At the end of all too many of these cases, are foreclosures, bankruptcy, and further deterioration of neighborhoods. Even without the scourge of this new generation of predatory lenders, the poor face a multitude of barriers when they attempt to obtain credit and other financial services at a fair and reasonable cost. An estimated 22 million Americans do not have bank accounts. This means that these citizens must turn to check-cashing firms, liquor stores, loan sharks, and other costly means to carry out their financial transactions. Faced with the need for emergency cash, consumers borrow against their next paycheck, at annual percentage rates ranging up to 500 percent or more.
Banks establish few branches in low-income neighborhoods.
Credit unions, particularly community development credit unions, are an answer, but too little is being done to promote them. This should be a priority for the credit union movement, the next administration, and the Congress. For too long, the agendas of the regulatory agencies, the Congress, and the executive branch have been oriented to the care and feeding of the biggest financial corporations. Washington needs to be shamed into devoting just a fraction of its time, money, and muscle to shaping a financial system that serves everyone, including the poor, on a fair basis.