More than 825,000 New Yorkers do not have bank or credit union accounts. That amount has some New Yorkers saying scattered bank availability is to blame.
In New York City, finding a bank is more of a challenge in some neighborhoods than others. For example, midtown Manhattan has 172 banks while the East Concourse neighborhood of the Bronx, doesn’t even have one.
That’s according to a recent report released by Representative Anthony Weiner (D-N.Y.) that said there’s a disparity between the number of banks in low income and high income communities, which have a $78,000 average income.
Megan Ahearn, Consumer Rights Organizer for the New York Public Interest Group (NYPIRG), said that disparity between the “haves” and “have nots” is a problem.
“Consumers without outlets to local bank branches, end up paying more for financial services and lose opportunities to develop a strong credit history, have access to good interest rates and to get on stronger financial footing,“ said Ahearn. “It’s a cycle of living pay check to paycheck when a big percentage of your paycheck is going to a check cashing outlet, when if you had a local bank branch in your neighborhood, you could deposit your check and not lose a penny of it.”
But not everyone agrees with that.
John Mintz, Commissioner of New York City’s Department of Consumer Affairs said the availability of the banks is only one reason why many New Yorkers don’t use them. Mintz referred to a 2010 study conducted by the Department of Consumer Affairs that sought to assess why thousands of New Yorkers don’t use banks. He said those numbers weren’t due to a lack of banks, but rather a lack of trust.
“It’s because they don’t necessarily trust the terms and condition of the accounts being offered at those institutions,” said Mintz. “And that’s what tends to drive people to fringe financial providers like the check cashers who are at least upfront with their fees even if they are very high fees and even if they aren’t long term, productive banking relationships.”
“While bank presence or absents was part of the picture, what New Yorkers were reacting to were whether those banks offered them banks that felt safe,” explained Mintz.
He said the study inspired the city to create the NYC Safe Start Account which helps New Yorkers open starter accounts at partnering banks.
Ahearn still thinks more needs to be done.
“Financial literacy is a complex mater and definitely something that’s important and intimidating,” Ahearn affirmed. “And the fact is…If you only have one bank in your neighborhood, but your family has a history of using other financial services, like the check cashing outlets, then that will seem less intimidating, while not being in your best financial interest.”
Congressman Anthony Weiner (D-N.Y.) has also been speaking out against what he calls the bank access disparity issue. Weiner is calling for three measures aimed at fixing the problem. First he suggests that the city strengthen the Community Reinvestment Act of 1977 so that it is more responsive to needs of lower income neighborhoods.
Second, he suggests permitting bank regulators to penalize banks with few branches in low income neighborhoods. He also recommends offering incentives to encourage banks to open more banks in a diverse amount of communities.
Copyright 2011 WFUV Radio News