Politician: Banks are leaving city residents to predatory lenders
March 1, 2007
By JONATHAN O'CONNELL, Hartford Business Journal Writer
Exasperated at the prevalence of Hartford residents who throw away excessive portions of their paychecks to check-cashing outfits and money orders, Rep. Marie Lopez Kirkley-Bey (D-Hartford) has been asking banks why they don’t open more branches in poor areas of the state’s cities.
But she’s been unimpressed by the response.
So Kirkley-Bey has taken the question — in the form of two Banks Committee bills — to her colleagues in the Connecticut General Assembly.
She wants answers about why there aren’t more branches in “disadvantaged areas” throughout the state and has proposed that the Connecticut Department of Banking both study the state of urban bank branches and begin ensuring that more branches in those areas aren’t closed without good reason.
Though this is not a new fight for Kirkley-Bey, it’s of more importance recently. Her day job is with Sheldon Oak Central, a nearly 40-year-old nonprofit housing development corporation that owns about 600 apartment units in Hartford. The group is now embarking on its first new housing development, a 57-unit, 25,000 square foot building pegged for a vacant lot at 1450 Main St. in North Hartford. On the ground floor will be space for retail, and Kirkley-Bey would like to see a bank or credit union branch there. She believes it would offer a sorely needed local source of financial services other than predatory check cashers, and could broaden residents’ understanding of banking.
“We could begin helping them to [improve their financial literacy], and maybe even put them on the path to home ownership,” she said.
But Sheldon Oak called a number of local banks, Kirkley-Bey said –- People’s, Webster, New Alliance –- and got nothing but rejection. Kirkley-Bey said one bank informed the group that it would need a minimum of $30 million in potential deposits to open up a branch.
“You tell me whether there is that much money in that area,” she said.
One of Kirkley-Bey’s bills would require the DOB to investigate the unavailability of banking services in urban areas of the state compared with suburbs. Another would require banks to submit evidence to the DOB before closing a bank in an urban area that the closing would not have “an adverse financial impact on such neighborhood.”
The simple reason for why banks don’t locate in poor urban areas is that they don’t think they can make money there. DOB Commissioner Howard Pitkin said the location of branches is “primarily a business decision by the bank.”
When banks open branches, the DOB considers competition and whether the institution operates in a safe and sound manner. But branches are sales offices; they’re placed where sales can be made, and the DOB allows banks to determine those places for themselves.
“Banking is a business, and if they’re not making money in one location, they’ve got shareholders to worry about, they’re going to go somewhere else,” Pitkin said.