NAFCU: Berger: Big banks have abandoned underserved communities

NAFCU, April 26, 2022, Berger: Big banks have abandoned underserved communities

In a new op-ed for American Banker, NAFCU President and CEO Dan Berger calls out the soaring closure rate of big bank branches and its disproportionate impact on underserved, rural communities, while simultaneously hastening the formation of banking deserts. Recognizing the toll the pandemic took on local economies, Berger mentions that while Americans and Main Street small businesses were seeking leadership and guidance from financial institutions big banks “began closing their doors in communities already suffering from financial and other disparities.”

Berger cites a National Community Reinvestment Coalition (NCRC) report which revealed that America’s banks took advantage of the crisis to accelerate the pace of already planned branch closures, with one-third of these closures concentrated in low- to middle-income and minority neighborhoods over the past five years. “Since March 2020, banks have closed more than 4,000 branches across the country. At 201 closures per month, they doubled their closure rate which – for the past 10 years – averaged around 99 per month,” wrote Berger.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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