Borinquen Federal Credit Union shut down

Federal officials shut down the Borinquen Federal Credit Union this month after a $2 million second-quarter loss wiped out the organization's net worth and left it with a $1 million deficit.

The sudden closing of Borinquen, founded in 1974 to serve low-income Hispanics in North Philadelphia, upset community leaders, who said they did not understand why the National Credit Union Administration had acted so quickly after taking control of Borinquen on June 24.

"I think the death penalty was an extreme sentence," Will Gonzalez, executive director of Ceiba, a coalition of Latino community organizations in Philadelphia, said Wednesday at a meeting to help Borinquen members open accounts at other financial institutions.

Irene Rivera, who opened a savings account at Borinquen in 2004 but who also banks at PNC, said the credit union had been popular as a "neighborhood place people could walk to. Because a lot of people didn't know English, it was convenient to them."

Borinquen, started by Casa del Carmen, a Catholic social-service organization, had 7,624 members with $6.2 million in deposits on June 30, according to financial statements on the National Credit Union Administration's website. The credit union closed July 8.

It is not clear what led to the failure, the fourth of a financial institution in the Philadelphia region since September.

The National Credit Union Administration, which insures savings at credit unions, ordered Borinquen on June 6 to hire an accounting firm to perform an audit and reconcile cash and bank accounts.

"This is based on serious and persistent record-keeping problems and the failure to perform or obtain an annual audit," the order said.

The biggest difference in Borinquen's financials from March 31 and June 30 was a $1.44 million decline in cash. The link between that decline and the quarter's $2 million "miscellaneous operating expense" is not clear.

Loans outstanding were stable at about $3.4 million. Deposits increased $561,277.

Borinquen's general manager, Ignacio I. Morales, could not be reached for comment. Calls to the credit union, in a former Wachovia branch at Front Street and Allegheny Avenue, are being routed to a National Credit Union Administration center, which is distributing deposits to former members.

No one on Borinquen's seven-member board could be reached for comment.

Patricia DeCarlo, executive director of the Norris Square Civic Association and one of the community leaders who helped revive Borinquen after a brief shutdown in 1986, said she was upset by the closing "because I know some of those members and know they are people who don't feel comfortable with banking, don't trust banking, don't speak the language very well."

Angel Ramos, another Borinquen member who also banks elsewhere, has no difficulty with English, but he said he liked Borinquen. "They always treat you good, nice," he said.