New bank offers loan help to consumer co-ops in US
The loan windows have been thrown open at a new $300 million bank in this capital. The goal is to provide much-needed financial and technical help for thousands of consumer cooperatives -- ranging from rural electric companies and credit unions to food stores -- at a time when recession is pummeling small and medium-size businesses.
The quasi-government institution -- the National Consumer Cooperative Bank -- is the first financial channel in the United State specifically chartered to aid consumer co- ops. And since its opening here this spring the bank has already extended $10 million in loan money to 15 cooperatives around the US, with up to
The bank is expected to have "major impact" in "revitalizing" the consumer cooperative movement in the US, Robert Sawyer, the personal assistant to its president, says.
The reasons are clear cut. Throughout the US, one-third of all Americans are believed to belong to, or in some way be linked with, a co- op. Some, such as credit unions and rural electric companies, have substantial financial resources. But most, ranging from health-care programs to retail clothing and food stores, are relatively modest, both in numbers of members and economic clout.
Moreover, consumer co-ops have tended to be vehemently opposed over the years by privately or corporately owned regular business competitors. Many businesses have looked upon co-ops as being "socialist" concerns in a "free enterprise" economy.
Co-ops are owned or controlled by their members, and usually operated on a non- profit basis. Agricultural co-ops in the US date back to 1785 and were formally recognized by law in the Capper-Volstead Act enacted in 1922.
The new consumer co-op bank was signed into law by President Carter in August 1978.
It is to be capitalized at $300 million on a gradual basis over a five-year period ending in 1984. The current authorization -- for fiscal year 1980 -- is expenses.
Final congressional authorization for 1981 is still being hammered out before Senate and House committees. The dollar amount is not yet certain.
Besides the eventual $300 million for the bank -- assuming there is no last-minute budgeting hitch in Congress between now and 1984 -- the bank has also been allotted a special account of up to $75 million. This money would be earmarked to new or "fledging" co- ops that may require extraordinary assistance. Of that amount, $17 million applies to 1980.
According to Mr. Sawyer, the bank has moved vigorously to fulfill its congressional mandate since its opening here March 21:
* In addition to the $10 million already outstanding in loans, the bank is weighing assistance requests from 80 co-ops. Those additional loans, however, would total $60 million, which is more than the bank has available in loan funds. For that reason, the bank is expected to be very selective in its commitments.
* The bank, although less than four months old, has 80 full-time staff personnel, one-half its authorized level of 160. In addition, there are some 30 summer interns, mainly university graduate students.
* In September the bank will open offices in Oakland, Calif.; St. Paul, Minn.; Seattle; Somerville, Mass.; and Charleston, S.C. -- all cities with an extensive co-op movement.
Offices in Detroit and New York are expected to be opened later this year or early in 1981.
According to Mr. Sawyer, who works directly with Carol Greenwald, president of the new bank, initial survey results by the bank indicate that the consumer cooperative movement in the US "is more significant than we had thought."
In some regions co-ops are widespread, such as in the Pacific Northwest, with its historical links to Midwest progressivism stemming from its large Scandinavian population, with roots in Wisconsin and Minnesota. But what is being discovered, Mr. Sawyer says, is that co-ops -- many of them substantial in size -- can be found in most parts of the US.
Bank officials note that processing time for loans has now been reduced to around 30 days. That is roughly equivalent to the time for larger loans with many regular commercial banks.
Under terms of the bank's operating policy, co-ops can receive loans of up to
In addition, the bank will provide technical, marketing, and management assistance.
Co-ops interested in seeking assistance -- financial or technical -- are asked to write the National Consumer Cooperative Bank, Suite 400, Washington, DC , 20009.