota would look like in other states. And I should say, the Bank of North Dakota's vests and it has data, therefore there's data about it, right? It has financials, you can extrapolate it a little bit. We know this, institutions of this, we do basically what we think are roughly comparable states in terms of population and economy and so on minus the oil boom and then the US average. And you see that North Dakota is above all of them on all of these various measures. We are.