The need for banking services for the urban poor
(marketplacemoney.publicradio.org) At a strip mall in the Watts section of Los Angeles, there’s a supermarket, a grocery store and a public library. The community is predominately African American, and the average yearly house hold income here is under 18,000.
What’s missing from this shopping center is a bank. Instead, there are two check-cashing businesses in the strip mall.
No surprise really. The Ford Foundation reports that there are 22,000 Payday loan shops in the United States. That’s more than the number of McDonald’s franchises nationwide.
Meanwhile, the number of regulated banks in low-income communities is flat. That’s according to John Taylor. He’s the CEO of the National Community Reinvestment Coalition.
JOHN TAYLOR: When you don’t have full-service, mainstream bank branches, the ones who replace them are these . . . many of them are subprime, often . . . too often predatory, high-cost lenders who end up offering only products that, you know, are really designed to strip wealth and not designed to help the person.
There are plenty of factors keeping traditional banks away from these urban communities. There’s the crime risk — and then, Taylor says, there’s business.
TAYLOR: Banks would rather make a million dollar loan to one person than 10 hundred-thousand dollar loans, because financially it’s more economically feasible for them. Instead of 10 transactions and 10 files and 10 meetings with loan officers, there’s one.
But the people in the community aren’t necessarily sold on the usefulness of banks either.
Lincoln Bostick is the assistant manager for Operation Hope, which has a branch in Watts.
It’s a nonprofit that teaches people about managing their money. He says all too often, young people here spend what they have on expensive shoes, car rims, jewelry and the like — anything to alleviate the reality of poverty. (more…)
The security piece is no joke. In my neck of the woods I use a bank where customers just walk up tellers who are stationed all over the main floor. I can physically touch the teller and the computer he/she is using. I have never seen a security guard on the floor. That same bank in Crenshaw: Bullet-proof glass and at least one security guard. The same bank in downtown LA: Bullet-proof glass, security guards and a set of doors that only allows a handful of folks at a time with a guard standing nearby with a wand.
