ColorLines is reporting that Showdown in America has released a report about credit segregation and its impact on black and brown communities. Rinku Sen reports that their research shows that banks are pulling good credit services out of black and Latino communities, replacing them with more and more payday shops that lend money against an upcoming check, and then charging interest of up to 911 percent on a one-week loan. For example, a $100 loan will cost you $900. The study also found that:
The nation's leading banks refinanced homeowners in predominantly white areas at 6.5 times the rate they did for homeowners in communities of color.
Midwestern African-American and Latino communities have three times as many payday lenders as neighborhoods when compared to predominantly white communities.
Credit segregation presents real challenges for black and brown communities. Without equal access and treatment, we're doomed to be exploited in the financial arena. We're wondering why payday shops are allowed to charge such exorbitant interest rates. If loan sharking is illegal, then how does this differ? If indentured servitude is over, then what do you call this? Where are our politicians on this issue?
Preying on desperate folks who need a quick fix but don't understand the real costs is unconscionable for sure. Shouldn't it also be illegal? From what banks do payday lenders get their money?
Read more at ColorLines.