The Queensbridge housing project in Long Island City is the largest public housing development in the country, with at least 10,000 residents, and another 6,000 low-income families live in nearby Ravenswood. But only 30 percent have bank accounts, and most don’t qualify for loans from traditional financial institutions — which makes it hard to get ahead.
That’s why the East River Development Alliance is opening a credit union in LIC this spring. It will be the first credit union to open in the city in 10 years, and one of just two nationwide to be approved in 2009.
Unlike banks, credit unions function as cooperatives. They are owned by their members and exist to provide loans and other financial services at lower rates than traditional financial institutions.
Bishop Mitchell Taylor, ERDA’s president, says the LIC credit union will extend loans to people would normally not have access to lines of credit. The point is to give struggling people a chance to get back on their feet.
“Once you get people employed — once you get people financially on track to some degree, then there has to be a mechanism to capitalize them — to give them the vehicle that can repair credit,” Taylor said.
ERDA is offering money management classes and financial counseling for those wishing to join the new credit union. By becoming members, the bishop added, people can build healthy relationships with a financial institution and learn how to manage their finances.
“Years ago, [banks] would draw a line around a particular area and say, ‘We’re not going to lend to that particular area,’” Taylor said. “They called it red-lining.” Then, as time went on, banks started “pink-lining,” or lending at high interest rates. Public housing projects were often red-lined or pink-lined.
“When you own the bank — when you own your own financial cooperative, you erase the red line, you erase the pink line and you draw a big green line,” Taylor explained, adding that he believes the credit union will do a great deal toward “breaking cycles of generational poverty.”
Becoming a member of the LIC credit union requires just a $10 deposit. One thousand people have already pledged to join, and non-member deposits thus far total $1.2 million. Mayor Mike Bloomberg has also said that the city plans to deposit $25 million in credit unions this year.
The LIC credit union is set to open in April and will be located at 13-03 40th Ave.
If the LIC facility is a success, Taylor said, other similar neighborhoods might open their own credit unions.