Consumer Alert: CEO says a public bank would allow her credit union to serve more low-income borrowers

It’s a close call. State lawmakers probably drank gallons of caffeine Friday night trying to get bills passed before the session ended. One of those bills is to create a public bank in Rochester. I presented that concept to you on Tuesday, and supporters say it would be the means by which more people of color could get credit.

After this article aired, Melissa Marquez, CEO of Genesee Co-op Federal Credit Union, contacted me and shared her very interesting perspective. Unlike other local financial institution leaders, she strongly supports a public bank.

New York State’s Community Equity Agenda coalition released a stunning analysis of Monroe County mortgage data, finding that in 2022, Monroe County banks lent five cents to prospective homebuyers in communities of color for every dollar lent in white communities.

His findings were consistent with those of the New York Attorney General’s report on homeownership.

However, Genesee Co-op Federal Credit Union has received special permission from the U.S. Treasury Department because the majority of its members come from low-income households in Rochester. The credit union therefore focuses on people looking to take out their first mortgage, a loan for a start-up business or hoping for a second chance. According to Marquez, the institution also helps people refinance usurious loans from other banks.

“I saw a borrower with 31 percent interest and 44 percent interest,” Marquez said. “It was a loan from a bank in Delaware. It was a young African-American man who was released from prison. And that was the loan he got for a car that he needed to get to work.”

She says she can often help the borrower get refinanced for half or less than half the interest rate of the original loan. While that’s not possible for every borrower, that’s always the goal. Marquez says a public bank would help them help even more people. The public bank would be a wholesale bank, meaning it wouldn’t provide services to individual customers. Instead, it would work with large customers like Genesee Co-op Federal Credit Union. The public bank could, for example, buy a loan package from Genesee Co-op.

“These would be ongoing loans,” Marquez explained. “So the public bank is not taking any risk. These are loans that have proven themselves. And that’s why we pass them on. We get money into our institution to make more loans.”

And that’s why she’s so hopeful the public bank bill passes. It would allow her $40 million institution to lend to even more low-income borrowers.

However, the majority of financial institution executives in our region are strongly opposed to the establishment of a public bank because they believe that such a bank would weaken the banking system in our region by competing with private banks.

Rep. Harry Bronson is one of the sponsors of the public banking bill, and a representative from his office told me that the bill was still being discussed Friday afternoon. Discussions on this and a number of other bills could continue late into the night. And of course, we will be watching developments.