Editor’s note: This opinion piece was published in the May 31-June 13 print edition of the Norwood News. It reflects the views of the author, not the Norwood News.

Gone are the days when banks turned their backs on the Bronx and refused to make loans here, a practice known as redlining that played a huge role in our borough’s economic decline a generation ago.

Yet the legacies of these discriminatory practices continue. Not only does the Bronx have the highest level of residents who are “unbanked” or “underbanked” in the City (they often use high cost “fringe” financial services, like check cashing shops, instead), but we also have the lowest number of bank branches per household of any county in the state, and perhaps in the nation.

Manhattan, meanwhile, has four times as many bank branches per person than the Bronx. And most of our borough’s branches are clustered around large commercial strips leaving midsize and small commercial areas virtually unbanked.

Among the 145 branches in the Bronx, half are from one of the giant four “megabanks” — Chase, Bank of America, Citibank and Wells Fargo — and a full 70 percent of branches are from banks with more than $100 billion in total global assets. Chase alone accounts for nearly a third of all Bronx bank branches, made possible by the acquisition of its closest competitor, Washington Mutual.

It was these financial giants who received most of the federal bailout dollars four years ago, but now reap mind-blowing profits despite losing billions on risky derivatives trading. These larger institutions often charge higher account fees (if you don’t meet certain minimum balance requirements) than small community banks. Smaller, locally-based banks are also often more in touch with the needs and more responsive to the demands of our communities.

So, while moving your money to a smaller institution may sound appealing to some folks, it’s often not an option here in the Bronx if you need the convenience of a branch in your neighborhood. This is why it’s also critical to hold the larger banks accountable for their harmful practices and it’s good news that the City Council recently passed the Responsible Banking Act that will require banks to disclose local investment activities, including foreclosure and loan modification information, in order to be eligible to hold City deposits.

Community and responsible banking advocates have also been showing up at shareholder meetings for the largest financial institutions to highlight destructive practices and ask those in charge to put the needs of people and communities over the desire to maximize profits at any cost. Some of these destructive practices include investing in for-profit prisons and payday lenders, and not doing enough to modify mortgages, reduce principal and prevent foreclosures.

Additionally, federal legislation that was passed in the wake of the financial meltdown created a much needed consumer protection agency and has limited a number of exploitative practices that were very profitable for banks, including overdraft fees.
However, a number of big banks have been looking to new, unregulated high-cost products to increase the profitability of branches in low, moderate and even middle income neighborhoods.

Prepaid cards are the new rage, but many of them come with excessive fees. Last year, Wells Fargo considered bringing a payday lending type product to New York known as direct deposit advance. As with any small-dollar, short-term loan, the interest rate would violate our state usury cap of 25 percent and go easily into triple digit Annual Percentage Rates (APRs). (The check cashing industry is also pushing a bill that would allow them a carveout of our usury cap to make a similar type of loan that preys on those in desperate situations.)

Really what we need is more responsible and affordable banking options in the Bronx. We also can’t expect the banking industry to take care of this for us. We need to push smaller community banks and credit unions to increase their convenience and accessibility. We also can be out there holding larger banks accountable to the needs of our communities. On top of that, we need to make sure we have legislation and regulations that will protect our neighborhoods and individual consumers from high cost products that prey on those who can least afford it.

Editor’s note: Gregory Lobo Jost is a Norwood resident and the Deputy Director of University Neighborhood Housing Program, who recently published the report, Banking in the Bronx and the accompanying consumer Guide to Banking in the Bronx, both available at www.unhp.org.