Can We Talk Banking for a Minute?

IMG_0244, originally uploaded by Prince of Petworth.

This is something that’s been on my mind a while and in a previous post about a CVS coming to Petworth, someone mentioned that they’d like to see a bank branch as well. I have to echo that sentiment. It’s always (and I’ve noted it before) bothered me that the Petworth (and U St) metro doesn’t have a Chevy Chase ATM when so many other stops have them. Then it got me thinking that there really aren’t many banking options near where I live in Petworth (yes there is one further south in Park View). So my folks were here this past weekend and my Dad mentioned that it was often quite common for banks to neglect lower income neighborhoods. And of course we have plenty of “Checks Cashed” spots. I know they are useful to some folks but they really bother me just like the damn Cash Point commercials. I believe the “Checks Cashed” stores take a decent percentage every time you cash a check. But do regular hard working residents also not deserve a proper bank where a percentage of their check will not be removed every time they/we cash one? I’m not saying I want a bank on every single corner (nor do I want a CVS on every corner) but it does seem like a glaring omission in many neighborhoods considered lower income. Am I reading too much into this?

48 Comment

  • There is that B of A a block south of Temper…Looking Glass Lounge.

  • Prince Of Petworth

    @Markus but how far north does one have to go on Georgia Ave before they hit the next real bank? How’s the bank situation in Bloomingdale? Shaw? I’m seriously asking, not being snarky, because walking around those areas I feel like they are few and far between.

  • – internet banking is the way to go. You can use ANY atm and they will refund you the atm fee.

  • Yeah this is a pretty common phenomenon. The banks simply don’t find it profitable to locate in certain areas. This, of course, changes with gentrification. See, e.g., the BOA in Columbia Heights. But I too was annoyed by the ATM situation on U St. the other day when I went to a place (J.J’s) that didn’t accept cash and I needed some. There’s a Bank of America mortgage office on U St….but no BOA atm. Fortunately, like dcpublius, I also use a bank that rebates ATM fees, so I just used that card. Still, it was annoying.

  • Banks want a large deposit base to justify a branch that low income neighborhoods cannot provide. Many businesses use census data to determine demographics and income of a neighborhood when deciding where to locate operations, I suspect much will change in that regard after the 2010 census.

  • Banks aren’t practical for people living paycheck to paycheck. Run the numbers on what a handful of bounced checks would cost versus check-cashing fees, and you’ll see why. Plus, some banks charge you money for having too little money in your account, which is a concept that blows poorer peoples’ minds.

  • there is an Industrial Bank on GA and Delafield. But your dad is correct, banks won’t invest in a lower income areas. But I betcha ya when more development comes to Ga Ave we will start to see more banks.

  • Independence Bank just open a branch in Shaw at 9th and N a few months ago. It has street access an ATM. I think its been a nice addition to the neighborhood.

  • Most banks are huge and therefore can only make money on wealthy clients and companies. This sucks for poorer clients and neighbourhoods. Community Development Financial Institutions like DCs City First Bank have a mandate to “provide credit, financial services, and other services to underserved markets or populations”. They receive subsidies. Without these programs all you get are check cashing and pawn shops which are an effective way to squeeze money out of poor neighborhoods.

    Do you want to earn interest by loaning money to arms dealers and tobacco companies or by financing low income housing in your neighborhood?

  • I agree, those check cashing commercials make me cringe! Do people really see the benefit in them? Some people need a good kick in the butt when it comes to managing money!

  • PNC – free ATMs everywhere, even overseas. That’s all I need.

  • Are there still check cashing places in DC? I admit that it’s been a while since I have been around much of DC. I thought that a law had been passed regarding how much interest they could charge. The interest amount was not enough to create a margin, so I thought they all moved out. Is this not the case?

  • @USA! USA! – I have PNC as well, but you still get charged when you use another bank’s ATM – ATM withdrawal fee from PNC plus the ATM fee at the terminal.

  • “Am I reading too much into this.” Yes, but don’t feel bad – so is everyone else.

    Let’s dial back the “banks hate poor people” thing for a minute.

    PoP, it’s only recently that you’re hanging out day to day during the week in your primarily residential neighborhood. There’s not a lot of daytime workers in Petworth (or lots of other places where there aren’t a lot of bank branches). Banks, until recently, didn’t keep weekend hours at all. (Still don’t where my dad lives) So they’re going to locate branches near where people who use banks work.

    ATMs will come in time, as more retail establishments that have preexisting contracts with banks/shady off brand ATM companies set up shop. If there’s not a lot of retail, banks aren’t going to put in ATMs because there’s no need.

    It doesn’t have much to do with gentrification or anything else (tangentially sure in that if it’s bringing a lot of new weekday traffic in, banks will set up shop; eg H St. had banks pretty much before it had anything else), just to do with where and when people bank.

  • @Mal, it depends on the type of account you have with PNC and your relationship with your bank manager. I’ve been a PNC customer in one way or another, literally since I was born, back when it was a tiny local bank. I’ve never had to pay ATM fees (except for the several years my primary checking account was with BofA and those bastards charged me for farting) because I’ve gone in and gotten them waived as each account changed. Now almost all of my accounts are with PNC, and there are no fees (and if another ATM charges me a fee, PNC credits it back to me). I think you just have to keep a certain balance in your checking account (I don’t remember what it is) and if you drop below that, no worries, but then they charge you $15. PNC is the best bank ever!

  • Isn’t there a Wachovia right at the U Street metro (at the entrance farther west)? I’m pretty sure I used that ATM last week.

  • We have really missed the Wachovia that used to be on NH. I loved how the sign said the branch had moved to Columbia Heights (when it clearly was just being closed).

  • There are a lot of people who still don’t trust banks and a lot who are unbanked for a variety of other reasons. Immigrants and low income people make up most of this population.

    Banks are businesses, not social services. Just like any other business, they will not open in an area where they can’t make money. So, in lower income areas they would likely make their money from fees and not from interest (ie investing the money you deposit while you are not using it). These are fees that people who are living from paycheck to paycheck can’t and won’t pay – so they don’t bank.

    Check cashing places make money from fees also. For cashing a low-risk payroll check it is usually 1-2% of the check – about $3 on a $200 check. As long as someone is just using the check cashing services and not the loan services, this is actually cheaper than monthly bank fees for a low balance account. They can then take cash to a bank (where they don’t have an account) and pay utility bills, pay their rent and buy what they need in cash.

  • Mike – most banks are huge and can only make money on wealthy clients? I’m not sure what you define as most, huge, or wealthy but this statement has some glaring contradictions. If wealthy is the top 10%, why would you need a huge bank or several huge banks to serve the top 10%? If banks only wanted to serve corporate clients, they could. Why would you service the corporation, but not the corporations employees? The reality is, banks make money on non-depository product lines and fees. Low income people buy less homes, heloc’s, insurance, mutual funds, etc… Check cashing joints charge high fees because there is a higher risk that someone not going to a bank will present a check that is more likely to bounce.

    I wonder why they don’t make banking 101 mandatory in the US education system.

  • This is an enormous problem in impoverished neighborhoods, and one of many reasons why people in those neighborhoods tend to stay impoverished. No banks mean less opportunity to learn to budget, earn interest, build savings, or establish good credit. Instead, check cashing fees siphon off disproportionate amounts of what little cash there is to begin with, and payday loans, pawn shops, and predatory lending schemes lock people into debt cycles. Would a branch bank solve everyone’s problems? Of course not, it’s not a single silver bullet. But access to financial services is a key component in providing stability and accumulation of wealth in a population, and one that cannot be ignored.

  • I believe the next real bank going north on Georgia is the Industrial Bank at Decatur St. Its a common phenomenon though; banks make money on loans, not on checking or savings accounts; until very recently, low income folks weren’t a targeted market for home loans (you’ve heard some of the crazy stories about SINA and NINA loans, the disconnect in lender incentives, and the financial meltdown that ensued, I’m sure).

    Some of the previous commenters seem to suggest that the banks follow the gentrificication. I’m not sure the causality runs in that direction though – essential neighborhood services (banks, grocery stores that sell fresh produce instead of just corner stores with frozen and canned goods, etc.) might be the seeds that bring the gentrifiers in. But that seems hardly a settled question. As noted above, Shaw just got a bank, and Shaw is starting to flip, but we’re still pretty early in the process for that neighborhood, in my view. I’m too new to DC to remember a different time, but my understanding of Columbia Heights is that the real boom in high(er) income white people moving to the neighborhood came with the Giant, not the expectation of a big-box-to-be (albeit in a semi-not-big-box). A story I’m certainly more familiar with is East Austin, in any case, where folks really started realizing the value of buying cheap land right next to downtown when BofA and Fiesta (a grocery chain) moved into the neighborhood.

    And then there’s always the artists-follow-cheap-space-and-yuppies-follow-the-hip theory of how gentrification happens as well… i think its likely that there are a lot of factors involved, but yes. banking is a huge one.

    I’m a bit too lazy to google it, but there’s a ton of academic literature about this stuff out there, in any case.

  • “But do regular hard working residents also not deserve a proper bank where a percentage of their check will not be removed every time they/we cash one?”

    They do and that’s what one of the missions of the Community Reinvestment Act was. Local politicians can sometimes force the hand of big banks by requiring them to put branches in underserved areas if they want to put them in more affluent areas. But I don’t think anyone likes to be forced to do the right thing.

    The problem is that banks have always found it unprofitable to put branches or even ATM’s in poorer neighborhoods. The bank really doesn’t make any money on cashing checks (unless they’re bouncing). A bank’s real money is (or should be, lol given today’s economy) in attracting deposits and then making loans on those deposits to qualifed debtors.

    Right across from the Whole Foods on P-Street there are 2 banks on the same block. There’s also a gym and a yoga studio…and a Gelato place (which I find quite humorous cause you’ll often see the lulemon chicks with their mats in place scarfing down a cup of hazelnut post work out)

    But because there’s a need in poor neighborhoods, Western Union (for remittances), Check Cashing, Pawn Shops, and formerly Pay Day Loans fill the void. They can only stay profitable by charging for it.

  • This group does some really cool work on using demographic data to educate companies about actual (often unbanked) income/wealth characteristics in underserved areas.

    (I haven’t actually followed their work closely in a number of years… but remember being enthralled by their reports.)

  • What @dcmom said. There was an NPR story a couple years back on the lack of trust that Latino immigrant populations had in banks and efforts to encourage the use banks by those populations instead of cashing paychecks and carrying around large amounts of cash. The neighborhood on which it focused was MtP.

    Beyond that, the large banks really aren’t focused on brick & mortar branches anymore — not only are they pricey real estate, but the employees needed to run them cost $. Most focus now on the full-service ATM that can take deposits, etc.. But once those apartments above the Petworth Metro start to fill up, you’re going to see an ATM or 2.

  • I think the Internets Celebrities got this one covered in their online video, Checkmate:

    Hilarious and informative. These two guys are quite funny with the social commentary.

  • @Jimmy D – I was trying to find that video this morning (saw it a few mos ago). It really is both hilarious and informative.

  • A lot of the articles about last year’s financial crisis pointed out how it was the lack of profitability of commercial banks (small, big, whatever size) that caused them to acquire (more profitable) investment/insurance banking companies.

    I liked that Riggs Bank (now PNC) kept its presence on 14th and Park during the many years when that certainly wasn’t a high-income area, and now it is nicely located in a developing retail corridor.

  • FYI – the city has plans to launch a “Bank on Washington” campaign in the coming months to help solve this problem. It’s modeled after a similar program in San Francisco ( and about 15 other cities across the country. Wells Fargo/Wachovia is the primary sponsor, and they’re looking to partner with other banks and credit unions in the area as well as community groups to help market bank accounts to people who might not consider getting one otherwise.

  • We should be helping impoverished neighborhoods in DC set up their own community banks. Similar to what the Peace Corps does abroad.

  • Mandy, the law that was passed limited interest rates put all of the payday loan places out of business. Those are the places where people get money ahead of their upcoming paycheck at an annual APR of 400%. The checks cashed places live on as one has to bring their paycheck in and have it cashed for a fee, rather than an interest rate.

    Still, putting payday loan outfits out of business without providing neighborhoods with alternatives was not the best the Council could have done for their constituents.

  • @Nichole – gotcha. I just checked and I realized I still have a student checking and savings account! I haven’t been a student for over a year :-/ and I should probably change that sucker. I agree in that PNC is really a great bank. I’ve had them for more than 6 years now and I’ve never ever had a problem. They’re really great about fixing mistakes when they [rarely] happen.

    Thanks for the heads up Nichole & USA! USA! I will be heading to PNC tonight to chat them up 🙂

  • Don’t forget their was a Wachovia in the shopping center on NH Ave and Farragut. It was there until they ROBBED it on several occasions. That will get a bank and any other business to close really quickly.

  • their–>there

  • @Mal – Do that. I think when I signed up you had to set up automatic deposit for paychecks and pay two bills online to get the free ATMs. I was going to do that anyway, so no big deal. Saved me $27 in the past month, and 11 instances of me getting pissed off someone wants $2 for me to get a $20 bill.

  • @USA! USA! – that’s awesome! I do all that anyway, and I’m sure they’d rather I have a normal checking/savings than a student account. ATM fees are ridiculous!

    Do they automatically reimburse you the ATM fee, or do you have to submit the receipts and ask for the reimbursement?

    Oh and PS I believe they just upped their own ATM fee to $2 (the additional fee PNC charges you when you withdraw from an out of network ATM)

  • @Mal, they automatically reimburse.

  • Of course hardworking people deserve to have a bank in their community. But keep in mind that banks are not just giving poor communities the shaft, they are increasingly giving all of their customers the shaft. Charging ridiculous account maintenance fees unless a high balance is maintained in checking accounts, ridiculously disproportionate ATM fees (thank god for PNC’s no fee ever rule), ridiculous fees for bounced checks, arranging debit card withdrawls to trigger overdraft fees, the list goes on and on.
    It is a myth that poor people don’t have money. As Too Short said, “There’s money in the ghetto.” It’s just that it is very expensive being poor. In the absence of a neighborhood supermarket, you shop at corner stores that charge higher prices for groceries. In the absence of a neighborhood bank, you cash your checks at a check cashing place that takes a percentage of the check. You also pay them a fee to pay your bills because you don’t have a checking account. Or, you pay bus, train, and/or cab fare to travel to a supermarket or bank in another neighborhood.

  • Credit unions are the way to go.

  • Marcus – It’s very expensive to uninformed, but that’s what the political class wants, that’s what banker’s want. You assume “poor” people don’t have access to the internet. I assume they can get to the library and use it for free, but they aren’t informed and it takes some effort. Banks are constantly competing for deposits, offering new account incentives. You can pay $20 a year for overdraft protection, but you have to ask the bank for it, they don’t just offer it with a new account. Online bill pay, direct deposit… As for travelling to the supermarket instead of the corner store, it’s about motivation and effort. It’s easier to buy what you need now, instead planning for next week too. Again, these are basic life skills that should be a mandatory part of the education system, but we live in a consumer society, where short-sighted decisions lead to financial instability and constant struggle.

    It’s buying a $3 40oz 7 days a week, instead of a $15 30-pack once a week.

  • I’m not sure paying a metro fare would be that much deterrent for people to do their banking elsewhere if the alternative is having a sizable % taken of the transaction. And its a mistake to assume people don’t have access to services whether it be internet or banking or grocery stores.

    I do think that society and history have steered certain groups away from taking advantage of these services though and it’s become ingrained. A bad education system and living paycheck to paycheck have stunted development of long term planning skills and limited peoples expectations for what they should have access to. What these communities need is counseling services to train them in some of these life skills that most people learn from family and school without even thinking about it.

  • Dirty and Columbia Heights Boy – I recommend the following argitcle to both of you –

    “Poor? Pay Up. Having Little Money Often Means No Car, No Washing Machine, No Checking Account And No Break From Fees and High Prices.”
    It can be found here:
    If the link is bad, just Google “high cost of being poor.” It should be the first article that comes up. It is from the May 18, 2009 edition of the Washington Post.

    The article makes the point more expansively than I did. In short, “The poorer you are, the more things cost. More in money, time, hassle, exhaustion, menace.” It’s not just about a lack of long-term planning skills and being short-sighted.

  • I’m surprised only one person has mentioned bank robberies but that is also one major reason banks won’t open branches in poorer neighborhoods. It’s not that banks are going to lose a lot of money in any one hold up but that the costs of making a bank in a rough neighborhood safe (bulletproof glass, security guards, etc.) are too high to justify opening a branch.

  • I read that article, I understand the difficulties… life is not easy, especially when the government doesn’t want to really help you

    “To accommodate any big box there would require a public-private venture,” he said.

    That may be a deal breaker. A spokesman for Mayor Adrian Fenty’s economic development office, Sean Madigan, said any assistance for Wal-Mart is off the table.

    Hard to believe a company that wants to create jobs and offer cheap merchandise to a “poor” area of DC isn’t being courted by the economic development office with open arms.

  • I just want a neighborhood bank with a free ATM where I can withdraw a little cash, deposit checks etc. in the morning if I want to take a cab, buy a bagel etc. before I go to work. Preferably one with a branch near my office, and free checking like my current bank has. The bank I’m with is no longer as convenient because our office moved…so it’s open season. Other than having free checking (with no interest, which doesn’t matter since I live paycheck to paycheck anyway) they’ve never done squat for me, we got our mortages loans from other banks.

  • And then maybe have a deli open next door.

  • It isn’t just about profits. When a customer wants to open a bank account, the bank looks at your credit history. Have you bounced a check? Ever? Have any debts in collections? How often are you late paying your bills?

    These things can stay on your ChexSystems report (not a credit report) for five years and prevent a person from opening a bank account. Low-income earners often have these blemishes on their reports that force them to lose bank accounts and be unable to open another. So they are stuck using check-cashing places at very high interests.

  • My sister can’t have a checking account because she’s an idiot (I get to call her that you don’t) who bounced way too many checks and owes the banks and a whole lot of other people money. I guess she is what you’d call the working poor. Her paycheck goes on to a pre-paid card like thing where she can withdraw cash or use like a credit card. She’d have to save up plenty of cash to clean up her messy banking past before any bank in their right mind would let her open up a checking account.
    When I was a teen working in a grocery store people would cash their checks in the store to buy groceries. The store would take their cut, btu then later the store stopped cashing checks because of too many bouncing ones. Was it the store wanting to shun the poor in favor of middle and upper class customers with credit or debit cards? No.
    I guess that’s also why the liquor store round the corner from me stopped cashing checks. I was in there and an angry woman was going off about how they wouldn’t cash her check. What would you tell her, go set up an account with Wachovia, PNC? No, ’cause you don’t mess with an angry woman.

  • petworth has a citibank point there but i would not recommend banking with citibank as they caused many people to loose thousands. My friend had a citibank savings account and lost $3oooo in strange fees and wierd account activity, better to use one of the other banks :0)

Comments are closed.