Latinos Seek Control of Second Federal Savings
At the corner of Pulaski and 26th Street is where you find Second Federal Savings, in the heart of one of Chicago's Latino communities.
Second Federal is one of the oldest thrift banks in Chicago. Its charter dates back more than a hundred years.
Being a thrift bank, Second Federal is owned by its depositors.
SALLAS: Second Federal is really a pillar in the Little Village Community.
August Sallas heads the Little Village Community Council, a non-profit organization that assists residents.
SALLAS: There's a group of us that would like to see Second Federal become a minority-owned, Mexican bank so that it can survive and prosper. So hopefully we're successful. We're having a little difficultly with the chairperson of the bank of directors.
Sallas and other community organizations are trying to get Second Federal designated a minority bank by the Federal Deposit Insurance Corporation or FDIC.
But FDIC rules state that to be a Minority Designated Institution, or MDI, more than half of a bank's board must be minority and the community it serves must be predominately minority.
Of Second Federal's seven-member board, two are Latino. One of them is board chair Constance Lara.
Lara did not return several calls seeking comment for this story.
The only board member talking is Mark Doyle, who served as Second Federal's CEO for more than 20 years.
DOYLE: The benefit to Second Federal in achieving that designation I believe is huge. Getting the designation go a long way in helping us manage the institution through these difficult times.
Doyle was at the helm when the bank drew national headlines earlier this decade for offering loans and mortgages to undocumented immigrants.
Now serving as the bank's senior vice president of community development, Doyle says foreclosures have hit this local community bank hard.
But unlike the big banks, none of the government's bail out moneyâ€”the so called TARP fundsâ€”has made its way to Second Federal.
A program director for the FDIC says obtaining MDI status many not necessarily lead to a bank obtaining TARP funding.
Adding to Second Federal's pressure, the FDIC has ordered it to beef up its capital as mortgage delinquencies mount.
DOYLE: Our customers are mostly first and second generation immigrants. And with that, these people had all of the construction jobs, manufacturing, warehouses and labor positions and all those jobs are gone. And when those jobs evaporated it affected people who also had loans with our institution. Then, our delinquencies have increased.
Plummeting property values have also added to the burden, Doyle says. He adds Second Federal becoming an MDI could make the bank more attractive to investors, since it would be the only Hispanic controlled bank in the Midwest and that can help it to increase its capital.
Whether the rest of the board supports bringing on more Hispanic board members is unknown. Another community member pushing for MDI status is Francisco Menchaca.
Menchaca, a banking industry veteran for more than 25 years, says because Second Federal has historically been able to offer services to meet the community's needs in a way a big bank can't, or won't, he wants to see that continue.
MENCHACA: We want to see it survive. We want to see it to prosper. This is really a legacy that we're creating for those that will be able to be afforded the benefits and the services that this institution provides.
Efforts to bring the board and community groups together to discuss getting Second Federal MDI status has stalled.
But such a meeting is scheduled for later today between the Second Federal's board of directors and the community groups. That meeting will be at 26th Street and Pulaski Road.