Woman; Women's Banks and Credit Unions

What what changed. Good evening and welcome to women.

Tonight we conclude our four part mini series on women and money with a discussion of women's banks and credit unions. With me is Joanne parent Joanne is a co-founder of the feminist Federal Credit Union in Detroit and a member of the Board of Trustees of the feminist economic network SAN is an organization formed to further develop growth of feminist enterprises. Also with me is Madeline McWhinnie. Madeline is president of the first women's bank in New York City. She's also a director of investor's research responsibility Center which is Carnegie Corporation and Charles Kettering foundation sponsor. Welcome to both of you. Marilyn did I get that right. That's enough. What do you think led to the fact that we now have women's banks and credit unions. What was the economic situation that led us to this point. Well I think that the feminist movement certainly with the emphasis on control over our lives let us there. The fact that as women we wanted to have economic independence and control over our lives and we went to

the local bank or the local credit union and we're not able to get the credit that we deserve. Lead us to the fact that we now have firms credit unions women's banks. Do you agree with that model. Yes definitely and as more and more women have moved into the labor market up the ranks into better and better jobs are starting their own businesses. They really needed financial help and they just weren't getting. How did the first women's bank begin. It began with two women who've been very active on the political front working on the problems of employment discrimination trying to get the big bank to let women into the training management training programs and trying to get laws passed at least in the New York State legislature outlawing discrimination in credit on the basis of sex. These two women decided that while those were important objectives to pursue politically that if they took a positive step forward started a bank which would be not discriminatory in its approaches but they would make a special effort to serve the feminine constituency if they could achieve their objectives much more

rapidly and much more effective. Women won't get special treatment but they'll get equal treatment. That it is that I got equal treatment but we are I would say we're we're not lending to a woman just because she's a woman. We are making a special effort to help women because I think in our culture for many reasons women have not have the same access to financial information and financial training. And I see this particularly and women starting new businesses they come in without really adequate knowledge of the kind of information that we need to help them. And we have to work with them in a much greater level of detail than we would with a normal man starting a small business that's equal treatment is special treat room a society where it's not the norm. So what about the Detroit critics. Well I think we were it came for women who again were politically active in the feminist movement. Myself and Valerie injures. We were involved in various kinds of activities working on the rape issue and were very interested in the whole gynecological self-help movement in

how it taught us you know through self-examination to have better control over our bodies and demystify our bodies learn what was going on and in the same sense we felt you know we've got to find ways in which we can demystify this whole financial system and have better control over the money that we do have. And we begin. Looking into different kinds of financial institutions and felt of the credit union form would not only be very easy to start that it sort of did fit the concepts of the feminist movement in the sense that you have to be a member of a feminist organization in order to join the credit union. And so we applied for credit in general. This was back in August of 73 or June of 73 and we got the charter in August of 73. Helen how long did it take from the time that someone had the idea to start a womens bank until you actually opened your doors. Nearly three years getting a bank charter is a long slow process under any circumstances a little more complicated than a credit union like them right. Yeah ours

was only complicated in the sense that it was the first famous credit union and the National Credit Union ministration which issues credit union charters had never really heard of feminist organizations and we had to do a little bit of education and training down there to explain to them what feminist groups were and how they operate and so forth and so it took more time than the usual crowd in charter but worked out. I can just hear a conversation like you'll never believe who came into the office today with some crazy women. Right now they're unsure. Madeleine what were some of the problems the problems that you're going to talk about with starting I think the basic problems that we face in starting the bank. We're the economic recession and and the problems we had in remodeling our site and getting bank charter under any circumstances is a slow process. The banking department has to. Review the histories of all the people involved to be sure that there's no underworld or any other kind of bad influence of that sort. And then once

that is clear then you have to raise capital and then you have to staff your bank and we have to get all the staff at least the senior members the staff approve of the Banking Department to make sure that we have people who are competent and able to run the bank. Then we had to start a re modeling and we have the site we picked isn't a very good spot for women it's where there's lots of retail businesses where there's lots of employment of large firms and it's near a residential area too but it was in an old building and it needed a great deal of work and we had only six months in which to do that remodeling we couldn't start it until after the charter was granted. And we had to be opens within six months. So the two things were women money needs different than men's. I don't think so I mean we all have to survive. Society we all need the basic. Consumer items that help us survive better. I don't really think our loan portfolio is that different. You know another kind of learning institution that primarily wants to know I think they're the same

I think that the only difference and the only problem is that women have not had access to the same kind of knowledge. And perhaps it's that women are also more willing to admit that they don't know some of the answers. So one of the things that's come out on almost each of the programs that we've done on women and money is that women really fear money and they're not comfortable with it and various people have you know put forth various theories as to why that's true and I'd be curious. You know to know what your response is I mean why are women so terrified you don't have the money to something that you don't know where you can be afraid of something that you know. And women I've seen friends friends of their mothers that have had very bad experiences with those that have gotten into all kinds of problems divorces that have had a lot of problems. Women starting businesses that couldn't get financing and I think this is why they're afraid. But one of the things that the bank is trying to do and certainly credit unions and others help greatly in this provision of education is to do more counseling and more education than the normal bank does and we have a library that's just getting underway it isn't where we want it yet but will be devoted to consumer and financial information with a library in there that can tell you where to go for help.

I think this is something that's very important to women. Will you also eventually offer counseling and that meant counseling and all kinds of services haven't I started a trust department yet. We will be doing that. And if I come in and say I want to balance my checkbook. Well the key is for you to be able to balance your debts through you know how to for us to explain it in such a way that we never have to explain it again. You know because basically the whole idea about balancing the checkbook is that somehow it's something that's too difficult for women to really be able to understand and what we found about the credit unions it's just amazingly simple that financial institutions you know it's made to seem like it's something that's beyond our comprehension much to difficult but really it's just that we haven't had the same kind of access I mean it's just like you know the young boy who grows up in his father's tinkering with his car and he you know it becomes natural to him because it's easier to enter with a car when you grows up because you've had all this experience and it's been you know natural that he should be able to play with

cars and we should be able to play with money and use money and invest and learn all the ins and outs of it and it's just a question of teaching ourselves. We're also making a special effort to simplify banking for everybody right now and take as much of the paperwork out of it as we can. Can you give me an example of some of why one of the one of the things that we're doing which is been very well received as is our personal checking program the personal checks that we're using have a carbon and carbon carbon so that when you write a check you've written a copy automatically people get to the end of the month and I forgot to fill in their stubs I don't know how much money they got in the bank or to whom they wrote the checks I got that copy right there and then we're we're filing the checks for them we're not returning personal checks but if you need a copy of a check or proof of payment purpose you can call us up and give us the number of the check and approximately when it cleared the bank and we can get you a microfilm copy of it immediately. I think that that's really fascinating because that is very similar to a program that we're into which is called share drafts and it's a truncated system of truncated just means that it is you

don't have that copy back and you do we do have the carbon copy in. We are the smallest credit union that is involved in this program. And as soon as we found out about it we were so excited because it is such a an easy system in. I was on a conference call with a whole bunch of credit union managers talking about the program. When I mentioned it because I have been in New York and you called the unforgettable chick and I mentioned that the only bank that I know that is doing this is is the woman's bank and they said oh yeah. Time to talk a checkbook got me into doing this for us. And now the program's going over so well they would have originally only given to just one thought for us but now they're willing to talk about doing other stuff in other colors. And we've had a coffin was you on the other day asking about the check that we were doing a lot of other things to make banking simpler and understandable and that take time. And be fun. What kind of people apply to the credit union. I mean who are the women who come in there and ask for money when the women that are supporting themselves I mean that question is. Difficult to answer

because then you have to start going down the list and categorizing all the different kinds women that come in because they're just amazing going to sit here not really catering to one class one race that kind of thing it's not a very special kind of thing. No we again had no idea of what kinds of women would come but it just seems that all of us have needs that all of us need to borrow money and every walk of life an income bracket in. Kind of services are you getting it. Are you offering. More women are coming in and opening savings accounts taking accounts that's going right across the spectrum we've developed a lot of corporate business as we've been advertising in the New York Times showing that the major corporations that have been supporting us but our deposit business is coming from both men and again right across the economic spectrum and right across the ethnic ethnic spectrum. The majority of our clients customers 90 percent of the installment loans are going to women. Women are in the majority of our commercial customers too but not

anywhere near so high a majority. Investment Advice helpless financial problems. Rank high on the numbers of types of questions we get when we're also getting a great many calls for help or at least we're seeing that people need help in the accounting area. People that come in looking for longs just haven't put material together in a fashion that's not needed. Sometimes I realize and sometimes they don't. But this is obviously an area where I'm going to need help as a good accounting. You both probably have had some sort of response from the male run counterparts of your institution something I think you're affecting some kind of change do you think the fact that there are women's credit unions and women's bags is going to end discrimination. Well I think the fact that the new federal regulations came down certainly was the effect of the fact that we were going to say if you don't want to listen to us then we will get it together and win to ourselves and I think that when the business starts being taken away that's when the the beings are not going to put up such a big lobby

against better legislation so that we have alternatives when we are turned in for credit that we can. You know. Then that Oh I think it's amazing when these rate regulations came through the applications had to change so much and we didn't have to make a single change on our loan application but these credit unions you know the we worked with they were just running around like crazy trying to figure out how to devise an application and still be as sexist as they wanted to be and yet comply with the regulations you know. One of the purposes the bank is to prove that this is good profitable business and we help the other banks will copy us. And we're already seeing an impact in the ads of other New York City banks. Are you taking risks either of you that you know or the other institutions wouldn't take. I mean really lending money to some people that other institutions have refused to lend money to but I don't think we're taking risks and where I really I think it's quite conservative that we're working with our customers to find ways that we can help.

So really it's an attitudinal thing I mean the other people by refusing to lend I not are not not taking risks. Yeah I would say that you know there are certain kinds of in our portfolio this is not the majority of it and portfolio is just a big word for you know all of the loads in the file cabinet and the you know the loans that we have there are some that could be considered high risk. But to us maybe are not high risk because that you know one of the things is character and you know if someone comes in who's been very involved in the feminist movement maybe is going to start out a new enterprise or business we know that this person has been reliable and has been you know it's bad to come at it and you know your people. Right yeah that is one of the advantages of being able to give loans on that character and not just the collateral in the ability to pale those are important considerations that you can pay back you know. Speaking of collateral I think most. Women think they don't have any.

Yeah we sure get that question a lot of mean when we say well do you have any collateral is there what is collateral you know we found a lot of times that we are a woman you know she said well you know we have two cars in the family but they're both in my husband's name. You know so we say well go to Secretary of State get changed your name so that you have something to back up and I think you know that's a good educational thing that women are beginning to see the need to get collateral and have a credit rating in their own name. How do you establish a credit rating in your own name if you're married and if everything is if you have a department store account. And Mary Johnson said of Mrs. John Jones that's the easiest way to do it because most women shop someplace where they have credit arrangements and you have a charge account in a store or if you're living by yourself and have a telephone you pay your telephone bills regularly. I've seen people or heard people say you know to take out a small loan someplace to do it but you don't need to do that

just in your ordinary everyday life or someplace that you're buying where you buy on credit or maybe credit and that's the easiest way. Yeah I think that you know one of the things that we've seen though is that financial institutions won't. Often pay much attention to the fact that you've been paying your phone bill regularly for this many months because it's not reported to a credit bureau as such whereas the the charge card thing is probably the best especially with these new regulations that they have to. If you're in a marriage situation you're both equally responsible for paying the charges for. And for running up the charge from the you know that they have to report to the credit bureau in your name. Because almost all our lending or we just check with a credit bureau we don't bother to call the phone company or the gas company and so the easiest is to check the great American thing about the record and what do you think that a woman can expect from a bank kind we know I mean a woman should be able to go to a bank and take out a loan without anyone cosigning right within reason. Well if she has some means of repayment Yes whether it's a regular job or alimony

or income from investments are some kind of collateral. What what the bank is looking for is is there some possible way in which you can repay this credit and if she had that if she has a regular job she shouldn't have to have her father or anyone else to get the last time either. But if there's no other way of repaying them we can find that homemaker cosigner. If you turn to that. Yeah I think the cosigner we considered simply as another form of collateral and you know we do get a whole lot of signature which is that you know you've got the ability to pay back this loan and that's all we care about and you know when you sign your name in a multi-user get around security and you know so that you've got the unsecured signature low versus the secured loan I think of somebody else you know first or without an established creditor that we might tend to want some kind of collateral or rooms that you know we try to work with women find ways in which we can do that without having to get a cosigner because it

you know it is very humiliating to be told that you have to have somebody else about for you to know that you're not good enough. Are there different kinds of credit unions you know there's employment credit unions which I think are about 80 percent of the credit unions in this country and then there the association which is what we are whereas you belong to association and then you can join a credit union and I think there's community credit unions also a very small amount of them and one of the things that's interesting about credit is that we just learned the other day was that we're larger than 75 percent of all credit unions and that really goes to show in short to have years for one thing half as we grow but another thing that credit unions are often very small limited is situations that don't seek to grow. But that 25 percent though is there in a particular plant in our church our particular bridge membership is relative and a loan company on the corner credit you know where they say that was created using a very interesting

development because that. They were formed just because of the loan company on the corner where commercial banks at one time were not doing as much consumer installment lending in the only place that individual people had to go to get loans for durable consumer goods was these outrageous loan sharks and finance companies that charge 25 and. Well at that time maybe even harder. Thirty six and forty six percent interest in that credit unions developed as a result were in fact the man that came to our organizational meeting he said. Credit unions are for the little guy and you know here it was a group of women that you know started the first fellows get in. And so in that sense the same way that women have been ignored you know by the lending industry that sort of went in gave us the impetus to start the credit union Kriti Union started because the banks weren't doing so much consumer lending and the only alternative people had was find it's companies. Which. Are very high interest and if you can get a loan at a bank or credit

union you're a lot better off than a finance company. There are different kinds of banks. The commercial word bank is probably a badly used because there are the commercial banks. There are savings banks. Something called a savings Law Association which a lot of people think is a bank. It really isn't a bank although it is somewhat similar in its activities to a savings bank. And then there are banks that are chartered by the federal government and chartered by the state government. So there's lots of variety in our banking industry although I think. Over the next decade that that will change greatly and that the lines of differentiation will will melt. I think that the difference between a thrift institution and a commercial bank is going to change and I think even the credit unions may come closer in the type of business. What is the difference between a thrift institution a commercial institution now your commercial where commercial banks were doing. Commercial loans personal loans. We're not doing mortgage loans. We will if we get a little bigger. A savings bank that cannot have checking accounts they only can take time

accounts. And they're very limited in the type of loans that they can make in most places they cannot make consumer loans like make mortgage loans but not for purchase of a car or to pay the dentist or make an occasion or something of that sort. So it's important to know what the institution is in that the founders of our bank went through the commercial charter so that they could provide help outside the membership organization particularly in the commercial field and that's. And in the trust department you know. Let me ask you a question we often see banks are doing a lot of advertising these days and offering free premiums toasters and aluminum bowls and things like that and free checking accounts. Is that true is there such a thing as a free checking account I mean doesn't that cost. Well it definitely cost the bank something. There's no question about that. But there are a few banks in the country and very few that have genuinely free to the customer checking accounts. But there are very few. It's never really free because the money that you have in the checking is being used by the bank to loan it to me.

Well there are some some banks I can think of one in New York City for example. You can keep a dollar in the account and keep you counted but that's you know the gas to either service charges or a balance in order to pay the cost of maintaining it can. But what I'm saying is if the bank doesn't pay you interest like it would have a savings account on that check you know because it cannot by law. Yes but I think that is going to be changing too and the laws have changed very recently with respect to small businesses small businesses may now start savings accounts which they never could before and they can transfer funds in and out of those savings accounts very readily. So the amount of M&A posits that a business keeps now is much smaller than it used to. What if a woman runs into some discrimination. What recourse does she have. Well she can go to a lawyer and tell her story. We refer to a lot of women lawyers in our area of the you know are familiar with the credit legislation and you know I think they didn't give her the best advice as to whether or not she has a case. What the unfortunate thing about is

that weird like this it's the humiliation that really affects us rather than I mean what we say is come to the credit union and get your loan and then go to the lawyer and you know I've got to get it here Loudon but they're slow and I mean you know New York State New York City and the federal government all have procedures for it you can go through. But if you're a need the loan as you say you might want to try another place. Yeah try the institution as you probably know what is the legislation I mean earlier you referred to the recent legislation and can you be more specific about it. Well in Michigan we had a credit law before the federal legislation and then I believe it was Bella Abzug its bill that was she was one of the. You know whenever people have worked on. But Arsalan you know. So it was it's a women included discrimination I'm not familiar with all the terms but I know that the regulations came out in the wind affecting in the 20th of October this past year when the law financial institutions had to end in credit granting institutions had

to comply with these regulations and I think it's really good it's a good system. Madeleine Have you always been involved in economics. Have you ever been president of a bank or aren't very many women that are presidents of banks. All of the numbers growing. Fortunately I had my training as a financial economist and I've been without a reason. Right. What about you. Well I don't have any training and financial thing. Like I said come out of the feminist movement and I had different kinds of various kinds of jobs and that you know very and I just decided that this was something that we wanted to do and worked with a number of other women who wanted to do this for you know kids can't see how amazingly simple it is if we want to learn. We want to take control over things that we can do it. We put our minds to it. The world is a lot simpler than we've been led to believe by men who want to keep control of it. I think that's the thing that amazes me most about we were sitting in my office earlier Madeline until one would think it's easy it's you see all your positiveness just start

and you know that such an unheard of thing I mean we we haven't had people telling us that it was not that OK you know. Will be interesting and I don't know if you've ever thought about this but there really isn't a place where women learn about money. Can you imagine you know elementary schools. Teaching there they're going to really get economics classes really down into the kindergarten area and nowhere near enough of it. But it is beginning. What do you think are the most important things that women should know about money. What to do with their money let's make it that. Well one of the things that we've been stressing is financial planning because I think too many women doesn't drift with respect to finances. And your plan may change over your life as your interests and priorities change but I think from the time you start your first job you ought to have some kind of an idea where you're going so that you set aside certain amounts for liquidity purposes emergency purposes and then you begin to invest. Children are.

Different for you. Control your career. Thank you. Thank you and good night. ME ME ME ME ME ME

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