Today, We Own It called upon credit unions across the country to make emergency loans to keep people in their homes. We Own It Executive Director Jake Schlachter sent a letter to the 1,430 credit union CEOs who manage over $100 million in assets and have excess reserves of member-owned capital on their books. In his letter, he called upon them to "strive for five percent" of their capital to put into an emergency lending program. This level of lending would create nearly $10 billion in emergency loans overnight across every community in America and still leave most credit unions with plenty of excess capital to do more.
America's 5,200 member-owned credit unions have a combined $185 billion of retained earnings1. $56 billion of this capital is in excess of what is required by regulation. This is capital owned democratically by 120 million Americans that they need now to keep themselves and their neighbors in their homes during an unprecedented eviction crisis in the midst of the COVID pandemic, in the absence of federal action or a functioning moratorium on evictions.
"Credit unions and their member-owners didn't cause this eviction crisis, but we have the power to keep people in their homes - $56 billion in available capital - and with that power comes the responsibility to act," said Schlachter. "Credit unions have empty seats in our lifeboats, and there are people in the water all around us. We can't take in so many that it sinks the boat, but as long as we have empty seats, we should be pulling in as many people as we can."
In August, the Aspen Institute estimated that, without a new moratorium on evictions and foreclosures, 30 to 40 million Americans -- 80% of them people of color -- would face eviction in the coming months due to unemployment caused by the COVID Depression and the expiration of expanded unemployment benefits by the federal government2.
"This is an extremely urgent racial justice issue flying beneath the radar," said Virginia-based organizer Daniel Mintz, who has begun a petition drive calling on Richmond-based Virginia Credit Union to start an emergency anti-eviction lending program. "Richmond has the second highest rate of evictions in the country. We need Virginia Credit Union CEO Chris Shockley to put $20 million of the co-op's excess member-owned capital towards emergency loans and keeping people in their homes now."
In September, the Trump Administration's Center for Disease Control announced an eviction "ban", but due to loopholes and burdensome paperwork requirements, few evictions are being stopped by it. When NPR investigated recently, they found that only a single eviction out of a 100 court cases was prevented by the ban3. "We now know that the federal eviction 'ban' announced in September was only a mirage," said Schlachter. "It was worse than nothing, because it took away people's urgency to act without actually saving people from being put out on the street. Our people need help that is not coming. We’ve got to do it ourselves.”
A credit union is a cooperative bank, democratically owned by the people who bank there, who are called members or member-owners. Most of America’s credit unions were founded in the 1930s during the Great Depression. When investor-owned banks refused to lend to working people, ordinary Americans -- often less than a dozen around a kitchen table or in a church basement -- came together to form their own cooperative banks to lend to each other. These credit unions have now matured beyond their founders’ wildest hopes, with 360 having hundreds of thousands of members and worth over $1 billion. Collectively, the 5,200 credit unions across the US have $1.7 trillion in assets and count 120 million member-owners.
Credit unions are regulated by the National Credit Union Administration (NCUA) under the Federal Credit Union Act of 1934. The FCUA requires credit unions to maintain a ratio of net worth to total assets of greater than 7%, which means in practice that most credit unions maintain at least 8% to have a buffer. Since the Great Recession, NCUA has pressured credit unions to go beyond the statutory minimum and maintain reserves of greater than 10% -- in essence, extracting money from their member-owners to stockpile that would otherwise be returned to members to pay for the necessities of life -- leading to an average ratio of 11.2%.
This excess capital is essentially a “rainy day fund”, now $56 billion and growing. We Own It has also published a spreadsheet at https://i.weown.it/cu_info with detailed information on each credit union’s financial outlook and capacity to make emergency loans. A copy of the letter sent to Chris Shockley, CEO of Virgina Credit Union, is available at https://i.weown.it/letter_to_vacu.
We Own It is a 501(c)3 nonprofit founded in 2015 as an advocate and network for the nation’s estimated 130 million member-owners of cooperative business. Its purpose is to develop the cooperative’s most valuable asset -- the leadership capacity of its member-owners.
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NCUA filings for Q2 2020, compiled by We Own It on Jun 30th. https://i.weown.it/cu_info
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The COVID-19 Eviction Crisis: an Estimated 30-40 Million People in America Are at Risk. Aspen Institute, Aug 7 2020. https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/ Retrieved Sep 18 2020.
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Despite A New Federal Ban, Many Renters Are Still Getting Evicted. Chris Arnold, NPR, Sep 14 2020. https://www.npr.org/2020/09/14/911939055/despite-a-new-federal-ban-many-renters-are-still-getting-evicted Retrieved Sep 18 2020