Remarks to Community Development Credit Union - June 9, 2006

Thank you for that wonderful warm welcome. And thank you Marc, for your kind words of introduction. Ladies and gentlemen, I have appreciated your strong support over the years. It is such a privilege to be with you today, for I have great respect for what you do!

As a member of the Senate Committee on Banking, Housing and Urban Development, I know that credit unions are helping people access financial opportunity, and the ripple effect of this personal financial empowerment in turn greatly strengthens our communities. Community credit unions provide people with access to affordable financial services and loans to help meet their families' needs. Your institutions give individuals the opportunity to establish good credit records, which can lead to approval for home mortgages and other major loans. Then they are able to start building wealth, often for the first time in their lives. Ladies and gentlemen, this is the route by which many families are realizing the modern American dream—and credit unions deserve the credit!

In North Carolina, we are fortunate, indeed, to have so many good community credit unions—for example, the Latino Community Credit Union here in Durham. Let me say that I am very proud to hear yesterday's announcement that Duke University, my alma mater, will deposit $5 million into this extraordinary financial institution. The Latino Credit Union actually was founded after Duke University Hospital officials approached local Latino leaders to find out the reason behind a disproportionate number of Latino residents being brought into the hospital with terrible injuries. Quickly they learned that many of these victims did not have bank accounts, and they were being targeted by criminals, who invaded their homes or attacked them after they cashed paychecks. You see, many of the new Hispanic residents in the area had never opened a checking or savings account. Some even kept large sums of cash in their home or on their persons, putting themselves at risk for theft or robbery—as in the case of Mr. Frederico Nañez, who was left paralyzed when thugs shot him after he cashed a $500 check. In May 2000, when the Latino Credit Union first opened its doors, Mr. Nañez became its very first member. Founder John Herrera put it best when he said that the credit union is "not just saving money, but saving lives."

When first established, the Latino Credit Union estimated that it would attract 1,000 members. Today, it has 43,000 members and counting! And 95 percent of its members are low-income, and 75 percent have never before opened a bank account. This credit union truly has a mission of serving the underserved. It is helping people, like Roberto Maya Sanchez, realize financial opportunity. Mr. Sanchez came to America in 1994. After being mugged twice for more than $1,200 of his hard earned money, he realized he needed a safe place to keep his cash. So Mr. Sanchez opened an account at the Latino Credit Union. He then decided to apply for a car loan, which was quickly approved. He diligently made payments on his loan and built up a good credit record. Then, he decided to participate in the credit union's home purchase workshop and he obtained a mortgage. Today, Mr. Sanchez, his wife and their three children live in their own home. They're building wealth that can be invested in their children's education or their own retirement. They enjoy greater financial stability and feel invested in their community. Ladies and gentlemen, this is the "ownership society" that our president speaks about—the realization of the American dream, made possible through credit unions.

One federal program in particular has significantly contributed to the success of the Latino Credit Union—the Treasury Department promotes economic revitalization through investments in community development financial institutions. Since its founding, the Latino Credit Union has received nearly $1.5 million in CDFI funding. In the Senate, I have strongly supported this program, because it strengthens our communities—and helps people like Mr. Nañez and Mr. Sanchez.

And I want to highlight the Self Help Credit Union. In 1984 founder Martin Eakes started Self Help out of the back of his car with just $77 from the raffle of a now-famous chocolate cake. Since then, in North Carolina, Self Help has loaned more than $550 million to nearly 3,000 low-income homeowners and 3,000 small businesses; it has loaned more than $29 million to 374 childcare centers. And it has loaned $53 million to charter schools in North Carolina, Massachusetts, Texas and Washington, D.C.

One such school, Gaston College Prep, was established five years ago in a high poverty area in northeastern North Carolina. You can literally count on one hand the number of children in this school from homes with two college-educated parents; yet most of the school's 300 students test above their grade level, and the school's test scores are among the best in the state! School is from 8 a.m. to 5 p.m.; discipline is tight; and excuses are simply not allowed. Students attend the school free-of-charge, and there are no entrance requirements other than a willingness to learn.

Self Help recognizes that good schools are fundamental building blocks for our communities, and it has loaned $2.5 million to Gaston College Prep, including $750,000 through an important CDFI program called the New Markets Tax Credit. This program allows qualified investors and institutions to receive a federal income tax credit for investments in low-income communities, stimulating economic development and job creation.

Less than a mile from here, the American Tobacco Campus stands as proof of the dramatic difference the New Markets Tax Credit can make. This restored tobacco warehouse has become a new center of commerce, generating further renewal of the downtown Durham area. I hear you all attended a reception there on Wednesday night, so you saw firsthand this amazing transformation. Self Help is also working with Brick Capital Community Development Corporation to renovate the abandoned W.B. Wicker School in Sanford. When completed later this year, this former school building will house a children's dental clinic, a dental hygienist training program run by the local community college, a small business center, a day care program and a community center.

Just last week I was proud to announce that the Wachovia Community Development Corporation will receive $143 million in New Markets Tax Credits, much of which will be invested in low income areas of North Carolina, such as Rocky Mount, where the poverty rate is greater than 30 percent. This eastern North Carolina town is still recovering from flooding caused by Hurricane Floyd in 1999. Through the tax credit, flood-damaged facilities will be relocated to a restored tobacco warehouse, which will anchor the redevelopment of downtown Rocky Mount. Wachovia's New Markets Tax Credit will also provide for renovations at the Lincolnton, North Carolina Industrial Building. Lincolnton has been hit hard by textile plant closings and layoffs, and the renovated industrial building is already attracting new companies to the area.

The New Markets Tax Credits are indeed making a tremendous difference in our communities, and I would like to see more of these tax credits awarded to our community credit unions. This is a program that generates real results—and you can be assured it has my strong support in the U.S. Senate.

Another issue that I am focused on in the Senate is guarding consumers against unscrupulous financial service providers—in particular, those who prey on our young service members and their families. The sale of flawed financial products not only harms our military families—it has serious ramifications for our military's readiness. You see, military conduct codes stress financial solvency, and a service member with bad credit and mounting debt can lose security clearances and face potentially career-ending disciplinary measures.

Last year the Government Accountability Office issued a report that explains well the many reasons why military personnel are being targeted by dishonest financial service providers. This report paints a picture of the challenges affecting the men and women serving our country. Many are young; in fact, the report points out that the Defense Department is the largest employer of young adults in the United States, having in 2004 recruited some 20,000 men and women into active duty alone, the majority of them recent high school graduates. Also, our military members face lengthy deployments and frequent relocations, and like most young Americans, they often lack financial savvy and have little savings. These very factors make them more vulnerable to predatory financial practices. The GAO report also details the problems with certain insurance and securities products marketed to military personnel that have lower payouts and larger fees and commissions.

I strongly believe that these detrimental practices deserve the closest scrutiny—which is why I included a provision in last year's Defense Authorization bill that takes an important step to stop predatory lenders from targeting our military. My amendment requires the Defense Department—in consultation with the Treasury Department, Federal Reserve, FDIC, and representatives of military charity and consumer organizations—to make an assessment of the prevalence of predatory lending and to provide to Congress a list of specific legislative and administrative actions that can be taken to prevent such an egregious practice. This report should be released in a few weeks, and I have been assured that the Banking Committee will hold a hearing to assess the report's recommendations. As a member of both the Banking and Armed Services Committees, and as a Senator representing the more than 115,000 military personnel stationed here in North Carolina, you better believe that I take this issue very seriously.

Once again, let me underscore that credit unions have an outstanding reputation for community involvement and service to their membership. Each of your institutions has discovered your very own niche in the market. Other financial institutions may attempt to attract your members away, but it is this competition that ensures our credit unions continue to find new and better ways to serve customers. As many banks grow larger and larger, there will always be a place for smaller institutions that provide the services and the special attention that customers expect.

I want to close today by telling you what a privilege it is to serve as a member of the Banking Committee. We have a responsibility to help those who are seeking opportunity and a better way of life for themselves and their families. In the committee, we are working to protect our most vulnerable citizens from fraud, to lower the cost of credit, and to allow financial institutions to benefit from cost-reducing technology.

Thank you so much for inviting me to join you today, and I look forward to continuing to work as together we strive to build stronger communities. God bless each and every one of you, and may God bless this great land of the free—America!