The New York Times reports today that the number of bank branches that closed in the U.S. was higher last year than the number that opened, the first time in 15 years that that's happened. Bank branches didn't shutter their doors across all communities equally, of course. Banks left low- and middle-income areas and opened new branches in areas with a median income of $100,000 or more.
There are many benefits to having a bank in your neighborhood, which should be obvious. It doesn't matter how many people flock to banking online; you need a computer or mobile device to do it, you would most likely prefer a physical location at which to cash physical checks, and according to a law professor quoted in the article, having a bank in your neighborhood promotes a "culture of savings."
The banks, of course, will tell you they've taken a dramatic hit in the financial crisis and that financial regulation preventing them from charging onerous overdraft charges or other fees means they can't make money off poor people.
The Community Reinvestment Act, if enforced, could prevent banks from leaving poor communities wholesale. As Alyssa Katz wrote for TAP two weeks ago, conservatives like to blame the CRA -- which requires banks to meet the financial needs of communities they're in and was designed to prevent discriminatory loan practices, especially in the mortgage market -- for the housing crash, and enforcing or expanding it to include other financial services is extremely toxic. But the flight of banks from poor neighborhoods shows just how much it's needed; banks are driven to make money which, for their low-income customers, often means fees and charges they can't afford. But without banks, low-income communities are prey to predatory lenders, like check-cashing shops or pay-day lenders, which keep them poor.
