<p>WASHINGTON – Although Malcolm Bush, president of the Woodstock Institute, and recent credit union critic and longtime community financial activist, emphasized that NCUA needs a regulation to quantify how many low-income people credit unions serve and how well, he said credit unions could enact several different strategies short of regulation to help low-income people. Bush, who Credit Union Times has learned is a member of the National Community Reinvestment Coalition's Board, suggested that technology and partnerships between large and small credit unions might provide ways credit unions, particularly those with newly approved underserved areas in their fields of membership, could serve larger numbers of low-income people. He emphasized that he believes there is a definite need for NCUA to be able to better know how credit unions are serving their lowest income members, and that is going to mean some reporting requirement. But even though that is not in place, he believes there is a lot credit unions could be doing right now. Bush, a credit union member, said he has been impressed with the work of Navy Federal Credit Union, which has used technology to cut transaction costs of working with low-income sailors in its extremely far flung field of membership. He also said that sailors' general comfort levels with technology, which might be greater than a general population's, might make them easier users of financial technology. But he also pointed out how technology has been used to good effect in providing financial services even in the townships of South Africa, where illiteracy is fairly widespread. He used the example of the African National Congress party that, after it came to power, was confronted with the need to get financial services into black township areas, where poverty was very high and literacy very low. "They adopted a system of ATM-type machines," Bush said, "that used picture symbols on their screens rather than words to help people use them despite their illiteracy. They have been quite successful with that," he said. Bush also noted that work with low-income people is fairly wide open for partnerships between big and small credit unions, with larger credit unions helping to fund the activities of the smaller, lower-income credit union and thus helping low-income people while saving on the cost of expansion itself. One of the possible avenues might be a larger credit union providing a loan to a smaller credit union for them to use as security for a small loan program that could compete with payday lenders, he said. Clifford Rosenthal, executive director of the National Federation of Community Development Credit Unions (NFCDCU), which is a NCRC member, said Bush's suggestions are on target for the different approaches credit unions are beginning to use to serve low-income communities. Rosenthal cited the recent first meeting of the NFCDCU's Technology Advisory Group, which Rosenthal described as being a cooperative effort among different sized community credit unions, data providers, and other community technological groups to document the different "paths" credit unions might take to bring more services to low-income people through technological interfaces. "We recognize that most of our community development credit union members don't have a lot of capacity to evaluate technological options in-house," Rosenthal said, "that's not one of our strengths." So credit unions are looking for examples of technological efforts in other venues, community centers and public schools for example, he said, where services are provided to lower income people. The group will study options over the course of a year and produce a report that community development credit unions can use to set up their own technology programs, he added. He also praised the notion of larger credit unions, or banks, helping smaller ones specifically to help lower income people. NFCDCU anticipates closing the deal on a long-term investment from the Ford Foundation of $1 million that the Federation will then parcel out to community development credit unions to backstop programs designed to help them provide alternatives to check cashers and payday lenders in the community. He stressed the money from the Ford Foundation is an investment, not a grant, and that NFCDCU anticipates making enough on the deposits to cover loan losses and be able to repay the money. Ed Jacob, President of the low-income North Side Community Federal Credit Union says a similar arrangement with a local bank is helping North Side, a $6 million credit union with 2,800 members, expand its "hot funds, cold cash" program. North Side started "hot funds, cold cash" to take aim at local payday lenders by providing short-term $500 loans. Jacob said the program had been very successful as it had been originally constituted, but that he had wanted to expand it and that required getting some help from the local bank. To qualify for the original program, borrowers had to have been members of the credit union for at least one year, not been turned down for any loan by the credit union during that time and make at least $1,000 per year from any source. The loan rate was 16.5% and, amortized over a year, the payments were $45 per month. "We were able to make about 1,800 loans since 1994, when the program started, or almost $900,000," Jacob said. "But we wanted to expand the program and to really compete against the payday lenders and for that we wanted to take away the `year membership' requirement and for that we needed more backing." So Jacob, a former banker, approached Northern Trust Bank, an institution he said tended to serve the upper end of the financial services market and with assets he estimated at $40 billion. Jacob convinced the bank to give North Side a grant of $20,000 as part of an effort to fight payday lending. Jacob will set aside the money in a separate account dedicated to covering any heavy losses from the new anti-payday lending program, which will not have a membership requirement. "The bank is able to get CRA credit for the grant as part of an effort to fight payday lending," Jacob said, "so it works from their point of view. It works from our point of view because it will enable us to make these loans to more people without my NCUA examiner getting too upset by it." North Side's overall loan portfolio has had charge-offs of about 1.55% since 1994, Jacob reported. Charge-offs in the Hot Funds/Cold Cash program have been 3.01% over the course of the program and Jacob expects that number to rise "somewhat" when the credit union drops the year's membership requirement.</p>