By Errol Louis
Families and businesses in southeast Queens are being shunned by the banking system, possibly in violation of federal law. And that makes Rep. Gregory Meeks furious.
Meeks, chairman of the House Subcommittee on Consumer Protection and Financial Institutions, recently held a field hearing to call attention to the near-absence of bank branches in his district and other mostly-black neighborhoods in the area. The congressman did not hide his anger.
“Payday lenders and pawn shops. We see lines at these kinds of institutions as financial institutions are closing,” he said. “We want to reverse these banking deserts in our communities.”
A map depicting locations of bank branches in New York City in 2019, created by the New Economy Project, shows why he’s angry. Meeks’s office crunched the numbers and found that Queens zip codes with 75% or more white residents had one bank branch for every 3,159 residents, while zip codes with more than 75% black and Latino families — including the New York City portion of Meeks’s district — had one bank branch for every 22,936 people.
And the relative paucity of branches in communities of color holds true even when family incomes are the same or higher than that of comparable white neighborhoods.
“Something is wrong with that,” Meeks said at the hearing. “You can’t say, ‘well, there’s money in one place and not money in the other place.’ ”
Nor can we dismiss this as a case of digital and online banking making the traditional brick-and-mortar branch unnecessary. Research by the Federal Reserve Bank of Philadelphia and other sources confirms that areas served by bank branches get more business loans, mortgage loans and other essential financial products than so-called banking deserts.
“It’s like a riptide,” says Sarah Ludwig, co-director of the New Economy Project. “There’s a lack of access and because of that, all this money is coming out of the neighborhood.“
Cathie Mahon, president of Inclusiv, an association of credit unions that serve poor communities, agrees.
“More than 11.2% of New York households are unbanked, meaning they have no account (savings or checking) with a financial institution,” Mahon said in testimony to the Meeks committee. Another 21% are considered underbanked, meaning they have accounts with outrageously high fees and interest rates.
That makes for a total of 689,000 New York families with no banking services or paying ripoff rates.
There are a few simple ways to fix this problem.
First and foremost, grassroots advocates should put pressure on the Trump administration to end its efforts to weaken the Community Reinvestment Act, the federal law that gives banks incentives to extend loans, grants and low-cost services to communities that have been ignored in the past. The National Community Reinvestment Coalition has a handy fact sheet and tons of information on why existing regulations should be strengthened, not gutted.
Locally, the city and state should steer investment dollars to New York’s network of community development financial institutions (CDFIs). These not-for-profit loan funds and credit unions currently have nearly $2 billion invested in loans to small business, mortgages and consumer loans that help low-income communities.
Gov. Cuomo’s State of the State address included a shoutout to the CDFI network and a promise to invest $25 million in them. That would be a great start.
Mahon says residents are studying ways to launch a credit union to fill some of the banking gap in southeast Queens. That, too, would be an excellent way to build grass-roots financial power where it’s most needed.
And Albany should move forward with legislation to allow the creation of so-called public banks: institutions chartered by cities and towns to make the kinds of socially responsible loans — for green economy projects, for instance — that private banks won’t make.
One way or another, we have to make banking deserts a thing of the past, in southeast Queens and other working-class neighborhoods in our city.