If Manhattan Borough President Scott Stringer meets his latest goals, 10,000 households will be brought into the traditional banking system over the next year-and-a-half.
In an effort to reduce the number of Manhattan residents who rely on non-bank institutions for their cash supplies, Stringer unveiled a program called “Bank on Manhattan” during his annual “State of the Borough” speech on Feb. 4.
Stringer said that he is focusing his efforts in neighborhoods with a high concentration of unbanked families, such as Harlem, with the goal of bringing them into the mainstream financial system.
In his speech, Stringer said he is planning a comprehensive program that includes low-cost and low-risk accounts, education components, and a multi-lingual campaign. The goal is to complete the effort over 12 months after the program is launched this summer.
Stringer spokesperson Joan Vollero said that the borough president is currently negotiating partnership terms with several institutions. Stringer could not be reached for comment.
The borough president explained in his speech that this initiative is driven by concerns over the charges imposed by check cashing companies, which are stores that cash checks at specific rates and do not invest money or accept deposits as banks do.
Many residents of northern Manhattan turn to check cashing companies as soon as they get paid. Nearly half of all residents of Washington Heights and Inwood do not have bank accounts, according to statistics Vollero provided, compiled by the non-profit organization Social Compact. While 13 percent of Manhattan is unbanked, 38 percent of West Harlem residents, 34,874 total individuals, obtain cash from non-banking institutions—a higher rate than both Central and East Harlem.
Check cashing institutions often fill the void left by banks, and there are many located in parts of Morningside Heights and Hamilton Heights.
Saskia Sassen, Robert S. Lynd professor of sociology and a member of the Committee on Global Thought, attributed the popularity of check cashing stores to cheaper fees and the abandonment of low-income communities by major banks over the past few decades.
“Banks charge people no matter what,” said Sassen, who discussed these issues in her 1994 book “Cities in a World Economy.” “Sometimes these charges are excessive. The charges that banks have been making restrict low-income families. Check cashing is cheaper in the long run.”
Juan Rosa, who lives between Amsterdam and Broadway on 135th Street, frequents Freeman Check Cashing, located on Broadway between 135th and 136th streets, because of its proximity to his home.
“Most of my friends and family go to check cashing stores instead of banks,” he said. “Not because of the costs, but because they are close. I’d rather come [to Freeman] because of the location.”
Check cashing stores do impose their own fees, however.
Many local check cashing stores, such as Metropolitan Check Cashing—located across from public housing units on Amsterdam Avenue between 122nd and 123rd streets—and Freeman Check Cashing, charge customers based on the same fee schedule. They subtract roughly 2 percent of the check presented: $1.00 for a $25 check, $1.82 for a $100 check, and $9.00 for a $500 check.
“You can get your money right away,” said Orlando Ruiz, the manager of Metropolitan Check Cashing. “We provide immediate services. Either here or the bank, you have to pay. If you can’t afford to wait five to seven days for your money, then cashing checks is better. Banks are good for people with more money.”
Stringer’s program is already facing skepticism from some local politicians. Although the initiative has been endorsed by advocacy organizations such as United Way and the Urban League, City Councilmember Robert Jackson, a Democrat who represents parts of West Harlem and Washington Heights, said he disagrees with the idea that economically troubled local communities should exclusively rely on banks for financial services.
“Credit unions, rather than commercial banks, always care about the local community,” he said, adding, “Stringer is right to encourage families to have a relationship with banking institutions, but in my experience, costs are less at a credit union.”
Credit unions are non-profit cooperative financial institutions owned and controlled by their members.
Jackson said that, ultimately, fees mean different things for different people. “Families will have to evaluate what works for them.”
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