Jackson: Closures and Downsizing of Financial Institutions throughout Shreveport’s Inner City Deserv
If a resident living in the Cooper Road, Allendale, North Highlands, Eden Garden, and Lakeside neighborhood had a new year’s resolution of creating financial stability in 2018, they would have to travel at least 10 minutes just to open a checking/saving account. While one with the means to do so may think the 10 minute drive, walk, bus or taxi ride isn’t that cumbersome, the absence and downsizing of traditional financial services says a lot about the current state of access to banking opportunities for residents seeking services, credit counseling, and potential business owners seeking capital. Payday lenders are expensive, and the cycle of debt in which they swamp borrowers is a long-term financial anchor around the unsuspecting. At the same time, local small-business owners are discouraged from investing because banks are reluctant to take a chance on a budding business if it’s in the wrong neighborhood.
Holistic reinvestment and revitalization of our community should include creating opportunities for low to moderate income (LMI) communities having access to traditional banking services. I look forward to have a conversation with our legislative delegation and Governor John Bel Edwards to amend Louisiana’s existing Banking Development Districts ACT to include credit unions. The hope is that the size of the deposits, and non-cash incentives such as property tax abatement for the location, would encourage banks to open in underserved neighborhoods. The local governments would earn slightly less on their deposits, but residents would benefit from having access to traditional banking services.
The change in legislation is modeled after a similar effort that New York State enacted in 1997 and Texas enacted in 2015 to include credit union participation. According to a report from New York’s state consumer services agency, the initiative led to the creation of 38 banking development districts by 2010, the majority of them in New York City. Between 2005 and early 2010, the new branches opened 61,750 bank accounts and extended loans (including mortgages, small business loans and auto loans) totaling $538.8 million to residents in underserved neighborhoods. An accountability review/report concluded “the program was a benefit to the “unbanked” and provided communities with access to financial products and services and providing growth opportunities for local businesses.”
Organizations such as BankOn of Northwest Louisiana have been a vital
Organizations such as BankOn of Northwest Louisiana have been a vital community partner to help break down the barriers of banking and create easier pathways for individuals to receive second chance accounts and break the cycle of predatory financial practices. Since its inception, 3600 accounts have been opened for individuals who utilized alternative banking methods (e.g. check cashing, pay day loans) instead of traditional banking. However, with the recent closure of several mainstream banking branches, downsizing of others, and the change in ownership of Shreveport Federal Credit Union, many vulnerable consumers could be hurt by lack of access to the traditional banking services. Similar to Tax Increment Financing (TIFs) and Payment in Lieu of Tax (PILoTs) that attract retail and manufacturing, the entire city and parish benefits when underserved communities increase their financial literacy. Breaking cycles of underinvestment requires long, steady efforts and must be welcomed with innovative and thoughtful solutions to identified problems. Supporting efforts that provide access to mainstream banking, affordable loan, and investment opportunities is a pragmatic first steps.