Gov. Hails CU Help in Pa. Budget Crisis

Pennsylvania credit unions along with banks were singled out last week by Gov. Edward G. Rendell for “acting in a socially responsible” manner in providing low-cost loans to hard-strapped state employees facing payless periods during the state’s prolonged budget impasse. “I am extremely grateful to the institutions that have responded to our requests and have agreed to develop financial products to help eligible state employees cope with these potentially difficult circumstances,” the governor said at a Harrisburg press conference. The CUs include Pennsylvania State Employees CU, AmeriChoice FCU, Members 1st FCU, and Oil Country FCU. Others identified by the Pennsylvania Credit Union Association as planning to offer loans include Altoona VA Hospital FCU, Belco Community CU, Grove City Area FCU, NE PA Community FCU and Your Choice FCU. In his remarks, the governor noted, “Each of these institutions has its own criteria for eligibility and participation, programs and interest rates in establishing low- and no-interest loans and lines of credit.” He was joined by Secretary of Banking Edward Kaplan, who, in particular, praised PSECU and President/CEO Greg Smith for “leading the way to remedy these problems and stepping up to take social responsibility.” Since PSECU began offering 0% loans in May, volume has jumped 20% on the product, which is offered to those state employees who stay on the job but don’t receive a paycheck. Commonwealth officials estimate that as a result of the crisis, which hinges upon lawmaker approval of next year’s budget, 69,000 state employees will be missing paychecks beginning July 17. –[email protected] Ill. CU Offers Members Budget Crisis

With so many states facing fiscal crises this summer, the $575 million Credit Union 1 in Rantoul, Ill. has a simple lesson for its peers: Be cautious about wide-open, new-member policies to help cash-strapped state employees. Under procedures it revised this year, the Illinois CU-which includes a large membership base of state employees-said it “no longer wastes a lot of staff time with inactive accounts.” “Two years ago when the state had a similar budget impasse, we were inundated with 1,000 applications but 20% were never activated,” explained Paul Simons, president/CEO. Under new rules on special low-rate loan offers, nonmember applications are being turned away, Simons said, noting also that employees must have direct deposit, payroll and a minimum 600 credit score. Credit Union 1 is also imposing a $2.5 million cap on the loans, Simons said. “We simply made our whole program wide open last time around and we’ve learned our lesson.” Some employees “are disappointed to learn that this time around they can’t simply get the loan by applying,” Simons said. “We insist they already are members.” –[email protected]