Recently, a friend gave me a check for a small amount of money. Rather than depositing it in my bank, as I usually do, I decided to cash the check so that I could have some currency. The check was drawn from a Wells Fargo Bank, and knowing of a branch in a low-income neighborhood on my way to work, I thought it would be easier to stop by and simply cash the check, even though this was not the financial institution with which I banked.
The teller behind the counter asked me for two picture ids. Fine, although most people I know just have one, a drivers license. Then they took a finger print of my thumb and placed it on the check. This was a first for me. I thought that only criminals were finger printed. Afterwards, before giving me my cash, the teller informed me that they would need to subtract from the total $7.50. Because the check was for a small amount, this fee would have represented about 20% of the total. Wait – what? I am charged for cashing a check with the bank from which the check is drawn. I’m sure the individual who wrote me the check pays monthly service fees – so why do I have to pay to get my money?
Then it dawn on me, it is expensive to be poor. I began to think of the working poor who live paycheck to paycheck, who cannot afford banking costs because they will always lack a minimum balance. If their employer banks with Wells Fargo, must they give a portion of their meager wages to the bank to get their money? Is this why check-cashing services that prey on the poor, so popular? Or what about the 9 million undocumented immigrants living in the shadow of our economy who lack one picture id, let alone two? How do they get access to the fruit of their labor?
I really should not be surprised with what I experienced. After all, banks like Wells Fargo are among the those responsible for the economic oppression of the poor, specifically black and brown people. But not just the poor. In the pursuit of short-term profits, they have no qualms in tanking the U.S. economy. They are mainly responsible for the devastation we – and the rest of white America – faced due to their predatory lending practices in communities of color. According to an affidavit given by Wells Fargo former loan officer Beth Jacobson, her employer saw black neighborhoods as fertile ground for high-interest subprime mortgages, pushing customers who could qualify for regular prime loans into subprime. One of her colleagues referred to the subprime mortgage applicants as “mud people” and to the loans as “ghetto loans.” Jacobson, the bank’s top-producing subprime loan officer noted, “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
A racial divide existed as to the type of loan people obtained. Eric Halperin, director of the Center for Responsible Lending pointed out “We’ve known that African Americans and Latinos are getting subprime loans while whites of the same credit profile are getting the lower-costs loans.” In 2006, Well Fargo subprime mortgages charged an interest rate of at least three percentage points above the federal benchmark, financing costs were higher, and prepayment penalties were imposed making refinancing to lower interest rates to keep one’s house out of foreclosure a financial impossibility.
When the housing bubble burst, most of those who took these subprime loans, who were disproportionately of color, were left destitute, widening the wealth gap between them and whites. Furthermore, municipalities like Baltimore, Cleveland, and Buffalo, faced with waves of foreclosures, experienced as a result reduced tax revenues and increased costs for city services. Abandoned houses cost such cities more as they attempted to ward off crimes like arson, prostitution, and drug use. The chief solicitor for the Baltimore City Law Department, Suzanne Sangree, best explained the damage banks like Well Fargo has had in neighborhoods of color: “This wave of foreclosures in minority neighborhoods really threatens to undermine the tremendous progress the city has made in developing distressed neighborhoods and moving the city ahead economically.”
Should we then be surprised that for Non-Hispanic Whites, the 2010 poverty rate was 9.9 percent? Although Non-Hispanic Whites constitute 64.5 percent of the population, they only represented 42.4 percent of those living in poverty. By contrast, 27.4 percent of Blacks, 26.6 percent of Latina/os, and 12.1 percent of Asians lived in poverty. According to the Census Bureau, African Americans and Latino/as experienced an increasing income gap from whites, rising to record highs in 2010. Since 2000, Hispanics and Blacks have consistently experienced a yearly drop in real median family income. Median household income for non-Hispanic whites in 2010 was $54,620. Contrast this with Hispanics at $37,759 and Blacks at $32,068.
The 2009 median wealth (assets minus debt) of whites ($113,149) is 20 times that of black households ($5,677) and 18 times that of Hispanic households ($6,325). Compare these net worth to 2005 when whites were at $134,992, blacks at $12,124, and Hispanics at $18,359. These numbers reveal that the 2008 Great Recession, triggered by the housing bust, had a far greater toll on the wealth of African Americans and Latina/os than it did on whites. From 2005 to 2009, Hispanics experienced an inflation-adjusted median wealth decrease of 66 percent while Blacks experienced a 53 percent decrease, compared to just a 16 percent decrease for whites. To make matters worse, about a third of African Americans (35%) and Latino/as (31%) had zero or a negative net worth compared to 15 percent of white households.
I did not cash the check at the Wells Fargo branch to obtain my cash. I wondered if the scrutiny I faced was common practice for everyone, or were just customers of color made to feel like criminals? And before you think I am being oversensitive, when I consider how banks like Well Fargo financially genocide communities of color, can you blame me for wondering? I ended-up going to my own bank and cashing the check there; but that’s because I have the economic privilege of doing so. I can’t help but wonder how the poor overcome these costly obstacles?