Iconic NY Credit Union Goes Under
This Year Has Had Its Share Of Sad Moments For New York Credit Unions.
Yesterday, NCUA announced that it had liquidated Bethex Federal Credit Union of Bronx, New York, bringing to an end an iconic low-income credit union chartered in 1970. Its assets were assumed by U.S. Alliance of Rye, New York.
When I joined credit union land, I quickly learned about Bethex and its scrappy CEO, Joy Cousminer. As a biography on the credit union’s website announcing her induction into the Cooperative Hall of Fame explains:
“First as a teacher and then as a founder and President/CEO of Bethex Federal Credit Union, she helped bring banking to an area that had no banking facilities and no access to credit. The many innovative programs and partnerships offered by Bethex reflect her recognition of the financial, educational, and business needs of the people of the South Bronx and her efforts to meet them. Her work embodies the ideals of community spirit, determination, vision, and cooperation. She is a leader with a quintessentially cooperative spirit.”
I got to know Joy in passing because she wasn’t hesitant about calling the Association and making sure it knew when she thought a proposed regulation was harmful to small credit unions.
This past June Bethex was one of the credit unions highlighted in a WSJ article reporting that fifty credit unions have been identified in a “confidential” FinCEN Report citing “their increased vulnerability to potential money laundering” because of their relationships with Money Service Businesses (MSB), in general, and check cashers, in particular. Crucially, the report was based on data analysis and didn’t accuse credit unions of wrong doing. MSB is a catch-all definition referring to businesses that engage in check cashing, wire transfers, travelers checks and pre-paid cards, among other services. https://newyorksstateofmind.wordpress.com/2015/06/03/credit-unions-under-bsa-scrutiny/
We can disagree about just how important asset size is to the credit union mission, but to me it is indisputable that the ethos personified by people like Joy has to survive if credit unions are to remain truly unique financial institutions.
IOLTA Regs Finalized
I’m guilty of being behind on my reading of the most recent regulations — don’t tell my boss – but with my Christmas hiatus coming up soon I wanted to remind everyone that NCUA finalized its regulations on Interest on Lawyer Trust Accounts.
IOLTA accounts are accounts in which lawyers hold client money in trust as part of a business relationship, for example the refundable portion of a retainer. Last year, Congress passed a bill authorizing credit unions to offer IOLTA and similar accounts to their members by extending Share Insurance coverage to IOLTAs and “similar” accounts. The final regulation explains what accounts are sufficiently similar to IOLTAs to be insurable. It authorizes NCUA to extend Share Insurance coverage to accounts where a professional or other individual serving in a fiduciary capacity holds a client’s funds as part of a transaction or business relationship including real estate escrow accounts and prepaid funeral expenses. The definition is expansive enough to allow credit unions to offer coverage for additional fiduciary accounts that may develop in the future. Here is the regulation: https://www.ncua.gov/regulation-supervision/Documents/Regulations/FIR20151217Share-Insurance.pdf