New check-cashing and payday-lending outlets would be prohibited in parts of San Francisco where they are already clustered, under legislation that is on its way to the Board of Supervisors.
The legislation, which unanimously passed through the Planning Commission last month, would prevent new businesses offering what The City is calling “fringe financial services” from opening in areas including the Tenderloin, the Mission, the Haight and the Bayview, said David Augustine, a spokesman for San Francisco Treasurer Jose Cisneros.
In 2006, the Board of Supervisors passed a temporary moratorium on new check-cashing and payday-lending outlets in The City. There are about 56 of the businesses, concentrated in San Francisco’s poorest neighborhoods, according to the Treasurer’s Office.
Seeking to offer an alternative to the high fees and interest rates charged by these “fringe” institutions, The City launched a new program, “Bank on San Francisco,” in September 2006. The program brought together 15 mainstream banks and financial institutions to offer “starter” accounts to households with such banking obstacles as a lack of a driver’s license or Social Security card or no money for a minimum balance.
City officials last year estimated that 50,000 households in The City had neither a checking nor savings account. Among blacks and Hispanics, about 50 percent of adults in The City do not have bank accounts.
Approximately 5,000 previously “unbanked” households have now signed up for accounts, as of quarterly data released on July 31. The number is ontrack for a city goal, stated by Mayor Gavin Newsom last year, to have 10,000 families in the program within two years.
Cisneros called the program a “win-win” because financial institutions picked up new customers and those with new bank accounts saved money by not having to pay fees from fringe institutions.
Cynthia Vega, a spokeswoman for Financial Service Centers of America, a trade organization for check-cashing outlets, said the industry provides a valuable service.
“People who criticize these services don’t talk to our customers and don’t understand why there’s such a demand. We help people every day,” Vega said.