A good friend of mine, John Hope Bryant, once stated that “we are going to rob the payday lenders of their customers in broad daylight.” I plan to do just that.
St. Louis tops the nation in the number of unbanked and underbanked individuals, particularly for African Americans. In 2013, studies showed that 23.2 percent of St. Louis households were unbanked or underbanked.
A recent study by the East West Council of Governments points out that a huge racial wealth gap still exists in this region. Poverty, poor money management, and a lack of education has contributed to the utilization of predatory lending services such as payday loans, title loans, and check cashing facilities.
These lenders only locate in low-income neighborhoods and target low income individuals who have too much month at the end of their money. When they finally repay the loans the interest rates have ballooned uncontrollably and the payoffs can be more than 400 percent of the original loan amounts.
As shocking as this information may appear, I consider the statistics as an opportunity to even the playing field by leveraging resources. As treasurer of the City of St. Louis, one of my goals is to promote programs that improve the lives of our residents.
The Office of Financial Empowerment in City Hall serves as a central point for financial advice and education. We will host classes on every topic ranging from basic budgeting to understanding investment portfolios to planning for retirement.
As early as November of this year, an Operation HOPE financial management counselor will begin hosting workshops on credit and money management. Additionally, the HOPE counselor will teach classes to help residents increase their credit scores to 700 or more, breaking the cycle of high interest debt and making homeownership a reality for many St. Louisans.
Finally, the College Kids program launches this fall and is opening children’s savings accounts for every public school kindergartner in the City of St. Louis with an initial deposit of $50. Incentives and match programs attached to the accounts will help families build a savings ethic and encourage children to start thinking about their futures early.
We hope that this program introduces families to healthy financial products and services, such as those provided by our partners, 1st Financial Federal Credit Union and Wells Fargo. Simply put, college savings accounts give families hope.
Our programs are part of a strong coalition of St. Louis leaders who believe it is unacceptable that there are more payday lenders in Missouri than McDonald’s restaurants. We work with the St. Louis Regional Unbanked Taskforce and the United Way’s Financial Education Collaborative to drive comprehensive change and ensure that community events such as Money Smart Week are a success.
There many more programs to be impressed within St. Louis. On the Money magazine, a project of People’s Community Action Corporation, will launch soon to educate and provide professional development opportunities for our city’s youth. Prosperity Connection has created micro branches across the region and provides counseling to individuals as they achieve financial stability. Justine Petersen is the largest microlender in the nation, and the office is located in our backyard on North Grand.
Payday lenders, watch out! Together, we are educating St. Louisans about how they can avoid predatory lenders and lead financially sustainable lives.
Tishaura O. Jones is treasurer of the City of St. Louis.
