The Community Organizer’s Community Development Credit Union

Although you can find $8 matcha lattes and $25 cocktails there today, Manhattan’s Lower East Side remains a neighborhood covered in both public housing and limited-equity housing cooperatives. Those buildings are home to thousands of low-income residents — largely Hispanic or Asian, often immigrants — who have been quietly investing in their own vision of the neighborhood for decades. On a warm, muggy Saturday earlier this month, outside the headquarters of the Lower East Side People’s Federal Credit Union on East 3rd Street, those residents gathered for a block party. They were celebrating the 9,000-member, $90 million credit union’s 40th anniversary as the conduit for making those investments in this neighborhood. Over the past 40 years, Lower East Side People’s Federal Credit Union has made more than $150 million in loans. That includes loans for the housing cooperatives themselves. The credit union is one of the few reliable sources around the city for limited-equity co-op share loans, which low-income households need to buy-in as new co-op members. It also makes larger loans to entire limited-equity co-op buildings to cover maintenance or other needs. The credit union also makes loans to beloved long-time local business owners, like Patricia Valencia and Chef Ricardo Arias, the wife-and-husband owners of Cantina Cubana — which catered lunch for the block party. The couple started out in 2007 with a small cafe across the street from the credit union, which made them their first business loan about a decade ago. In 2023, the duo moved to a larger, more prominent location around the corner, on the first floor of another limited-equity co-op. After re-opening, the couple took out another business loan from Lower East Side People’s. “Not too many banks give restaurants business loans, because they’re afraid they might not last and be too hard to pay them back,” Valencia says. “But we have a nice relationship. When we opened here three years ago, there were like six other places that opened the same time we opened, and they’re all gone. If you don’t know the neighborhood, it’s really hard.” Residents and members attend Lower East Side People’s Federal Credit Union's 40th anniversary block party, held outside the credit union's headquarters on East 3rd Street. (Photo by Oscar Perry Abello) Community organizing roots Lower East Side People’s Federal Credit Union emerged during an era when it was much more obvious that other banks weren’t interested in serving diverse, low-income neighborhoods like the Lower East Side — alternatively dubbed “Loisaida” by its large Hispanic population. It was the mid-1980s. The decades-long consolidation of the banking sector was just beginning. Community organizers and neighborhood activists came to see the formation of their own financial institution as part of their broader work to build power in a diverse, low-income neighborhood from the ground up. In 1984, the Cooper Square Committee left a message on the answering machine at the National Federation of Community Development Credit Unions, then led by Clifford Rosenthal. The Cooper Square Committee had famously led the charge to stop Robert Moses’ plan for wholesale clearance of the Lower East Side and Chinatown. Those efforts eventually led to the creation of the Cooper Square Community Land Trust, the first such land trust in New York City, which now stewards 23 buildings with 360 permanently affordable housing units. The Cooper Square Committee was also part of a larger coalition in the neighborhood, called the Joint Planning Council, famous for its fight to build low-income housing at the massive “Seward Park Urban Renewal Area,” a six-acre set of parcels on the south side of Delancey Street that the city condemned, acquired, and demolished in 1967. Local politicians opposed low-income housing at the site. The whole area remained vacant for decades. When ground finally broke on a new redevelopment project for the whole area in 2015, half of the 1,000 housing units slated for construction were designated as permanently affordable housing. On the answering machine in 1984, Cooper Square Committee left a message about the Joint Planning Council’s campaign against the planned closure of the Manufacturers Hanover Trust bank branch at Avenue B and East 3rd Street. At the time it was the last bank branch within a 100-block area of the Lower East Side. The bank claimed it couldn’t find anyone who might want to take it over. The organizers had heard about credit unions and they wanted to know more. When he met with the Joint Planning Council, Rosenthal explained how a credit union was a not-for-profit, member-owned financial cooperative. That meant its depositors would elect its all-volunteer board of directors — one member, one vote — who would set its policies and hire its key staff. The structure appealed to the community organizers: It would help ensure they had a captive financial institution that wouldn’t someday threaten to move away or send away profits to distant, faceless shareholders. Using the bank’s obligations under the Community Reinvestment Act as leverage, the organizers got the Manufacturers Hanover Trust to fund a feasibility study for the credit union. After tense negotiations, the bank paid for badly needed renovations at the Avenue B and East 3rd Street location; agreed to give the new credit union a rent-free lease for three years with an option to buy the building later for $90,000; and even promised to deposit $100,000 for zero interest in the credit union after it opened. Meanwhile, the Joint Planning Council knocked on doors to scrounge up $900,000 in non-binding pledges of deposits from the Lower East Side community. Rosenthal appealed to local foundations to fund the credit union’s initial startup capital and operations. All that was left was for the Joint Planning Council to submit an application for a credit union charter to the National Credit Union Administration, the independent federal agency that charters credit unions and insures their deposits. The agency granted the charter on Jan. 16, 1986. “Lower East Side, particularly over the years, became the proof of concept for us,” Rosenthal says. “It showed that there was interest, that there was demand, that despite the formidable obstacles of not really having substantial equity capital to start up, they were able to make a go of it.” Current CEO Aissatou Barry-Fall welcomes members to the 40th anniversary block party, during which the credit union also conducted its annual member meeting. (Photo by Oscar Perry Abello) Community organizing branches Much has changed in New York City over the past four decades. Bank branches have become much more common even in racially and ethnically diverse, low-income neighborhoods. But access to bank branches doesn’t necessarily serve as a good proxy for access to credit. In the rollout of the Paycheck Protection Program during the COVID-19 pandemic, many small businesses turned to the big banks where they’d kept their deposits, only to be ignored or placed at the back of the line behind much larger clients. And non-white small business owners are still significantly more likely to be denied on a small business loan application compared to their white peers. And there’s still the perpetual threat of a big bank closing branches on a whim. Between 2019 and 2021, seven different banks closed 17 branches across the Bronx. As Next City reported previously, the Bronx already had the fewest bank branches and the most check cashers and pawnshops per household in the state, possibly the country. In response, a set of long-standing community based organizations came together in 2021 to form the Bronx Financial Access Coalition. Having a captive financial institution once again appealed to a new generation of community organizers. “In the world of community-control, community-driven solutions to issues facing our neighborhoods, credit unions represent this kind of foundational piece of that people-driven economy,” says Greg Jost, a local historian and co-convener of the Bronx Financial Access Coalition. “The vision of many formerly-enslaved people was to have these kinds of cooperative models where it was one member, one vote. Credit unions still have that.” They might have started their own new credit union in the Bronx. But the Lower East Side People’s Federal Credit Union’s community organizing roots appealed to the Bronx Financial Access Coalition. “This really came out of neighborhood organizing,” Jost says. “Their origin story really was attractive to us in the Bronx because so many of our organizations came up through that same type of experience – that we’re just people from the neighborhood fighting to save this building, this block.” The credit union also offered a tried-and-true playbook for figuring out where to open a branch in a new borough. The credit union had opened a Staten Island branch in 2017 after testing out multiple possible locations using a mobile unit inside a van. They could do the same for the Bronx. Read more: A Mobile Bank On Wheels Reaches Bronx Residents Where They Are After initiating discussions with Lower East Side People’s Federal Credit Union about a possible Bronx expansion, it also turned out that the credit union already had more than a thousand members in the borough — some probably displaced due to rising rents or a lack of family-sized housing units on the Lower East Side itself. “One of the first days we drove the mobile unit to a location in the Bronx, somebody was like, ‘I’m a Lower East Side member!’” Jost says. Lower East Side People’s Federal Credit Union celebrated the opening of its first permanent branch in the Bronx last year, in a storefront on the first floor of a low-income apartment building owned by one of the coalition member organizations. It’s the credit union’s fourth branch. In addition to the Staten Island branch, in 2014, Lower East Side People’s Federal Credit Union merged with another credit union in East Harlem that had its own community organizing origins. New York City Comptroller Mark Levine thanks former CEO Linda Levy, current CEO Aissatou Barry-Fall, and CDFI pioneer Clifford Rosenthal during the block party. (Photo by Oscar Perry Abello) Community organizing flowers Lower East Side People’s Federal Credit Union has also inspired other neighborhoods across the city to start their own institutions. At the other end of Manhattan, Neighborhood Trust Federal Credit Union opened its doors in Washington Heights in 1997. Co-founder Mark Levine was on hand for remarks at the Lower East Side credit union’s block party. Not only was Neighborhood Trust inspired by its Lower East Side counterpart, Levine said, but in its early days he often called on Lower East Side staff and board members with questions about starting up and running a new credit union with a focus on low-income households. “The community development credit union movement would not exist in New York City without these activists and these leaders,” Levine said. “I am so privileged to be a part of this movement.” Levine eventually went on to represent Washington Heights in the city council. He took office in January as New York City Comptroller — a position that helps determine where the New York City government holds its bank accounts. He called for changing state laws that currently restrict local governments in New York from placing deposits into credit unions. “We’re gonna do this if it kills me,” Levine said. “We got $13 billion in cash in New York City, all going to banks. They wouldn’t mind sharing a little bit with Lower East Side [Federal Credit Union] and even if they would mind, we’re gonna make it happen.” “It is galling to me that we are prohibited from putting the billions of dollars in cash that the city has on hand at any given moment, on deposit, in credit unions,” Levine tells Next City. “It will yield incredible returns for people in the city, people who are being left behind currently.” Depending on your perspective, $150 million in loans, spread out over 40 years, may or may not seem like very much by way of returns in New York City. The SPURA redevelopment project alone, known as Essex Crossing, is slated to be a $1.9 billion investment once complete. But Lower East Side People’s Federal Credit Union’s former CEO Linda Levy can point out some of the other material ways that the institution has helped shape today’s Lower East Side. Levy had just moved to the neighborhood in 1986 when she walked past a building with “Lower East Side People’s Federal Credit Union” spray painted on the outside wall. She thought it looked interesting, so she went inside to check it out. By July, the board had hired her as manager. Rosenthal’s federation, today known as Inclusiv, provided training for Levy learn how to run a credit union. Three years later, when the time came to buy the building from Manufacturers Hanover Trust, the credit union’s regulators blocked the purchase, apparently seeing it as too much for a new credit union to take on. So instead, the credit union worked with the residents of the six apartments above for them to acquire and convert the building into a low-income housing cooperative. Most of the co-op units are still home to members of the same families who were there in 1986, Levy says. That’s just one of many limited-equity co-ops that the credit union has helped either start, finance, or preserve over these past 40 years. Levy retired after her second stint as CEO from 2006 to 2018, though she still serves on the credit union’s board. She’s known many of those co-op residents not only as members of the credit union but also as members of the dozens of community gardens that dot the Lower East Side, where the modern community garden movement was born in the 1970s. “Those are actual things that wouldn’t be here, if it weren’t for the credit union, if it hadn’t supported co-op residents for all these years,” Levy says. This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. Oscar Perry Abello is Next City's senior economic justice correspondent and author of The Banks We Deserve: Reclaiming Community Banking for a Just Economy (Island Press). He also writes Next City's free economic justice newsletter, The Bottom Line. Since 2011, Oscar has covered community development finance, impact investing, economic development, housing and more for media outlets such as Shelterforce, Impact Alpha, Yes! Magazine, City & State New York, The Philadelphia Inquirer, B Magazine and Fast Company. Oscar is a child of immigrants descended from the former colonial subjects of the Spanish and U.S. imperial regimes in the Philippines. He was born in New York City and raised in the inner-ring suburbs of Philadelphia. Reach Oscar anytime at oscar@nextcity.org or follow him on your favorite social media platform at @oscarthinks. Follow Oscar .(JavaScript must be enabled to view this email address) Add to the Discussion Next City sustaining members can comment on our stories. 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