The Little Bank That Could

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Linda Levy, the chief executive of the Lower East Side People’s Federal Credit Union, will retire at the end of April after leading the scrappy lending institution for nearly 30 years. Credit Jeenah Moon for The New York Times

When Mick Mulvaney was named acting director of the Consumer Financial Protection Bureau in January, several critics expressed outrage over the appointment.

But only two went to court to try to block it.

The first was Leandra English, the deputy director, who was passed over for the top job when her boss, Richard Cordray, stepped down. And the second was the Lower East Side People’s Federal Credit Union, a nonprofit financial cooperative, whose modest size — just $54 million in assets — belies both its public profile and the scrappiness of its chief executive officer, Linda Levy. (Both legal actions were dismissed, and Mr. Mulvaney remains in place at the consumer bureau.)

This wasn’t the first time the credit union took on the establishment. Most notably, it acted as the bank for Occupy Wall Street, which sprang up in 2011 in protest over the financial crisis.

“People were donating money to Occupy Wall Street, and they had no idea where to put it,” Ms. Levy, 64, said. “So they opened an account here.”

It was not a move without some controversy. When the credit union held its 25th anniversary gala that year and named Occupy Wall Street as its honoree, Goldman Sachs rescinded the $5,000 it said it was going to donate to the credit union. (In response, other credit unions and Community Development Financial Institutions collectively donated $30,000. Those donations, Ms. Levy said, “came from people interested in our mission.”)

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The credit union was created in 1986 after the lone remaining bank in the neighborhood closed its doors. Credit Jeenah Moon for The New York Times

The Lower East Side People’s Federal Credit Union serves a mostly low-income, largely immigrant population, and it uses deposits to make loans for things like affordable housing and small businesses.

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It got its start after Manufacturers Hanover Bank — now part of JPMorgan Chase — closed its Lower East Side branch in 1984, creating a financial services desert in the neighborhood. In response, Cliff Rosenthal, then the chief executive officer of the National Federation of Community Development Credit Unions, suggested that the community begin assessing whether it could raise the capital to start a credit union.

“The community was struggling to save itself,” Mr. Rosenthal said in a recent interview.

During the 1970s and 1980s, landlords who wanted to get out of the drug-infested neighborhood would go so far as to hire someone to torch their buildings.

“There were buildings burning on a nightly basis,” said Lisa Kaplan, a founding member of the credit union.

In early 1986, the credit union received its charter from the National Credit Union Administration and took its first deposits that May.

The space on Avenue B was not a glamorous one. The floors of the credit union were covered with dirty rugs, and the lighting was dim. The windows were boarded, and the doors were sheets of plywood, with a padlock to secure them.

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The credit union serves a mostly low-income population, using deposits to make loans for things like affordable housing and small businesses. Credit Jeenah Moon for The New York Times

But one day, soon after to moving to the neighborhood, Ms. Levy noticed that the name of the credit union had been spray-painted on the side of its building, reflecting the graffiti art that was beginning to emerge at that time.

“I thought, ‘Well, that looks really cool,’” she recalled.

Ms. Levy was working in food cooperatives in Brooklyn. Earlier, while attending the University of Pennsylvania, she had protested the Vietnam War and participated in hunger marches.

Ms. Levy was interviewed by the board in the middle of June and was given the position in July despite having no background in finance. (Her acquaintance with Mr. Rosenthal through their mutual work at food banks apparently helped in her interview.)

At the time, the credit union had only one other employee. Helen Scalia, a 22-year-old who had just graduated from New York University with a degree in marketing and an interest in community development finance.

“It was a total start-up,” Ms. Scalia said.

Ms. Levy and Ms. Scalia split the labor evenly. Both women opened accounts, balanced the books and washed the floors, while Ms. Levy also spent much of her first year attending daily training sessions organized by the National Federation of Community Development Credit Unions.

“Her fighting spirit was dedicated to the survival of this fragile community-based credit union,” Ms. Scalia said of Ms. Levy. “We had to figure out how to open checking accounts, learn how to work with cash on site in a dangerous neighborhood and how to work with safe deposit boxes.”

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An employee helping a customer at the credit union. In the early days, the space on Avenue B was not a glamorous one. The floors were covered with dirty rugs, the windows were boarded, and the doors were sheets of plywood, with a padlock to secure them. Credit Jeenah Moon for The New York Times

There have been struggles, as well as successes, over the years. During the financial crisis that began a decade ago, the credit union was hit with a rise in delinquencies, and some of its grant funding was lost. The staff took a 10 percent salary cut for a full year. The credit union instituted a hiring freeze. Some members lost jobs and homes.

“Even if our institutions aren’t engaged in predatory lending, it doesn’t mean that our communities aren’t harmed by these broader problematic practices,” said Deyanira Del Rio, chairwoman of the credit union’s board of directors.

Now, more than 30 years after its start, the credit union’s next challenge is finding a chief executive to succeed Ms. Levy, who is retiring at the end of the month.

“Working at a community-based, nonprofit financial institution comes with resource constraints and other challenges — though we also are fortunate to be in a strong financial position and to serve a broad field of membership that includes several underserved neighborhoods, low income people citywide, dozens of nonprofit and business partners, and low income housing cooperatives,” Ms. Del Rio said.

The search began in the fall, and the board hopes to have someone in place by the time that Ms. Levy leaves.

The position requires an “extraordinary combination of being very focused on the business aspect and yet being in tune with the political and social aspirations of that community,” Mr. Rosenthal said. “Those things are not easy to find.”

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MORTGAGES

Credit Unions Expand Their Clientele

MORTGAGES

Credit Unions Expand Their Clientele

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