Treasurer José Cisneros and Supervisor Tom Ammiano introduce
Ban on check-cashing and payday lending businesses in San Francisco
High concentration in the poorest neighborhoods leads to zoning
From the offices of Supervisor Tom Ammiano and Treasurer Jose
Tuesday, October 18, 2005
SAN FRANCISCO-Treasurer José Cisneros and District 9 Supervisor
Tom Ammiano today announced the joint introduction of a moratorium
on check-cashing and payday lending businesses.
"These businesses prey on low-income neighborhoods by offering
short term loans with exorbitant rates of interest, and charging
for simple services such as the cashing of paychecks," said
Treasurer Cisneros. "And they are concentrated in the poorest
neighborhoods in San Francisco, among the people who can least
afford their rip-off rates."
The legislation calls for a 45 day zoning moratorium on all new
check cashers and pay day lenders in San Francisco, while allowing
the City to investigate and recommend permanent controls. At least
56 check cashers are in operation in San Francisco, selling over
$40 million worth of services annually, according to the Brookings
Institution. Some charge an annual percentage rate of up to 911
percent for a one-week loan.
"These businesses are financial predators, and they have
to be stopped," said Supervisor Tom Ammiano. "The products
they offer may look like a good deal at first, but they can trap
families in a spiraling cycle of debt."
"By charging exorbitant rates and fees, these predatory
financial institutions deprive hard-working families of the chance
to build assets and to get ahead. Not surprisingly, these predatory
financial establishments are overconcentrated in the City's diverse,
working class neighborhoods. City residents need greater access
to mainstream credit, not fringe financial services," said
Kevin Stein, Associate Director of the California Reinvestment
Check-cashing and payday lending businesses are concentrated
in San Francisco's poorest neighborhoods: the median income in
a neighborhood with these types of businesses is roughly $38,000,
compared to a City-wide median income of about $60,000. The Brookings
Institution estimates that half of check-cashing and payday lending
businesses are located in just four neighborhoods in the City.
"I am working hard to get all San Francisco adults out of
the predatory lending cycle, and to provide solid financial services
that meet everyone's needs," remarked Treasurer Cisneros.
"By reining in pay day lenders and check cashers, and developing
sound financial solutions, I believe we can set all San Franciscans
on the road to building assets instead of debt, and securing a
safe financial future for their families."