CITY HALL – Council Speaker Christine C. Quinn, together with Public Housing Sub-committee Chair Rosie Mendez and Oversight and Investigations Chair Eric Gioia, today released a report that details the financial challenges New Yorkers living in New York City Housing Authority (NYCHA) developments face because of a lack of access to banking institutions and they services they provide. The report is titled “Access to Financial Institutions for NYCHA Residents.”
The legislators were joined by a number of housing advocates, including: Reginald Bowman, President of NYCHA’s Citywide Council of Presidents; Bishop Mitchell Taylor, Founder and President of the East River Development Alliance; and Linda Levy, CEO of the Lower East Side People’s Federal Credit Union.
The New York State Department of Banking estimates that in New York City, approximately 800,000 people, or nearly one in ten New Yorkers, are “bankless.” Many of these residents opt instead to use check-cashing services to turn their checks into currency, despite the recurrent fees associated with such services. The Federal Reserve Bank estimates that one in 12 families does not have a bank account, and among families earning less than $18,900 a year, that proportion increases to nearly one in four.
Among various explanations for this trend is the belief of some that they do not have enough money to justify opening an account. Other factors include cultural barriers, such as the inability to speak English and a lack of trust for financial institutions.
“This report proves a fact we already know – that the best way to invest in an individual’s future is to give them the tools they need to succeed,” said Council Speaker Christine C. Quinn. “While we need to improve access to banks in lower income communities, we also need to re-enforce the idea that that banks are an invaluable support tool that can lead to financial stability. We need NYCHA and the Center for Economic Opportunity to adopt these recommendations, so that residents can eventually take control of their financial futures.”
“Economic justice means equal access to the American Dream,” said Oversight and Investigations Chair Eric Gioia, who recently attracted a bank to Queensbridge Houses, the largest public housing development in the country. “When your primary financial institution is a check casher, you have basically no ability to get a credit card, much less a mortgage – creating a permanent financial underclass. As this investigation shows, more needs to be done to give public housing residents the financial tools necessary to break out of the cycle of poverty.”
Between the fall of 2006 and the summer of 2007, the New York City Council’s Policy and Investigations Division (PID) analyzed the proximity of banks and banking habits in some of New York City’s poorest communities – its public housing developments. PID used mapping software to determine the proximity of banks to the city’s 350 NYCHA developments, and a survey of 385 NYCHA residents at 25 developments about their banking habits and preferences.
This investigation found:
Nearly three out of four public housing developments, or 74% are closer to a check-cashing store than a bank;
24% of NYCHA residents don’t have a savings or checking account with a bank or a credit union;
53% of NYCHA residents use check-cashing services, including 50% of residents who are already bank account holders;
19% of NYCHA residents surveyed are lacking a bank or credit union account and a credit card.
These findings suggest that more than 98,000 (or close to 1 in 4) NYCHA residents are not accessing financial services at banks or credit unions.
The report issues the following recommendations:
The Mayor’s Center of Economic Opportunity (CEO) should expand financial education opportunities for NYCHA residents;
The Mayor’s CEO and NYCHA should create a public strategic plan on how they can support efforts for cooperative banking and financial literacy;
NYCHA and the CEO should report on time rent payments to credit-reporting agencies;
NYCHA should exclude interest income from rent determinations;
NYCHA should explore renting retail space to banks.
“At a time when bank branches seem to be sprouting up on every corner of many neighborhoods in our city, it is shocking to find that the residents of New York City’s public housing developments do not always have easy access to financial services,” said Public Housing Sub-committee Chair, Rosie Mendez. “Having a bank or credit union nearby can help residents gain financial literacy and access to capital – two necessary components of moving up the economic ladder.”
“The Residents of the public housing community represent an essential part of the economic engine that drives the city of New York,” said Reginald Bowman, President of the NYCHA Citywide Council of Presidents. “The financial equity that is generated from the revenue stream of our rents and our vast purchasing power should benefit NYCHA residents. I applaud and support this report and its recommendations of financial literacy training and cooperative banking initiatives for NYCHA residents, which will be tremendous first step towards economic independence and Socio-economic equality for the residents of public housing.”
“I commend the City Council for working to identify the need for access to mainstream financial institutions and financial literacy services in public housing neighborhoods,” said Bishop Mitchell Taylor, Founder and President of the East River Development Alliance. “I think this is a great first step, and as President and Founder of the East River Development Alliance (ERDA), a non-profit working to expand economic opportunities for residents of public housing, I look forward to continuing to be part of the solution.”
“In a city that is home to the major financial institutions of the world, this report reveals just how deep the divide remains between economic classes,” said Linda Levy, CEO of the Lower East Side People’s Federal Credit Union. “NYC must provide the under-banked residents of public housing with affordable and just financial services if it hopes to begin to close that divide.”