NY Council urges "bankless" to open accounts
NEW YORK (Reuters) - New York City's 800,000 "bankless" residents should be encouraged to open accounts instead of using the often more costly check-cashing firms that cluster around public housing, the City Council said on Wednesday.
"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," said Eric Gioa, the Council's Oversight and Investigations Chair.
About 53 percent of the New Yorkers who live in public housing projects use check-cashing services, and almost three out of four of them live closer to a check-casher than a bank, according to a survey by the Democratic-led Council.
Many of New York's more than 8 million residents were born outside the United States and the Council said the reasons individuals do not use banks include the belief they do not have enough money, fears their English is not fluent enough and a mistrust of financial institutions.
Yet these individuals are desirable bank clients. "They actually are great potential sources of fee income, whether for wiring money or just additional products they can sell," said Christopher Marinac, a FIG Partners bank analyst in Atlanta.
"Banks can sell them a mortgage or sell them a credit card or life insurance for their kids," he added.
Steps the Council recommended to encourage public housing residents to switch to banks include offering them more financial education through the mayor's Center of Economic Opportunity and excluding interest payments from income guidelines governing who qualifies for public housing.
The New York City Housing Authority could also weigh renting space to banks, the Council said.
A mayoral spokesman had no immediate comment.
