African-American farmers get help from Wachovia Bank to start credit union

<p>HEATHSVILLE, Va. – Being denied access to small business and agricultural loans for years says the National Black Farmers Association, is about to significantly change after one of the largest banks in the U.S. agreed to assist the group with the start of a federally-chartered credit union. The move comes after a year of boycotting by the association of Wachovia Corp., a financial institution that had been charged with denying minority farmers access to lines of credit and agricultural loans, said John Boyd, president of NBFA, a non-profit organization whose goal is to eliminate and reverse the causes of land loss by farmers, ranchers, and rural landowners. “We’re hoping the credit union will cut through the red tape and eliminate the fear factor that, unfortunately, some banks create to indirectly discourage applying for loans,” Boyd said. The NBFA is in talks with Wachovia to secure a $100,000 non-member deposit but has already been offered a $25,000 grant to assist with legal, compliance and other start-up costs. The credit union will serve NBFA’s 66,000-member base and may be headquartered in either Virginia or North Carolina. NBFA is also hoping to secure office space in some of Wachovia’s branches left vacant when the bank merged with First Union Corp. last September. Wachovia has $330 billion in assets. That merger prompted Boyd to write to the Federal Reserve Board urging a review because of the banks’ lackluster community reinvestment action track record. “Neither of the banks will deny that African-American farmers have not had access to loans, and it’s probably a combination of discrimination and not seeing a profit margin in lending,” Boyd said. The NBFA tracked the CRA records over a five-year period of the top 20 banks in the U.S. and found that several had the worst accounting of reinvestment in minority and low-income communities. Boyd said Wachovia, First Union and SunTrust Banks were targeted because their branches are predominantly in states that have large minority farm populations and all three had less than stellar CRA ratings. Wachovia spokesperson Mary Eshet disputes Boyd’s research saying Wachovia and First Union have “long, positive CRA records and are committed to helping disadvantaged communities.” “We want to provide access to credit for disadvantaged farmers and in our goal to do so, we work with organizations that reach that constituency,” Eshet told Credit Union Times. Eshet said the bank will also provide assistance with research and development and technical expertise. Meanwhile, at press time, Boyd was scheduled to meet with a SunTrust Board member on Feb. 26 to discuss additional assistance with start-up costs. When the boycott was launched in late August, the NBFA wanted Wachovia to establish a $81 million CDFI fund for loans to minority and low-income customers in the Southeast. Eshet said the bank has pledged $35 billion in community loans and investments over the next five years in Florida, Georgia, North Carolina, South Carolina and Virginia. If all goes as planned, Boyd hopes the NBFA will have a federal charter by early fall. [email protected]</p>