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“Movement” Bank’s Ribbon Cut

by Paul Bass | Jan 25, 2011 2:39 pm

(9) Comments | Commenting has been closed | E-mail the Author

Posted to: Business/ Economic Development, Fair Haven, Whalley

Paul Bass Photo Jim Paley needed to hustle. And, it turned out, he needed a local banker.

Paley runs Neighborhood Housing Services (NHS), New Haven’s leading not-for-profit builder. He needed a bank to sponsor his group to qualify for a state program to help working families save money through government-aided bank accounts. At the last minute, he learned that the bank that had helped him before—like most New Haven banks, based out of state—decided to stop letting Paley’s clients open accounts.

With a state application deadline looming, Paley tried the newest bank in the neighborhood, START Community Bank. He reached Vice-President Lynn Smith. The same day Smith got back to him: Sure, she said. START’s in.

Paley told that story Tuesday as he joined a crowd at START’s official ribbon-cutting on Whalley Avenue, on the same block as NHS’s office.

START christened its two branches Tuesday, at 299 Whalley and 258 Grand Ave. The event marked the culmination of seven years of work to create a “community development bank” in New Haven—locally owned and run, overseen by a not-for-profit corporation, dedicated to lending to small businesses and homebuyers within city limits and to guiding people in poorer neighborhoods away from predatory payday lenders. (Read more about the bank’s genesis and mission here.) The bank has about $13.5 million in assets.

“We would like you to think of this not as a bank. We would like you to think of this as a movement,” bank President William Placke told the crowd. “We would like you to join the movement ...  Your bank account can make a difference in your local community.”

To sweeten the pot, START is entering visitors to its branches this week into a “ribbon-cutting grand prize” contest. The prize: a $1,000 savings account. Then there’s a Cracker Jack-style promotion: The first 150 people in line Wednesday will receive “lucky” envelopes containing either $1, $5 or $100 bills.

Placke announced the development of a “Loot Camp” run by Vice-President Smith in conjunction with city government youth chief Che Dawson. The program encourages schoolkids to save part of the money they earn from summer or other jobs.

START bank is a for-profit subsidiary of a not-for-profit called First City Development Corporation (FCDC). It is modeled on community-oriented lenders like Chicago’s ShoreBank (the granddaddy of community banks, which has since run into financial trouble and been acquired by another institution), City First in D.C., and North Milwaukee State Bank.

Corey Stone, who chairs START’s all-volunteer board, Tuesday spoke about how the bank’s mission differs from New Haven outposts of national lending institutions.

“When somebody wants to buy a car, we’re going to help them save to buy a car. Our loan is going to be better than the loan they get at a dealer,” he said. The same goes for people wanting to start a business or buy a home in a city neighborhood.

State Rep. Pat Dillon encouraged community institutions to follow the lead of the housing authority in finding “creative” ways to do business with START. The authority is moving $250,000 into the bank to house a revolving-loan fund for public-housing tenants who start their own businesses.

START emerges from the ashes of New Haven Savings Bank, the beloved former mutual savings bank that was taken public and became NewAlliance in 2004. As part of its approval to go public, NewAlliance had to set aside $25 million to create FCDC; the money to start START came out of that fund.

The concept is to fill in the local lending gaps left behind when local banks—like NewAlliance, now in the process of being taken over by Buffalo-based First Niagara—become regional banks.

START’s Fair Haven branch is in a building owned by Angelo Reyes, a developer recently arrested by the feds on arson charges. Placke said Reyes has been a “totally cooperative” landlord. Should Reyes end up in jail and/or lose the building, Placke said he’s not concerned because START has a long-term lease: five years with four successive five-year renewal options.

Paul Bass Photo

 

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posted by: Threefifths on January 25, 2011  2:49pm

I would trust none of these banks.

The History of the
“Money Changers”
by Andrew Hitchcock


http://www.erichufschmid.net/TFC/History-of-Bankers.htm

posted by: anon on January 25, 2011  3:52pm

“look for the valuable information that the criminal Jews provide, but watch out for their propaganda and tricks.”

Nice article, Threefifths.

posted by: Jon Schultz on January 25, 2011  4:12pm

How dare you call payday lenders “predatory?” Payday lenders offer an option which is extremely useful for many people and in some cases saves people from eviction or losing their jobs when they need to get their car repaired fast. The service is generally advertised honestly and people choose it of their own free will.

You should be sued for libel.

posted by: robn on January 25, 2011  4:46pm

JOHN,

Would calling payday lenders “usurious” be slightly more factual for you?

posted by: Jon Schultz on January 25, 2011  4:58pm

robn:  Acutally no, because the word usury has no valid definition - unless you use the original definition, which was the charging of any interest whatsoever on a loan - and in that case all lenders are usurious. The more modern definition, which is the charging of “excessive” interest on a loan, is invalid because the word “excessive” is a subjective, and not objective, characterization. And people who try to define usury in terms of an annual percentage rate always miss the point that the importance of a loan’s APR is directly proportional to the term of the loan. You cannot compare the APR of a two-week payday loan to the APR of a 30-year home loan because the home loan is in effect 780 times longer. Thus laws that set an APR cap for all loans are invariably counterproductive.

posted by: Threefifths on January 25, 2011  5:15pm

posted by: anon on January 25, 2011 2:52pm
“look for the valuable information that the criminal Jews provide, but watch out for their propaganda and tricks.”

Nice article, Threefifths.

I don’t agree with the statement criminal Jews provide, but watch out for their propaganda and tricks.”But I do agree with The History of the “Money Changers.

posted by: Not quite, Jon. on January 25, 2011  6:20pm

In fact, in most states, there is a usury rate on the books.  In Connecticut, that rate is 12%.  Thanks (no thanks, really) to preemption case law, these usury rates are typically bypassed by nationally chartered banks and credit card companies incorporated out of state but are still enforceable against state-chartered or state-incorporated entities (this is a generalized overview, I’m assuming you don’t want a treatise).

Payday lending is abhorrent as it too often leads to a never ending cycle of debt for working poor people.

A worthwhile primer: http://archive.demos.org/page44.cfm

posted by: Jon Schultz on January 25, 2011  9:13pm

Payday lending too often leads to a never-ending cycle of debt just like the selling of food too often leads to a never-ending cycle of obesity. All good things are misused to bad effect by people who simply need to learn from their mistakes.

Customer satisfaction surveys show that a large majority of people who have taken out a payday loan feel that they benefited from the service:

http://www.cfsa.net/get_the_facts.html

posted by: ernest on January 26, 2011  7:07am

... Placke isn’t worried about his ill-gotten building because he has a lease?  And just who will make repairs and live up to the landlords obligations under that lease, Mr. Banker?

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