In an economy that has seen innumerable bank failures, two community-minded institutions in the Mission are emerging as the little financial engines that could.
What started as a proposed New Year’s resolution on the news site Huffington Post, the “Move Your Money” campaign has spread, a populist revolt against big banks’ predatory lending practices, the taxpayer bailout, and extravagant bonuses for bankers. A recent Zogby poll shows nearly 10 percent of U.S. adults have taken some of their business away from big banks in protest.
While many larger regional and national banks, including Bank of America, continue to report net losses domestically, the Mission’s two neighborhood financial institutions have grown in customers over the past year.
“I think it’s a great opportunity for us small guys,” said J. David Joves, president and CEO of Mission National. “I’m trying to figure out a way to ride this wave.”
Mission National, which operates two branches in the Mission District and one in Berkeley, grew 8 percent in net assets in 2009 and gained 140 customers in the past 16 months. “I think a lot of people already had an account with us and a larger bank, but consolidated their money with us after some, like Washington Mutual, started to fail.”
The nonprofit Mission SF Federal Credit Union, which sits on Mission Street near Valencia, just across from one of the thousands of Bank of America branches nationwide, now has more than 2,000 members, an increase of more than 450 in the past year.
“I constantly meet members of the credit union who’ve made the switch from big banks recently,” said Ivan Barriga, the outreach and financial education director at Mission SF. “People who are very socially conscious are flocking to us. There is a lot of resentment [of big banks] and they want to support the community.”
Barriga said he left a job at Wells Fargo where he was in charge of “seeking out the wealthiest people and trying to make them more wealthy.” The turning point came after a business coach paid for by his employer suggested he try writing a hypothetical obituary for himself. He realized his professional track didn’t match his desire to work more closely with a community and find ways to offer financial resources to low-income people.
Mission SF fit the profile of social responsibility and community engagement he sought.
The credit union recently began offering advances on paychecks, as an alternative to the payday lenders in the Mission. Interest rates for such loans at the credit union are one-twentieth what they are at most payday outlets, which tend to cluster in low-income, predominantly minority neighborhoods, and have been banned in 15 states. Major banks often invest in the lucrative businesses, but try to keep their name from being associated with them, said Barriga. Wells Fargo and U.S. Bancorp have themselves begun offering similar short-term, high-interest loans.
“CEOs of those big banks travel in Lear jets, and go to work in limousines – where do you think they get that money?” Barriga said. “Our CEO drives a car from the ‘80s.” He gestures towards his boss sitting in a modest, open office a few feet away, animatedly discussing finance with a customer in Spanish.
In distinguishing themselves from the largest national chain banks, employees at Mission National Bank and Mission SF Federal Credit Union emphasize community. Money coming in from the community remains in the community, they say, with micro-loans for local businesses and personal financing. Mission SF has even begun offering loans to neighborhood residents looking to buy a bicycle.
Barriga estimates over half of the credit union’s loans are made in the Mission District.
“People are starting to realize now what bank you pick makes a big difference,” said Guillaume Lebleu, a software designer who opened an account at Mission SF less than a year ago. “It’s important to make sure the brand is in line with your intentions.”
Kevin Stein, the associate director of the California Reinvestment Coalition, which advocates for financial rights for low-income communities, said he is acutely aware of the failings of the larger commercial banks.
Stein switched to Mission SF in 2009 and believes the occasional inconvenience of banking at a smaller institution is offset by the knowledge he’s supporting something that’s serving a community.
Mission SF is trying to address those inconveniences, and said it hopes to have online banking within the next three months. Barriga pointed out that customers can access 60 surcharge-free ATMs in San Francisco, more locations than Bank of America has in the city.
Steve and Annette Spector, a couple living in Noe Valley, joined the cooperatively-owned credit union eight months ago, after learning about abusive lending practices by banks they’d used in the past.
“It’s the hometown bank, it’s the small bank, and it’s one you can feel connected to,” said Steve Spector, now retired at 68 after working as a public policy attorney. “The whole idea of members lending money to each other really was attractive to us.”
Tomorrow: Credit Union Invests in Tots to Teens