You can open a checking account. You can deposit money into a Certificate of Deposit. You can even use ATMs around town to get cash.
In short: START Bank is a genuine bank.
That’s what bank president William Placke (pictured) impressed on aldermen gathered for a hearing about his lender Wednesday night at City Hall.
While being community focused, START is a serious, old-fashioned, functional, insured financial institution, Placke said.
Placke cut the ribbon on two brand new bank locations exactly one month ago: START Bank—with one location on Whalley Avenue in Dixwell and one on Grand Avenue in Fair Haven—is concerned mainly with the economic growth and financial health of New Haven neighborhoods, he said.
“But we’re not a giveaway,” he pressed. “We’re a full service bank.”
Read more about the bank’s development here.
START is a community development bank with a twofold mission, Placke said: To use its profit to expand existing services, and to improve New Haven. The bank, which is overseen by a non-profit corporation, intends to pour itself into the community by lending to small, local business and non-profits as well as potential home buyers in New Haven. It also seeks to guide low-income people away from predatory payday lenders, encouraging them to start on the road to fiscal security.
A Hybrid Organization
“You can’t expect to be successful if all you’re doing is the community service stuff,” he told the aldermen. “We have to think of ourselves as, and we are, a full-service, traditional commercial bank. And one of the reasons I was asked to speak tonight is because there’s some misconceptions about that.”
“We have a full suite of loans, deposits and other products,” he said. “We’re a tax paying entity and required to maintain the same capital levels as every other bank. We get no free passes from the Feds,” he said.
START deposits under $250,000 are fully insured by the Federal Deposit Insurance Corporation (FDIC).
“So you have CDs [Certificates of Deposit] and things like that?” asked Alderwoman Bitsie Clark.
Yes, and at a rate that won’t last long but beats the heck out of the market—1.67 percent, said Placke.
The hearing came about, Board of Aldermen President Carl Goldfield (pictured) interjected, when one of the aldermen wanted to buy a CD. “He’ll remain unnamed,” said Goldfield, “But he wanted to buy a CD and said the rates are good—but is this insured? I was surprised that he didn’t understand that this was a regular bank with home and business mortgages, checking, savings accounts, ATMs, all the rest.”
I want people to understand what this is all about, said Goldfield, who sits on START’s board.
“START must be a hybrid organization,” said Placke. The bank will provide traditional commercial banking services for companies and organizations around New Haven, he said, and it needs to attract those traditional clients. But it will also offer convenience services such as check cashing, walk-in bill pay, and money transfers to Mexico with lower fees than traditional banks, and neighborhood services including financial and savings education, youth services, and credit counseling.
“And we want to convince people over time that things like check-cashing aren’t a good way to do business,” Placke said. “We want to move them to the middle of the playing field with a checking account first, reducing fees, and making it easy for them to pay utilities without having to run around the city.”
What About the ATMs?
One important thing, Clark (pictured) noted, is that this becomes a truly neighborhood bank. “But you’re talking about the need for having regular business to support it, right?” she asked Placke.
“So I wonder if I should open an account there, but then I wonder if I have to schlep all the way over to Whalley and Grand? There’s no place downtown,” she said. “I’m all excited to support this bank and I’m sure others would be too, but that would have an effect on me—not being able to get there immediately.”
Placke agreed, and said he’d thought about that very issue. He emphasized the need for a strong online banking facility, direct deposit and remote deposit for commercial organizations.
“We also belong to something called Allpoint ATM network, which has 30,000 machines nationally at Walgreens, Target, grocery stores. They have more machines than Bank of America.”
START designed its partnership with Allpoint to protect customers from fees. “There’s no charge to use the ATMs,” he said. “Our challenge is letting people know that’s the case.”
Placke, prepared with PowerPoint slides, walked aldermen through the bank structure, leadership and development. Then he got to the real issue: poverty.
Showing a map of New Haven representing income per capita, Placke pointed to the lightest areas, which represent households making less than $15,000 per year. “This demonstrates why a community bank is needed,” he said. “This is just an extremely poverty stricken city.”
The light areas, he said, are largely black and Hispanic neighborhoods.
He asked the Aldermen to think of the map as a fabric. “The strength of this fabric is only as strong as its weakest pieces,” he said. “If the fabric starts to fray or shred, we’ve got big problems. So it’s on all of us to strengthen, and darken, those light areas with jobs and development.”
Placke said the bank is already calling itself a vehicle for improvement, and asked the aldermen for their support. “You’ve gotta help us become successful, because our work is to raise the level of New Haven generally. It’s in your best interest—our funds will be cycled back into the community.”
He called New Haven a worthy place for such an effort.
“Are we going to make a ton of money?” he asked, rhetorically. “No.”
Does it matter, he asked?