Filene Expands `Check Cashing' Pilot with Broader Services; Wisconsin Still Leading the Way, But Other States May Join

MADISON, Wis. -The pilot program begun two years ago by Filene Research Institute encouraging credit unions to offer non-member check cashing services to add new members while also serving the “unbanked” is undergoing an overhaul and now includes a broad array of savings, loan and “wealth building” services. Formal debut of Filene’s “Real Solutions” program, as the revamped project is now known, came in May with the hiring of ex-staffer from the World Council of Credit Unions Lois Kitsch to run the venture, but CU executives in Wisconsin and Wyoming got their first sampling of the research endeavor three weeks ago. Wisconsin CUs have long been in the forefront of offering limited check cashing services to non-members with the Wisconsin Credit Union League confirming it has signed an agreement with Filene to start offering the “Real Solutions” package unveiling it to the public at an Oct. 19 press briefing. Meanwhile, members of the Wyoming League during their annual conference Sept. 9-11 in Casper got an inkling of the revamped Filene project in an unusual give-and-take discussion with the owner of a Colorado-based chain of payday loan shops who challenged the Wyoming group to take a look at payday loan products While Wyoming CU executives remained, as one put it “astonished at what pay day loan firms can get away with” that League, which is managed by the Colorado Credit Union League, is not initially part of the Filene venture. But Mark Meyer, Filene’s director of innovation, said the non-profit Madison think tank is close to signing agreements with two other Leagues, which he declined to identify, as also part of “Real Solutions” which if successful would be extended to other Leagues and CU groups nationwide. Heading up Real Solutions, aimed at building new members for CUs while also guiding them in reaching the “unbanked” through various check cashing, savings, tax assistance and loan products is Kitsch, director of special projects and a former international project manager for the World Council. Filene said Kitsch’s work on Real Solutions will be to guide Leagues and CUs in implementing “transaction and savings products” designed to meet the needs of “underserved low-wealth households.” Filene also said Real Solutions would be building on “insights obtained from field testing” on check cashing services over the last two years offered by 19 CUs, a number of them in the Madison/Milwaukee areas. At the Wisconsin League, James Drogue, vice president of operations, said he and Kitsch discussed the “Real Solutions” program with dozens of CU executives two weeks ago during chapter meetings in Eau Claire, Madison and Milwaukee and received a favorable reception. “They liked the concept,” said Drogue noting that a number expressed interest in participating. The initial discussion of the venture will occur at the Oct. 19 press briefing with a date and participants yet to be determined, he said. But in Wyoming, it was obvious CU leaders were not as far along in working with the unbanked since, as the chairman of that League, Vickie Nelson of Casper, put it, “we had no idea” the speech by the Colorado payday executive was part of the Filene pitch on “Real Solutions.” Both Kitsch and Tim Lanham, president of Mr. Money Holdings, a national chain of 65 payday loan outlets and pawnshops based in Fort Collins, were speakers on the Wyoming League program with Kitsch commending the group for being “in tune with their members.” But it was remarks by Lanham, a newly hired “applied research” consultant for Filene, that raised the most eyebrows with Nelson, the League chairman and CEO of Burlington Co-Op CU, saying she was “surprised at how he gets away with charging those rates which I’d call gouging.” Nelson stressed that her CU like others in Wyoming is committed “to helping our members” and while it might like to offer such products as “a great way to gain new members” federal law bars Wyoming CUs from extending such rates. “We would want to make sure we operated safely,” she said, “since these are pretty high risk” products. Nonetheless, she said “it was interesting to see the volume he has generated” but as for CUs “we don’t fall under the same rules.” Dennis Vinson, chairman of the Wyoming League’s Government Affairs Committee and president/CEO of the $35 million Atlantic City FCU in Lander, said he was so astonished at Lanham’s review of Mr. Money’s growth and profitability that he discussed it with U.S. Sen. Craig Thomas. (R-Wyo.) during CUNA’s `Hike the Hill’ meetings in Washington two weeks ago. “Our senator didn’t even know this outfit existed and he was amazed,” said Vinson. It was noted that Mr. Money has outlets in several Wyoming and Colorado cities as well as franchises in the South. Vinson said he was simply surprised Mr. Money “was posting a return on assets of 30%” as compared to peer CUs at the 1-1.5% ratio. “It all was pretty enlightening,” said Vinson. Lanham said the Wyoming speech is the first of its kind to a state League but he gave one two weeks ago to a Washington meeting of Filene’s new “i3″ group of so-called innovators “and rising stars” among CUs. He said he has another scheduled meeting in San Diego as he travels the country “to work together with credit unions to help them understand how to reach the unbanked.” Filene’s Meyer said Lanham would be booked for other meetings as the need arises but the Fort Collins payday lender represents a key link to tapping into payday product resources. Lanham has a solid reputation as “an honest, insightful individual” who can assist CUs in serving the low income market. -