Cedar Grove a banking desert, vulnerable to predatory lending
Sara MacNeilThe building that used to be a Chase bank in Cedar Grove has been vacant for about two years and future owners are restricted from offering any type of financial service.
A law that passed in 1977, the Community Reinvestment Act, encourages financial institutions to help meet credit needs in all parts of the communities they serve, including low- and moderate-income neighborhoods.
Caddo Commissioner Steven Jackson said JPMorgan Chase has been neglectful of this law by leaving a void of banking services in the Cedar Grove neighborhood.
"That community does not have a bank at all. You can get liquor, you can get a payday loan and you can pawn your families valuable possessions, but you can't cash a check," Jackson said.
Greg Hassell, executive director at JPMorgan Chase, said the branch at 332 East 70th Street closed in December 2017 and can not be a site of any type of financial-service business.
"The site is now under contract and is deed restricted against future owners operating any type of financial-service business, which includes check cashing, title loans and payday loans," Hassell said.
Hassel said he would not be able to disclose who the site is under contract with before a sale is completed.
With a lack of banking services, the Cedar Grove neighborhood would be an ideal place for lenders to profit off high interest rates on short-term emergency loans. Jackson said he wants to protect the area from predatory lending.
He pushed legislation through to the Commission that would urge the City Council to declare a moratorium, a temporary ban, on issuing permits to payday loan shops. The Commission voted 7-4 Thursday in favor of urging the City Council to temporarily ban the issuance of permits to payday loan shops. City Councilman John Nickelson said the Council is discussing the possibility of introducing legislation.
The proposal said payday loan shops offer predatory lending rates and are dangerous to low-income people. Shops offering high-interest loans contribute to a cycle of poverty, the proposal says.
Like payday loan shops, more and more banks are offering what some call predatory lending. Some regulators are encouraging banks to compete with payday lenders by offering short-term emergency loans.
More:How Banks Slid Into the Payday Lending Business
More:Payday Lenders vs. Traditional Banks
Rather than institutions charging high-interest rates for short-term cash, community development financial institutions promote offering responsible, affordable lending to low-income people. These types of institutions are eligible for federal resources.
Jackson said a local credit union designated as a community development financial institution was interested in the Chase-owned property in Cedar Grove, but the credit union was turned away.