Two LGBTQ CUs in the Works
Officials believe these credit unions will help knock down financial discriminatory obstacles.
Earlier this year, Superbia USA LLC, a New York City-based organization led by Founder Myles Meyers, raised more than $100,000 in contribution commitments that will be used to establish Superbia Credit Union. The organization, which submitted its application for a state charter in Michigan, has the backing and support of CU*Answers, PSCU, Mastercard, and other companies and individuals that are providing advice and resources for the capital, compliance and operational requirements to secure a charter.
Meyers, an insurance and financial professional who most recently served as the head of strategy and business in global business planning for Foresters Financial, said his research and recommendations from business partners led him to apply for a state charter in Michigan.
“Michigan has been very cooperative with us,” Meyers noted, who is working full-time on the de novo credit union project. “We’re very encouraged by our communications and the frequency and openness of our communication with them.”
In San Francisco, LGBTQ Credit Union Coalition Organizing Director and Founder Spencer Watson expects to submit a federal charter application with the NCUA in 2019 with a goal of opening LGBTQ Federal Credit Union by 2023. The Coalition operates under the financial sponsorship of the San Francisco Bay Area Leather Alliance, a nonprofit that provides education on health and safety issues primarily to the leather, fetish, kink and motorcycle communities. Other nonprofits that are Coalition members include Sisters of Perpetual Indulgence, St. James Infirmary and community organizations such as the Queer Land Trust, which provides affordable housing for gay people. Watson said these groups and others will be included in the credit union’s field of membership.
“While certainly organizing the credit union itself is the principal goal of the Coalition, there are other milestones that we are looking to accomplish along the way, which is developing a robust understanding about the financial and economic LGBTQ issues,” Watson said, who previously built national movements as a campaign and relationship manager for several Bay Area nonprofits and developed individual clients’ financial and credit literacies as a credit counselor.
“We’re also developing that research and knowledge to fill the present information gap about LGBTQ households, and creating education workshops and programs that are oriented toward helping LGBTQ consumers and businesses identify what their specific needs are that differ perhaps from other mainstream consumers, and how they can plan more effectively for those needs,” he said.
Superbia, which is the Latin word for pride, according to Meyers, is a reference to the Gay Pride movement that began in 1969 at New York City’s Stonewall Inn. After the bar was raided by police, protests erupted, launching the national movement for the rights of lesbian, gay, bisexual, transgender and queer people.
To be sure, a gay pride moment also will be celebrated if Superbia and/or the Coalition secure their charters and open their doors as new credit unions. Over the last couple of years, Equality Washington organizers in Shoreline, Wash., had been working with credit union professionals to secure a charter “white label branding” arrangement to serve LGBTQ consumers, but the status of that project is unknown. Former and current organizers did not return CU Times’ messages seeking comment.
The First Gay & Lesbian Credit Union in Dallas is believed to be the first cooperative to serve the gay community in Dallas, Texas, and obtained its state charter in 1988, according to the NCUA’s listing. But the credit union wasn’t insured until 1991. Six years later, it was merged into Dallas Area Rapid Transit Federal Credit Union, which was consolidated with the City Credit Union in Dallas in 2007. The First Gay and Lesbian CU served 840 members and managed assets of $525,000, 54 loans valued at more than $337,000, and total shares and deposits of $442,996, according to its final NCUA Call Report.
Superbia and the Coalition have much larger visions – to go national. Meyers pointed out about 10 to 15 million Americans who identify as lesbian, gay, bisexual, transgender or queer hold a combined economic power amounting to about $1 trillion.
“By operating as Superbia Credit Union, we can remove that risk of discrimination effectively overnight as we roll out across the country,” Meyers said. “So our solution is being authentic in that proposition to the [LGBTQ] community, being commercially competitive with the other credit unions that are out there and creating a sustainable mechanism for giving back to the community. That is really what Superbia is all about.”
He noted only 14 states currently have laws that specifically protect against credit discrimination based on sexual orientation and gender identity.
While Superbia will offer all of the traditional financial products and services, it will offer a unique service experience.
“We plan to also provide the types of lending for trans people, and gay couples who are looking to get married or to adopt, but the service experience that you have with that type of product is where the differentiation happens,” Meyers explained. “I’m not interested if you’re male or female. I’m interested in your pronoun. That’s particularly meaningful to trans persons when they are filling out a [loan] application or when you’re speaking to someone. Superbia will bring a level of safety and security to the [LGBTQ] community that it just has never had the chance to experience.”
In addition to anecdotal evidence, numerous research studies and surveys conducted by corporations and academia confirm discrimination exists, including pay inequality. And just like the general population, the LGBTQ population has a variety of money challenges.
Although Watson of the Coalition concedes there are organizations that do not discriminate against anyone and that there is a much broader social acceptance of LGBTQ persons, it does not mean that discrimination and inequality have faded away.
“Just like with any underserved or minority community, there are underwriters out there who are discriminatory, and they’re given a wide latitude and discretion in their ability to set interest rates and approve or deny loans,” Watson said. “Frequently, they don’t offer any explanation as to how they arrived at a certain interest rate or a certain credit decision.”
For example, using Home Mortgage Disclosure Act national data from 1990 to 2015, two professors, Lei Gao and Hua Sun, of the College of Business at the Iowa State University, found that in contrast to otherwise comparable loan applicants, the average approval rate for potentially gay applicants was about 3% to 8% lower and their financing costs were about 0.02% to 0.2% higher. This was equivalent to an annual total of $8.6 million to $86 million in additional interests and fees paid by same-sex borrowers nationally, according to the study.
The study also found no evidence of higher default risks among gay consumers.
What’s more, according to a 2018 research report by Prudential Insurance, lesbians earned $5,000 less than heterosexual women, while gay men earned $30,000 less than straight men. The same report also revealed 41% of LGBTQ persons say they struggle or are unable to keep up with finances compared to 27% of the general population of consumers.
Other research by Experian, Aegon-Transamerica and the Human Rights Campaign found that LGBTQ people struggle to maintain adequate savings and retirement savings, while more than half of LGBTQ employees say that sexual orientation discrimination exists at their companies.
These statistics may come as a surprise to many because there is a common myth that most gay people are affluent – one that has been largely perpetuated by marketers from big banks, tobacco and alcohol companies, Watson said.
“There’s a very large assumption that LGBT households have greater discretionary spending because either they’re earning the same, or more, as heterosexual households, or they don’t have families to support,” he said. About 30% of same-sex households have children.
These discretionary spending myths, however, have led to aggressive marketing tactics by tobacco and alcohol companies.
“The same thing is certainly happening with debt,” Watson said. “When you have firms like Wells Fargo, Citigroup and U.S. Bank, who show up at pride parades with huge rainbow floats and huge advertisements for rainbow-emblazoned credit cards, those marketing efforts are frequently predicated upon their financial support either through sponsorship or what they purport to be friendly employment practices at their firms.”
However, he argues that this type of marketing is not competitive on the actual terms of the products that the big banks are offering.
“It’s not actually clearly demonstrating that their products have a superior interest rate or superior financing costs compared to other financial products on the market,” Watson said. “This type of marketing exploits our desire for equality, which is really a predatory marketing tactic that causes consumers to make buying decisions on business practices that have nothing to do with the competitiveness of the product that consumers are actually purchasing.”
Spencer said the mission of LGBTQ FCU will be to offer fair and equal access to affordable financial products and services with lower rates and fees, LGBTQ-specific financial planning and specialized loans such as adoption and fertility loans or grants, and gender-affirming loans or grants.