In many of the District’s newly developing or distressed areas, large financial institutions are scarce – frankly they’re just not there. In distressed areas of the city there is a limited amount of basic banking amenities, but in their places are a slew of check cashing store fronts and payday loan servicers. Historically, the District has faced a disparity between banking services and its underserved communities. Data collected from the 2011 Home Mortgage Disclosure Act shows that 56% of the District’s households are African American, but all the large financial institutions together have made loans to a total of 18.5 % of their African American Borrowers. In the District, low-and moderate-income (LMI) households accounted for 40.9% of the city’s households, but lenders made only 22.9% of their loans to LMI borrowers. There is a negative trend here. According to the Community Development Act of 2000, District chartered financial institutions have an obligation to meet the credit needs of all of the Districts communities. This issue is much larger than the District of Columbia. Nationally there are some 40 million unbanked individuals, while another 100 million individuals are classified as underserved. To no surprise, this data disproportionately represents minorities, women, youth and poor individuals.
Banking origins are rooted in community development. They were instituted to put a community’s deposits and investments back to work for the community by lending to individuals to buy cars, homes, put children through college, and even start businesses. Allowing banks to neglect this obligation would be contrary to the fundamental nature of their existence. Although financial literacy is a major component in the grand scheme of financial wellness, making these institutions accessible and available is one of the first steps. If large financial institutions cannot manage to provide basic banking access to all of the Districts residents, it is only fair they be deemed ineligible to hold city funds. Introduced by Councilmember Jack Evans, the Community Development Amendment Act of 2013 looks to remind financial institutions of their primary obligation.