Riverwest Organizes a Credit Union
The credit union, also serving the Harambee neighborhood, already has $500,000 in pledges.
It took a lot of work, but the first credit union to open in Wisconsin in 10 years will soon serve the Riverwest and Harambee neighborhoods. All individuals and businesses who live in the 53212 zip code will be eligible to join the Riverwest and Harambee Credit Union (RHCU)
Organizers with the project have been going door to door in the Riverwest and Harambee neighborhoods since June to ask residents to complete surveys and make a pledge to open a savings account once the credit union opens for business. More than 462 people completed surveys, with more that two thirds of respondents pledging $500 or less.
“We knocked on a lot of doors,” says Alex Brower, a spokesperson for the fledgling credit union. The organizers have also held several information sessions in both neighborhoods. The goal was $500,000 in pledges and it was reached in just six months.
“Now that we have the pledges we need to submit an application for the charter to the Wisconsin Office of Credit Unions,” Brower says. They’ll also need approval from federal regulators.
Whereas banks are profit-making businesses, credit unions are tax-exempt non-profits that typically can charge less for services. Since the banks bailout of 2008, there has been much criticism in the country of these big multi-national companies.
“There is no corporate accountability,” Bowser charges. “We will be deciding through elected people what our rates will be, how we operate the business. A credit union is owned by the people who use it. There’s accountability and things will be run as a democracy. We’ll be looking out for our members.”
Still, he notes, the credit union must be run in a business-like fashion if it is to succeed. “We’ll charge interest for loans, but that money goes back into the credit union.”
Credit unions in America go back to 1913, when President William Howard Taft signed legislation allowing their creation. By 2014, U.S. credit unions had 100 million members. Wisconsin has 165 credit unions with $27 billion in assets and 2.5 million members, according to the Wisconsin Credit Union League’s Scorecard.
Brower says the organizing committee for the new credit union has been talking with the Riverwest Cooperative Alliance, which has years of experience forming and maintaining cooperatives. The alliance can provide consulting and and a range of services at any stage of development. Founding members of the group include the Riverwest Co-op, Riverwest Public House Cooperative, People’s Books Cooperative, Build Milwaukee Cooperative, and the Riverwest Investment Cooperative.
Brower says the fledgling credit union is still determining what services it will be able to offer. “We won’t be able to offer business accounts right away. We hope to be as competitive as possible. Our members will know their deposits in this credit union will be better used than it would in a commercial bank.” Ultimately, Brower says, the credit union hopes to be able to offer loans for new coops.
He says credit unions are largely a lifestyle choice. “Our members are buying into something else. For one thing, they’re buying into a local economy.” All the dollars and savings that go into the credit union stay in the community.
Credit unions also help area consumers by competing with banks. “When credit unions are in the same markets as banks, banks offer better rates,” Brower says.
Brower has experience in the field. “I worked at a credit union for factory workers. We served those workers well. We offered better rates than they would have gotten anywhere else. A lot of people that got turned down for a loan at other places got one with us.”
“People are ready for a change,” he says. “People are fed up with the way economy is working. Or isn’t working.”
A particular problem, he says, are “predatory financial institutions” like the two check-cashing places in the neighborhood that charge high rates of interest.
“I’d love to see those people driven out of business. I’d love to be a thorn in their sides,” Brower says.
But that will take time, as people in the neighborhood learn the difference between the credit union and other lenders.
“We did a lot of canvassing, door knocking already. A credit union will educate you as to what to do with your excess money. People we’re talking to here in this zip code, they have to make their money stretch as much as possible,” Brower says. “We’re going to be their best bet to get a car loan, improve their credit score.“
“Most credit unions typically serve a large geographic area, like several counties or all of southeastern Wisconsin,” Brower notes. “We’re defining the boundaries of the this new credit union as the 53212 ZIP code, because we believe that keeping our wealth in the community means improved economic health and security for the people who live there.
Interested people can contact the Riverwest and Harambee Credit Union Organizing Committee by visiting creditunion.rca.coop.