For many consumers, particularly modest income or older adults, a bank branch is needed in order to establish a bank account or conduct transactions. Small businesses also depend on bank branches in order to conduct routine transactions. A branch closure in a modest income neighborhood can be a devastating occurrence and can start a downward economic spiral.
Thankfully, you are not helpless if a bank announces it is about to close a branch in your community. You cannot force a bank to keep its branch open and the federal agencies likewise lack the power to compel a bank to keep its branch open. However, there are public notice procedures that you can utilize to persuade a bank to keep its branch open.
A previous column described disparities in bank branching by race and income of neighborhood. In particular, Wards 7 and 8 east of the river have a population that is about 95 percent African-American, and these wards have only 14 bank branches compared to 235 in the rest of the city. There is about one branch per 10,000 people East of the River and about 4 branches per 10,000 people elsewhere in the city. The scarcity of branches translates into fewer home and small business loans as described in the previous column.
Within the last year, one of the branches East of the River on South Capital St. closed in a census tract that was 98 percent minority and low-income. Forty eight percent of the people in the census tract was below the poverty level. In spite of the low-incomes, the bank branch had deposits of $19 million. Clearly, the neighborhood needed and depended on the branch and will be worse off economically without it.
In order to possibly avoid a branch closure, community organizations and neighborhood residents need to use the available public input procedures. A bank is required to send a notice to customers 90 days before a branch is slated to close and also post a closure notice in its lobby 30 days before closure (not sure why the notice in the lobby can be much later than the mail notice). If the branch is located in a low- and moderate-income census tract, members of the public can write to federal agencies identified in the branch closure notices and explain why the branch closure is harmful. The federal agencies have the discretion to convene a public meeting to explore alternatives to branch closures which could include another bank buying the branch or the bank donating its branch to a community-based credit union.
When I was at NCRC, NCRC and member organizations used this public input mechanism to ask federal agencies to convene meetings. The meetings were successful in halting branch closures in places as diverse as rural Mississippi and America Samoa. In the case of Mississippi, a Congressman showed up at the meeting convened by the federal agency and likewise the member of Congress from America Samoa was also involved.
The lesson is that campaigns to keep bank branches open work better when community organizations have organized important constituencies. These include elected officials, small businesses, and neighborhood residents who use the branch to explain why the branch is important. In addition, you need to do your homework and data analysis to demonstrate why the bank branch is important to the neighborhood.
If at the end of the campaign, the bank closes the branch, you should not feel that all is lost. If the bank was not responsive to community concerns and did not offer any alternative services or products, then you can comment on the next CRA exam of the bank or comment if the bank submits a merger application. The opportunities for commenting do not cease and there are many ways to hold banks accountable for serving communities.
There are no guarantees of success in obtaining alternative outcomes other than a branch closure. What is guaranteed, however, is that without public input and participation, the branch will close.
Josh Silver is the Development manager at Manna, Inc. Prior to his time at Manna, Josh served as the vice president of research & policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.