Banks Financing Preadatory Lenders

Banks Financing Predatory Lenders
Financed by major banks, payday lenders and check cashers are pulling more than $5.7 billion in fees out of California’s low-income neighborhoods every year.  Setting up shop in neighborhoods that have been abandoned by mainstream banks, nationally controlled chains of check cashing shops and payday lenders are expanding a two-tier system of high-priced consumer finance plaguing many California communities.

Payday lenders and check cashers are able to prey on the working poor with the help of some of the nation’s biggest banks. Bank of America, Union Bank of California, U.S. Bank and Wells Fargo Bank all finance these high-priced lenders, contributing to their growth. The lack of competition from mainstream finance (fewer bank branches in low-income neighborhoods) and huge profit opportunities have meant that the number of check cashers and payday lenders has increased nationally from 2,000 in 1996 to 22,000 in 2003.