Financial Predators

Millions of Californians are paying too much in rates and fees for credit and basic financial services. Bank consolidations and the growth of high-priced payday lenders and check cashers have created a two-tiered system of consumer finance with serious negative impacts on California's diverse communities.

While banks and savings & loans neglect lower income communities and communities-of-color with little to no branch presence, check cashers, payday lenders, finance companies, tax refund lenders and pawn shops have become the major financial institutions in California's low-income neighborhoods.  This narrows low-income people’s choices to high-cost, low-quality financial products that block their path to asset building.

Two-tier financial entities have increased exponentially in the last decade.  Check cashing businesses currently make more than $60 billion annually and payday lending more than $40 billion annually. People borrow from high cost lenders because of a lack of alternatives, or desperate financial needs.

CRC has undertaken the following strategies and tactics to overcome predatory financial services and lending:

Public Education: We are reaching out to community organizations and the general public to inform them about the predatory nature of payday lending, check cashing, tax refund loans and subprime mortgage lending. 

Alternative Products: CRC has designed two bank product prototypes intended to replace and undercut payday lending and check cashing.  These include the Essential Bank Account (EBA) and the Quick Consumer Loan.

Policy Advocacy: CRC works with and pressures the federal financial regulators, state legislators, local policy makers and the California Department of Corporations to stop banks from partnering with and/or financing predatory lenders. 

Financial Advocacy: CRC meets with banks directly to end their financing of payday lenders and check cashers and underwriting of tax refund loans. CRC also meets with shareholder advocacy groups, the California State Treasurer and union pension groups to discuss financial institutions’ purchases of pools of high cost (sub-prime) predatory mortgage loans on Wall Street (known as mortgage-backed securities).

Local Organizing: CRC participates in and helps to expand ongoing local campaigns and coalitions that work for economic revitalization and highlight the specific role that two-tiered lending has in impoverished neighborhoods. CRC works with constituencies across the state including: the San Diego Coalition for Fair Banking, the Bay Area Antipredatory Lending Group, the Financial Services Committee of the Low San Antonio Collaborative in Oakland, and the Mission Economic Development Association.  CRC and its partners have assisted in the formation of city government ordinances that restrict payday lending in San Francisco, Oakland, Los Angeles, National City and San Diego.