Youngstown needs a credit union

Editor’s Note: The names of the 13 other community leaders in the Mahoning Valley that were included in this article are listed at the end.

A person needs a loan until his or her next paycheck. The loan could be for an unexpected car repair, a visit to the dentist or even a child’s tuition bill.

The Mahoning Valley has more than its fair share of lending “stores,” commonly called payday loan banks, ready to offer cash with little more than the person’s signature.

The terms of the loans often sound reasonable: $15 for every $100 borrowed. And as long as the loan is paid off in two weeks, the interest rate stays at that 15 percent.

The first missed payment, however, triggers a series of escalating fees that have sent thousands of Mahoning Valley residents into cycles of debt from which there is often no escape.

Although Ohio overhauled its predatory lending laws in 2008 and capped interest rates at 28 percent, it left a loophole that has allowed some lending operations to charge people as much as 500 percent interest.

In a study released earlier this year, The Pew Charitable Trust said that Ohio ranks as one of the worst states for predatory lending. Pew labeled Ohio as “permissive” in terms of its regulations for quick loans.

One out of every 10 Ohioans has taken out a payday loan, ranking Ohio fourth in the nation for its volume of loans. And our state has more notoriety. It also is third among states in the number of consumer complaints to the Consumer Financial Protection Bureau about payday loans, trailing just after Texas and California.

Concerned about predatory lending in the Mahoning Valley and worried that many residents of the city of Youngstown lack access to capital for business ventures, a group of concerned citizens has been meeting to develop plans to launch a community credit union in the city.

This credit union would serve as a place for local residents to save and borrow money. It would be their bank.

It would help small businesses expand and could provide entrepreneurs with the funding to launch their businesses. It could help residents save and then give those in need of cash a safe and affordable way to borrow.

Establishing a credit union in the city is an ambitious project. We understand that we need to raise money, support and awareness. We realize that our chances of getting a charter for a credit union may be small. In the last two decades, only one other credit union received a state charter.

We are working diligently with the Ohio Commerce Department, Division of Financial Institutions, and the Ohio Credit Union League to make certain that we follow all laws, statutes and regulations with respect to establishing a credit union.

Despite the enormous challenges, our group remains steadfast in its commitment to keep working for solutions to help people escape predatory lending and to be able to access funds that will make our communities stronger.

And we’re doing more than talking.

We’re investing.

The Catholic Diocese of Youngstown has contributed more than $20,000 in financial and administrative aid to this group. Businesses have joined the effort, including Covelli Enterprises, which has pledged $25,000. The Youngstown Foundation has contributed $30,000; Youngstown State University has offered $20,000 in financial and administrative aid; the City of Youngstown’s Office of Economic Development & Department of Finance has contributed $5,500 and the Ozone Business Gallery gave more than $26,000 in financial and administrative aid.

But that’s just the start. We recognize that this initiative is going to take more money and more support. We’ll be working hard to line up both.

We have launched a virtual brick and mortar campaign. For more information and to donate, please visit www.give2cofcu.net.

Sam Covelli is head of Covelli Enterprises; Rev. David J. Bergner SDS is with the Diocese of Youngstown; Pastor Kevin Crum, New Hope Baptist Church; Gwen Fish, Community of Faith Collaborative Union; George Freeman Jr., NAACP of Youngstown; Artis Gillam Sr., Northeast Homeowners & Concerned Citizens Association; Rev. H.L. McNeil, First Baptist Church; Dr. Carolyn L. O’Neil, Tabernacle Baptist Church; Rev. Larry Parker, Fellowship Baptist Church; Rev. Willie Peterson, The McGuffey Centre; Rev. James Ray, community volunteer; Jacqueline Taylor, Youngstown State University; Deborah Wilkins, Ozone Business Gallery; Rev. Joyce Williams, New Beginnings/Feed My Sheep Church.