Well, well, well. We crafted a very important message to the community this past week regarding the need for basic financial services and the impact it has on our local economy. Guess what? It was published by the St. Louis Business Journal. We thought you might enjoy reading the article. It will help you understand what St. Louis Community Credit Union is working diligently to accomplish in our great city:
Providing Basic Financial Services Creates Economic Stimulus
The prosperity of our region is needlessly at risk when individual households are financially unstable. The facts are brutal. St. Louis residents who don’t use a credit union or bank spend an additional $1,042 a year in check-cashing services according to the Pew Charitable Trust.
An estimated 88,000 households in the St. Louis area do not have a checking or savings account according to a December report from the Federal Deposit Insurance Corporation (FDIC). African-American and low-income households are disproportionately affected. The Pew number multiplied by the household count means this region loses $91.7 million a year in consumer purchasing power.
Families that live in the cash world without access to financial services are at higher risk of theft and robbery. In addition to the costs of check cashing, there is little chance to save. Without the capacity to build assets, which includes buying a home or saving for education, our local economy ultimately takes a hit.
According to an August 2009 report from the FDIC, a lack of access to mainstream banking is a large contributor to the use of alternative credit services like payday loans and pawn shops. Over the past five years, banks added more than 10,000 full service branches nationwide. Yet, barely one in ten of those new branches were placed in low-income, minority neighborhoods. Considering that the majority of individuals choose a financial institution based on proximity, this leaves poorer communities and minority neighborhoods at higher risk.
Offering services in these neighborhoods is a challenge, but the FDIC report closes by calling government and industry across the country to jointly demonstrate a serious commitment to expanding cost-effective and safe financial services, as well as education to low-income and minority households.
Locally, collaborative efforts are already underway. The U.S. Department of Treasury used St. Louis as one of eight sites for a 2009 Community Financial Access Pilot (CFAP). Twenty-two banks, credit unions (including St. Louis Community Credit Union) and community service organizations participated. Results of the project which ended in December will be out soon.
This past week, The Greater St. Louis United Way coordinated a Martin Luther King Financial Education Blitz in conjunction with the National Day of Service. A wide range of community partners worked together to offer more than 20 financial stability workshops. It is the first of three such efforts this year. Businesses throughout the region should take this opportunity to get involved. Details are online at www.stl.unitedway.org/mlkday.
As we search for a means to jump-start our region’s economic engine, working in concert to provide meaningful financial education is a logical starting point. Information is power and may represent the needed catalyst to transform the unbanked and the under-banked households in our region to greater financial stability. There are $91.7 million reasons to make this happen.