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The power of banking will be introduced to the needy

0 Comments | Florida Times Union, Apr 28, 2010 | by Tonyaa Weathersbee

In Jacksonville, and particularly in struggling neighborhoods north of the St. Johns River, $28 million could go a long way toward buying bootstraps to help people pull themselves out of poverty.

Especially if the millions for those bootstraps comes from their own wallets.

But according to a 2006 study by the Brookings Institution, many people here are spending millions on shackles. They are paying for fees and interest just to cash their paychecks, or to get an advance at a check-cashing or payday loan business.

Most people who rely on those services do so because they either are too poor to afford a bank account or, because of past credit problems, can’t establish an account. Many also live in neighborhoods where there aren’t many banks, mostly check cashing businesses.

UNAWARE OF CHOICES

So they are left with few choices – some don’t even know that other choices exist.

What’s more, 70 percent of the city’s payday loan and check- cashing services are in Northwest Jacksonville; an area where 29 percent of the people live below poverty level, and where 45 percent earn less than $20,000 a year.

But come October, that could change.

That’s when an initiative titled Bank On Jacksonville will be launched by War on Poverty-Florida, a nonprofit organization based at Gateway Marketplace, the Federal Reserve Bank of Atlanta and other collaborate partners.

It will be modeled after the National League of Cities’ Bank on Cities Campaign; a campaign that began in 2008 to connect low- income and moderate-income earners to banks, credit unions and other mainstream financial services.

The campaign persuades banks and credit unions to commit to what it calls “starter” accounts, which include either free or low-cost checking, overdraft protection and financial education, according to the league. Some cities even have programs that allow people to receive advances on their paychecks, but at much lower fees and interest rates.

About 70 cities have started Bank On programs, and the campaign has been particularly successful in San Francisco. According to the San Francisco Chronicle, it now has 50,000 active accounts under the program.

The details of Jacksonville’s initiative, however, will be worked out during the summer. As well it should – because this is what fighting poverty should be about.

POWER OF AN ACCOUNT

It should be about empowering people economically.

Too many times, it seems that poor people are caricatured as slackers and moochers responsible for their own situation, and undeserving of any help. Or they’re seen as people who cannot be helped, only pitied.

Ye, they’ve been able to make the check-cashing and payday loan places prosperous.

Thus, the problem isn’t a lack of initiative or a will to work, but a lack of access to financial services the middle class takes for granted.

If poor people are able to spend less of their paychecks on exorbitant checking and cash-advance fees, the more opportunity they have to save money and build wealth – and become full-fledged taxpayers.

And even if they decided to spend that money rather than save it, chances are they’d spend it at a supermarket, or an eatery, or a drugstore or some other business that might help to support more jobs or services.

And the banks win, too – by cultivating a new clientele
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