The NYS Community Equity Agenda sets forth practical steps New York can immediately take to ensure economic justice and self-determination in New York’s low-income and immigrant communities and communities of color. By adopting this platform, New York will expand access to fair and affordable financial services, advance cooperative ownership, and ensure strong local economies throughout the state.
The Agenda was created by a statewide coalition of community, labor, civil rights, and faith-based groups, along with community-based financial institutions. Click here to view the list of coalition members and endorsers.
The platform has three core objectives: (1) Build individual and community wealth; (2) Hold banks accountable to the public; and (3) Zero tolerance for predatory lending. Click on each policy priority to learn more.
I. Build Individual and Community Wealth
- Commit at least $25 million in the FY’19 Budget to the first-in-the-nation state Community Development Financial Institutions (CDFI) Fund to invest in low- and moderate-income neighborhoods not adequately served by mainstream banks.
CDFIs have an outstanding track record of providing New Yorkers in lower-income communities with affordable loans, savings accounts, and financial services, as well as financial counseling, to support homeownership and small business development.
With 81 certified CDFIs serving every county, New York has the second-highest concentration of CDFIs in the country. These CDFIs offer tremendous bang for buck: In 2015, New York CDFIs provided more than $2.6 billion in financing to 60,000 New Yorkers, including individuals, small business owners, affordable housing developers, and primary care and non-profit community facilities. Community Development Credit Unions (CDCUs), in particular, help people build assets by providing savings vehicles, consumer credit, home mortgages, and financial counseling. And because CDCUs are community-based financial cooperatives, they contribute to neighborhood economic security and preserve money and resources in local communities.
In 2007 New York established a state CDFI Fund modeled after the federal CDFI Fund. This was the first state-based CDFI Fund in the country. Unfortunately, the state has yet to allocate funds to the CDFI Fund it created more than ten years ago.
CDFIs leverage every public dollar with at least 12 additional dollars from other sources, including banks, foundations, and impact investors. Appropriating $25 million to New York’s CDFI Fund would help leverage more than $300 million in direct lending and services to New York’s underserved communities.
Funding the state CDFI fund is now more important than ever, because the federal CDFI Fund—currently, the main source of funding for CDFIs—is on the chopping block. The Trump administration’s proposed 2018 budget would virtually eliminate the federal CDFI Fund.
Public investment in mission-driven CDFIs is a sure-fire strategy for building the wealth of individual New Yorkers and New York communities. This support is especially critical now, in light of the dangerous federal agenda.
- Facilitate the chartering of community development credit unions (CDCUs).
CDCUs are community-based financial cooperatives with a mission of serving low- and moderate-income people and communities. They provide affordable financial products and services, along with financial counseling and support, and are vital to keeping wealth within a community, particularly in communities of color, immigrant neighborhoods, and neighborhoods with a large senior population.
New York State is already home to 24 federally-chartered CDCUs with more than 185,000 members throughout the state. There are 16 credit unions that hold a New York State charter, but none is specifically chartered to serve low-income people and communities.
The NYS Department of Financial Services (DFS) recently issued guidance facilitating low-income designation for state chartered credit unions. This first step is important, but there is more the state can do to keep capital and ensure sound lending in neighborhoods, strengthening local economies in the process.
For starters, New York should:
- Establish a streamlined state chartering process for CDCUs.
- Provide state-chartered CDCUs with competitive grants and investments through the state CDFI Fund and access to other public capital.
- Strengthen state regulations that include benefits for low-income designated credit unions and CDCUs.
- Allow for flexibility in field of membership, especially to low-income and “unbanked” / “underbanked” communities.
- Expand and strengthen worker cooperatives, as part of a broader effort to advance cooperative ownership across all sectors of New York’s economy.
Worker-owned and democratically managed, worker co-ops typically provide higher wages, better hours, and greater job security than traditional firms. By supporting worker co-ops, New York State can spur economic development, create jobs with dignity, and root wealth in communities for the long-term. New York State should follow the lead of Rochester, New York City, and progressive governments around the world, in supporting worker cooperatives through comprehensive assessment and planning, legal and technical support, grants, affordable financing, public procurement, and more.
- Create the NYS Office of Community-Wealth Building to document financial services needs and to promote fair and affordable financial services around the state.
The Office would identify New York communities that mainstream banks do not adequately serve, and devise a comprehensive plan for addressing these gaps responsibly. It would also support the creation of wealth-building models and serve as an information clearinghouse. The NYC Office of Financial Empowerment could serve as a useful model for New York State.
- Ensure a living wage and a collective voice on the job for all New Yorkers, and raise tipped workers to the full minimum wage.
Decent pay and a voice on the job are two core components of ensuring dignity in the workplace and addressing economic insecurity. A worker who doesn’t earn enough money to get by, or who can be fired at will, has no economic security. These issues go hand in hand with access to responsible financial services and should be addressed jointly.
- Eliminate all asset tests for public assistance eligibility.
Asset building is central to financial security. Savings enable families to afford healthcare and transportation, invest in their children’s education, and build for retirement. Yet New York’s Family Assistance and Safety Net Assistance programs limit the amount and types of assets families may have to qualify for benefits. Having some assets does not mean that a family has the income to make ends meet. New Yorkers struggling to get by are forced to spend down instead of saving up, or are discouraged from applying for needed income support even when they qualify.
More than one in three New Yorkers are “liquid asset poor,” meaning they do not have enough savings to cover even basic expenses for three months, if they were suddenly to experience job loss, or a medical or other financial emergency. (Prosperity Now Scorecard. 2017.) Asset limits perpetuate this economic insecurity, keeping families in poverty. For this reason, eight states have eliminated asset limits.
New York has already ended asset limit tests for SNAP benefits. By eliminating asset limits for cash assistance programs, New York would support greater economic security for low-income New Yorkers.
II. Hold Banks Accountable to the Public
- Publicly identify banks’ performance in meeting financial services and community reinvestment needs state-wide.
The proposed Office of Community Wealth-Building would work closely with DFS to issue a biennial report showing banks’ performance in meeting financial services and community reinvestment needs throughout the state. Using input from community groups, public hearings and comments, and data research, the report should focus on whether and how mainstream banks are serving low- and moderate-income neighborhoods, neighborhoods of color, immigrant neighborhoods, and neighborhoods with large concentrations of older New Yorkers. It would also exam New Yorkers’ relative usage of “fringe,” higher-cost financial services, including pawnshops, check-cashers, rent-to-own stores, prepaid cards, and money-wiring outlets, and the correlation between high usage and lack of access to fair and affordable financial services. The report would identify best practices and recommendations for addressing gaps identified.
- Divest public deposits from banks that the proposed Office of Community Wealth-Building and DFS determine are not meeting the State’s financial services and community reinvestment needs.
New York should allow the state, as well as counties and municipalities in New York, to place public deposits in credit unions, with preference to community development credit unions and other insured entities that serve lower-income neighborhoods.
- Facilitate the establishment of public banking in New York, at state and municipal levels.
New York deposits billions of public dollars in Wall Street banks that routinely exploit and extract wealth from low-income communities and neighborhoods of color—perpetuating racial and economic inequality. Through public banking, New York can leverage public money to support vital sectors of the economy and foster cooperative and community-led economic development, while divesting from banks that finance corporate activities harmful to New Yorkers.
III. Zero Tolerance for Predatory Lending
- Reaffirm that the policy of this state is to prohibit payday and other high-cost predatory lending through (1) our strong state usury laws capping interest rates at 25% and (2) strict enforcement of our consumer protection laws.
As The Pew Charitable Trusts has noted, “The 15 states [including NY] and the District of Columbia that already effectively prohibit payday lending should maintain rate caps that protect consumers; research does not show that changing those laws would benefit borrowers.”
Thanks to vigorous enforcement of our strong laws, New York has kept payday lenders out of the state, saving New Yorkers $790 million in fees each year that would otherwise be siphoned. In California, a state that lacks the strong usury laws we have in New York, older people are the fastest-growing segment of payday loan borrowers, as payday lenders siphon off older people’s Social Security income, leaving them in even greater financial distress. Strong usury laws are also the best line of defense against other types of debt-trap lending, including usurious pension and lawsuit advance loans, and online predatory loans to consumers and small businesses.
Industry-backed bills introduced in recent years purport to meet community needs but are in fact thinly-veiled attempts to gut our longstanding usury and other consumer protection laws, opening the door in New York to high-cost, predatory lending.
- End the exploitative, for-profit commercial bail bond industry in New York.
- Strengthen New York’s Consumer Protection Law by adding a ban on unfair, abusive, and unlawful acts and practices.
Although New York is a leader in many areas of consumer protection, its Deceptive Practices Act (GBL § 349) lags behind statutes in at least 39 other states. GBL § 349 bans deceptive business acts and practices, but not unfair, abusive, or unlawful acts and practices, as other states do. This glaring omission leaves New Yorkers defenseless against conduct that is abjectly wrong, but not necessarily deceptive.
Now is the time to better protect New Yorkers against unscrupulous lenders and other bad actors by amending GBL § 349 to prohibit unfair, abusive, and unlawful business conduct, and otherwise strengthen the law’s impact.
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