CommunityPam's House Blend

Predatory lenders target black neighborhoods

Payday lenders, which are allowed to charge whatever interest rate they feel the market can bear, are not surprisingly, setting up shop in minority neighborhoods. As Chris Kromm of Facing South reports, if there are three times as many of these predatory “banks” taking advantage of people perceived as living on the margins in black areas, the proposed bankruptcy “reforms” are going to have a direct negative and discriminatory impact on the community. So much for the “ownership society.”

A new study from our friends at the Center for Responsible Lending in Durham, N.C. “reveals a powerful relationship between the proportion of African-Americans in a neighborhood and the prevalence of payday lending stores.” According to the Center’s press release:

African-American neighborhoods in North Carolina have three times as many payday lenders per capita as white neighborhoods, even after controlling for variables associated with the industry’s purported customer base such as income and homeownership.

“This study shows in the starkest terms that African-American neighborhoods bear the brunt of predatory payday loans — loans that are not even legal in North Carolina,” said Mark Pearce, CRL president. “This confirms that the abusive loans made by payday lenders are not just an issue of fair and responsible lending, but are a civil rights issue as well.”

This is in line with what Southern Exposure found in our report “Banking On Misery,” which investigated the predatory practices of Citibank and other lending institutions. For example, see these maps of Atlanta and Charlotte (PDFs) from SE’s investigation, which clearly show how high-interest “subprime” loan offices are routinely stationed in black neighborhoods — regardless of the credit record of individual consumers.

Predatory banking is a big reason why people are trapped in debt, and another reason to oppose the bankruptcy reform bill which goes before the U.S. House this week.

The situation reminds me of NYC when I lived there in the 70s and 80s — go to a predominantly black neighborhood and you’d find a liquor store on nearly every corner and rarely a grocery store.

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Pam Spaulding

Pam Spaulding