State launches new efforts to examine access to banking services

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Local financial institutions and advocacy groups hope a new state effort focused on communities lacking banks and other financial services will benefit some of Long Island’s poorest and most diverse towns and villages on the racial level.

Democratic Governor Kathy Hochul signed legislation on May 5 to study and make recommendations to tackle so-called “unbanked” or “underbanked” communities where residents are at greater risk of falling victim to predatory lenders. and other harmful financial schemes that prevent them from building wealth.

Douglas Mayers, NAACP chapter chief for Freeport, Roosevelt and Baldwin, said a full assessment of these “banking wastelands” on Long Island is overdue.

“Look around our communities of color. We don’t have big banks in our communities, he said. “Even if we have them, most people in the community can’t get loans to open a small business, or they end up paying through the nose with high interest rates and fees.”

Hochul’s office did not respond to emails seeking comment on Friday, but the new law directs the state Department of Financial Services to submit its report within one year.

The statewide assessment will hopefully address the lack of reliable and granular local data on the extent of the underbanking problem on Long Island, said David Okorn, executive director of the Long Island Community Foundation. The foundation launched the Long Island Racial Equity Initiative in 2018 to address inequalities that affect the economic health of black people on Long Island.

The Federal Reserve Bank of New York, in a 2017 report, identified 18 neighborhoods on Long Island, including parts of various communities such as Hempstead, Roosevelt, Freeport and Uniondale, where families are particularly struggling to access credit. ordinary and manage their debt. .

In the greater New York metropolitan area, which includes Long Island but also covers parts of New Jersey, black and Hispanic households have some of the highest rates of being “unbanked,” according to the most recent survey from the Federal Deposit Insurance Corporation, or FDIC, the federal agency that insures bank deposits.

Some 11% of black households and 12% of Hispanic households in the New York area were unbanked, compared to about 2% of white or Asian households in 2019.

Meanwhile, families with incomes below $30,000 made up nearly 40%, all unbanked in 2019, according to the FDIC.

A major driver of banking disparities is a lack of financial literacy from childhood, said Renu Dalessandro, chief marketing officer of Jovia Financial Credit Union, a Westbury-based nonprofit with nearly two dozen credit unions. locations on Long Island.

As the state studies and develops its recommendations, it should consider strengthening programs for young people so they are better able to manage their finances as adults, she said.

One model to consider is Florida, where Republican Gov. Ron DeSantis recently signed into law a unanimously approved bipartisan law requiring high school students to take a financial literacy course to graduate, according to Dalessandro.

“We have to provide that education,” she said. “You’d be surprised how some people are just afraid to ask questions or don’t know what questions to ask.”

Whatever the solutions, Mayers of the NAACP says he hopes state officials will involve those most affected early and often in discussions.

“How are you going to solve this problem without the people who live with this problem?” he said. “You just can’t leave them out, or you’ll never get anywhere.” — Special for Newsday


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