The New York Times combed through the data and found that when the banks close branches, they’re doing it in poorer neighborhoods. And when they open a new branch, it’s more likely to be in a well-off area. While that makes business sense, it could violate the spirit of the Community Reinvestment Act which was passed to curb “redlining,” where lower-income neighborhoods are discriminated against by the financial services industry.
In low-income areas, where the median household income was below $25,000, and in moderate-income areas, where the medium household income was between $25,000 and $50,000, the number of branches declined by 396 between 2008 and 2010. In neighborhoods where household income was above $100,000, by contrast, 82 branches were added during the same period.
“You don’t have to be a statistician to see that there’s a dual financial system in America, one for essentially middle- and high-income consumers, and another one for the people that can least afford it,” said John Taylor, president of the National Community Reinvestment Coalition, a group that advocates for expanding financial services in underserved communities.
No worries, I’m sure predatory payday lenders and check cashing joints will rush in to fill the void.