How Can We Get More Banks in Poor Neighborhoods?

A new report by the National Community Reinvestment Coalition finds that most of the largest metropolitan areas of the United States have markedly lower numbers of bank branches in working class and minority communities than in the upper class and white neighborhoods.

Setting aside the curious vernacular ("working class" and "minority"), the NCRC is concerned that there are neighborhoods without enough banks, and is proposing that existing banks be forced to open branches in undesirable locations by way of the Federal Reserve Board's "Community Reinvestment Act".

But instead of using force, here are two more palatable ways of bringing more banks to these neighborhoods:

- The NCRC, instead of lobbying for government controls, can open a bank themselves.

- The NCRC can explore reasons why banks, and many other merchants, are reluctant to locate in these neighborhoods. Or, maybe the NCRC can just ask themselves: According to the U.S. Census Bureau, the NCRC chose to locate in census tract 1303 (West Roxbury, MA) that is 92.5% white.

Of course, there can be many reasons why there might be fewer banks in these neighborhooods. Perhaps the residents prefer to do their banking in other neighborhoods -- like where they work. Or perhaps there are regulations, like usury laws, that make banking unprofitable in these areas. Or perhaps these areas are better served by pawn shops and check-cashing stores than they are by "traditional" banking services.

And this is ignoring the fact that these neighborhoods have many banks. Go to Yahoo Maps, pick the poorest area you can think of, and then "browse by category", "community services", "banks". Look at the South Side of Chicago, and you will find over 300 banks. Apparently, 300 is not enough. What is enough? Probably no number is enough, as that would give the NCRC nothing to do.

And, apparently, it would give celebrity politicians one less lobbying group to please, as well.