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Worker Coop Credit Union Proposal. Brent Emerson Mike Leung 2008 Democracy at Work Conference. Introductions. Brent Emerson Worker-owner at Electric Embers Cooperative Worker Ownership Fund advisory board Former NoBAWC board member Tech Underground founder Mike Leung - PowerPoint PPT Presentation
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Worker Coop Credit UnionWorker Coop Credit UnionProposalProposal
Brent EmersonBrent Emerson
Mike LeungMike Leung
2008 Democracy at Work 2008 Democracy at Work ConferenceConference
IntroductionsIntroductions Brent EmersonBrent Emerson
Worker-owner at Electric Embers CooperativeWorker-owner at Electric Embers Cooperative
Worker Ownership Fund advisory boardWorker Ownership Fund advisory board
Former NoBAWC board memberFormer NoBAWC board member
Tech Underground founderTech Underground founder
Mike LeungMike Leung
Worker Coop Credit Union organizerWorker Coop Credit Union organizer
Physics, human rights, poverty and developmentPhysics, human rights, poverty and development
More info at workercoopfcu.orgMore info at workercoopfcu.org
OutlineOutline
1) Current Financial Infrastructure1) Current Financial Infrastructure
Startup financing lackingStartup financing lacking
2) Credit Union Benefits2) Credit Union Benefits
Pooling worker coop resources Pooling worker coop resources democraticallydemocratically
Accessing outside resources Accessing outside resources
3) Next steps3) Next steps
Discussion and analysisDiscussion and analysis
Setting up a steering committee Setting up a steering committee
Why Worker Coops?Why Worker Coops? Inherently protects workers rightsInherently protects workers rights
Worker ownershipWorker ownership
Democratic managementDemocratic management
Over 15M unemployed or underemployedOver 15M unemployed or underemployed
Large demand for jobs, supply lackingLarge demand for jobs, supply lacking
Protect existing jobs Protect existing jobs
Reduce wealth/power concentrationReduce wealth/power concentration
Redirect profits for workersRedirect profits for workers
Supports human rights and social justiceSupports human rights and social justice
Current NeedsCurrent Needs
A way for average people to support A way for average people to support worker coop developmentworker coop development
Consumer financial services Consumer financial services
Startup and expansion financing for Startup and expansion financing for worker cooperativesworker cooperatives
Financing for entrepreneurial activitiesFinancing for entrepreneurial activities
Shared development expenseShared development expense
Grassroots Support for Worker Cooperatives
Entrepreneurial Activities
Startup/Expand Worker Coops
Established Worker Cooperatives
Deposits Deposits
Loans
Worker Cooperative Employment
CreditUnion
Grassroots Support for Worker Cooperatives
Entrepreneurial Activities
Startup/Expand Worker Coops
Established Worker Cooperatives
Deposits Deposits
Loans
Existing Financing SourcesExisting Financing SourcesOrganizatiOrganizationon
AssetsAssets Fraction to Fraction to Worker Worker CoopsCoops
InsuredInsured RegionRegion
WOFWOF $700k$700k 100%100% NoNo NationalNational
NCDFNCDF
NCFCUNCFCU$12M$12M
$6M$6M60% 60%
0%0%NoNo
NCUANCUAUpper Upper MidwestMidwest
CFNECFNE
CCFCCF$6M$6M
$500k$500k15%15%
100%100%NoNo
NoNoNortheastNortheast
LEAFLEAF $1M$1M 90%90% NoNo NortheastNortheast
NCBNCB $2B$2B ~1% ???~1% ??? FDICFDIC NationalNational
Worker Ownership Fund, Northcountry Cooperative Development Fund, Northcountry Federal Credit Union, Cooperative Fund of New England, Cooperative Capital Fund, Local Enterprise Assistance Fund, National Cooperative Bank
Present situationPresent situation A worker coop startup requiring over $10M in A worker coop startup requiring over $10M in
unsecured capital is currently very difficultunsecured capital is currently very difficult
All capital intensive startups are corporationsAll capital intensive startups are corporations
No worker coop entrepreneurs in most sectors due No worker coop entrepreneurs in most sectors due to lack of financingto lack of financing
Especially industrial/manufacturingEspecially industrial/manufacturing
Minimal capacity to create coop jobsMinimal capacity to create coop jobs
Coop employment less than 0.01% of workforceCoop employment less than 0.01% of workforce
Instead a focus on corporate buyouts and Instead a focus on corporate buyouts and conversionsconversions
Fundamental pricing issuesFundamental pricing issues
A Participatory Financial A Participatory Financial Institution?Institution?
Business lending exclusively to worker Business lending exclusively to worker coopscoops
Enhanced ability to attract resourcesEnhanced ability to attract resources
Socially responsible investors, labor movementSocially responsible investors, labor movement
Retirement fundsRetirement funds
Better way to fund entrepreneurial activitiesBetter way to fund entrepreneurial activities
Mondragon type developmentMondragon type development
Credit UnionsCredit Unions
Financial consumer cooperativesFinancial consumer cooperatives Depositors and borrowers are Depositors and borrowers are
membersmembers Member owned and controlled, one Member owned and controlled, one
member one votemember one vote Pooling financial resources for lendingPooling financial resources for lending In U.S. there are In U.S. there are 8400 credit unions
90 Million members with $780B assets90 Million members with $780B assets $650B savings and $540B loans $650B savings and $540B loans
outstandingoutstanding
Credit Union AdvantagesCredit Union Advantages Relatively easy to startRelatively easy to start
$50-500k depending on services$50-500k depending on services
Comparatively fast startup timeComparatively fast startup time
Insured depositsInsured deposits
Average person can participateAverage person can participate
Potentially large pool of resourcesPotentially large pool of resources
Efficiently utilize existing coop resources Efficiently utilize existing coop resources
Fractional reserve bankingFractional reserve banking
Democratic worker coop sector autonomy Democratic worker coop sector autonomy
Financial self sufficiency with control of creditFinancial self sufficiency with control of credit
Credit Union DescriptionCredit Union Description Full service credit unionFull service credit union
Consumer financial servicesConsumer financial services Savings, checking, CDs, loans, initial capital contributionsSavings, checking, CDs, loans, initial capital contributions
Business lending exclusively for worker coopsBusiness lending exclusively for worker coops Business checking, savings, loans, lines of creditBusiness checking, savings, loans, lines of credit
Community Development Financial InstitutionCommunity Development Financial Institution Low income designated credit union?Low income designated credit union?
Common bond of worker coops Common bond of worker coops Plus support and development associationsPlus support and development associations
Financing for entrepreneurial activitiesFinancing for entrepreneurial activities Similar to Arizmendi AssociationSimilar to Arizmendi Association
Credit Union DisadvantagesCredit Union Disadvantages Common bond requirementCommon bond requirement
Limits growth from external sourcesLimits growth from external sources
Limited business lending ~ 12.25% of Limited business lending ~ 12.25% of assetsassets
Wrong entity for startup financingWrong entity for startup financing
Should be FDIC, not NCUA regulatedShould be FDIC, not NCUA regulated
Likely to have limited services initiallyLikely to have limited services initially
2 year probationary period on business lending, 2 year probationary period on business lending, checking accountschecking accounts
Option two:Option two:Modify Existing Infrastructure?Modify Existing Infrastructure?
National Cooperative BankNational Cooperative Bank
Small shift in lending priority Small shift in lending priority big financial impact big financial impact
Unlikely to finance entrepreneurial activitiesUnlikely to finance entrepreneurial activities
Little worker coop influenceLittle worker coop influence
Northcountry Cooperative Federal Credit UnionNorthcountry Cooperative Federal Credit Union
But full service and national?But full service and national?
And focused on worker coops?And focused on worker coops?
Option three:Option three:Worker Cooperative BankWorker Cooperative Bank
AdvantagesAdvantages
Better business Better business lending regulationlending regulation
Easy expansionEasy expansion
No common bondNo common bond
Entrepreneurial Entrepreneurial FinancingFinancing
DisadvantagesDisadvantages
Democratic difficultyDemocratic difficulty
Long/High startup Long/High startup costcost
~$2M Precharter~$2M Precharter
~$20M Postcharter~$20M Postcharter
Large equity capital Large equity capital requirementsrequirements
Not currently feasibleNot currently feasible
Survey ResultsSurvey Results
Worker CooperativesWorker Cooperatives
US Federation and NoBAWC surveyedUS Federation and NoBAWC surveyed
Neutral to positive responseNeutral to positive response
Some business accountsSome business accounts
IndividualsIndividuals
About 50 member pledgesAbout 50 member pledges
Interest in low income servicesInterest in low income services
Next StepsNext Steps
Steering Committee of interested coopsSteering Committee of interested coops
Discuss financial needsDiscuss financial needs
Evaluate appropriateness of credit unionEvaluate appropriateness of credit union
Define Mission: Maximize Worker Coop Employment?Define Mission: Maximize Worker Coop Employment?
Form Advisory TeamForm Advisory Team
Evaluate market, complete feasibility study, write Evaluate market, complete feasibility study, write business plan, etc.business plan, etc.
DiscussionDiscussion
More info at More info at
workercoopfcu.org