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A New Jersey based non-profit organization, First Step Alliance, said Wednesday its "proof of concept" to open a credit union that will serve the financial needs of millions of formerly incarcerated men and women has been approved by the NCUA.
The NCUA's approval means First Step Alliance will be allowed to continue its application process with the goal of eventually securing a federal charter for Diverge, a Proposed Federal Credit Union. The proof of concept chartering tool is an option that has been in place since 2019 for federal charter applicants to streamline and digitize phase one of the chartering process. In April, the federal agency released a new guide to simplify and clarify the federal credit union charter application process.
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Discrimination in financial services is a significant problem for millions of formerly incarcerated individuals, and it especially impacts people of color and women, according to First Step Alliance in Fort Lee, N.J. As a result, formerly incarcerated persons are forced to rely on check cashers, payday lenders and other high-cost, non-bank alternatives.
The proposed Diverge PFCU's mission will be to address systemic discrimination by improving access to affordable products and financial education to help people build long-term financial health, First Step Alliance said in a prepared statement.
Individuals, businesses and other organizations can join the proposed new credit union through approved membership organizations, including First Step Alliance, whose membership is broadly open to formerly incarcerated people, and their families and supporters. Those who join Diverge PFCU will be able to access their accounts online and via a mobile banking app, as well as through fee-free ATMs. The proposed credit union also plans to hire staff that will provide personalized services by phone and at planned branch locations.
"I'd like to commend the team behind Diverge PFCU's charter application. Their concept is an example of true financial inclusion, and it's also an example of why reforming (the) NCUA's chartering process is one of my top priorities," NCUA Vice Chair Kyle Hauptman said in a prepared statement.
There are several ways individuals and organizations can get involved and show their support for the project:
- Individuals interested in becoming a future member of Diverge PFCU can take the Community Membership Survey on this website.
- Persons also can make a donation to support the formation of the proposed new credit union at its website.
- Organizations interested in providing a capital contribution, deposit pledge or other support can find additional information at this website.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
