As the banks leave Winnipeg's North End, the pawnshops, cheque cashers, and payday loaners move in. This may reflect the laws of supply, demand, and risk, but is it healthy for the community? No way says a clutch of local organizations and citizens. This article shows how they are exploring a sustainable, responsible alternative to fringe banking.
"One could argue that fringe financial service outlets fill credit voids in poor communities and that the higher fees simply reflect the costs of providing short-term, high-risk credit. In fact, some say that access to fringe services keeps some customers from resorting to criminal activity in order to meet their financial needs.
"However, the reality is that the fees are exorbitant, particularly when measured as a percentage of the customers' disposable income. What is actually emerging is a 2-tier banking system where low-income people pay much more to cash their cheques and access credit than the rest of society does. It does not contribute to the financial health of the individual or the community.
"Yet government does not yet seem overly concerned about this trend. So the responsibility for developing healthy responses will necessarily rest with communities, with critical support from government, banks, credit unions, or other key stakeholders ..."