When banking services are unavailable, unaffordable or untrusted, alternative financial services providers offer services through financial products that exploit communities – predominantly rural communities and communities of color – and divert profits away from those communities. We’re talking: check cashers, payday lenders, auto title lenders, buy-here-pay-here auto loans, subprime and secure credit cards, pawn shops, rent-to-own stores.
It’s easy to see how the unbanked and underbanked fall into the trap of paying more for inferior financial services when we look at bank availability. According to a 2013 United Fair Economy (UFE) study:
- areas with majority of households within income levels of $0 – $49,999 lost 456 bank branches;
- areas with majority of households within income levels of $50,000 – $149,999 gained 2,783 bank branches.
Clearly, banks go where the money is, leaving the spoils for alternative financial services providers.
The first female bank president of any race to charter a bank in the United States:
Maggie L. Walker
Ironically, in 1902 it was Maggie L. Walker of Richmond, VA, a black woman who became the first woman of any race to charter a bank in the United States. St. Luke’s Penny Savings gave loans to black business owners and residents at fair rates, then recycled the interest earned to keep building the community. Espousing her vision for a banking community she said, “Let us put our monies together; let us use our monies; let us put our money out as usury among ourselves and reap the benefits ourselves. Let us have a bank that will take the nickels and turn them into dollars.”
For every foot that crushes, there should be a hand to lift up!
“It is well with the man who deals generously and lends; who conducts his affairs with justice.” Psalms 112:5 ESV
In all you do, B. Lifted…