N.Y. Times discusses difficulties of attracting unbanked

NEW YORK (8/18/09)--Despite a surge in the number of bank branches and credit unions--including a prominent credit union in the lower east side of New York City-- there still are a large number of unbanked consumers in the area, according to the The New York Times (Aug. 17).

In Manhattan, 12% of households do not have an account at a financial institution, compared with a national average of 8%, according to data from the Pew Charitable Trusts.

Lower East Side People's FCU, a $22.7 million asset credit union, based in Manhattan, received its charter to open in 1986, replacing the only bank branch within a 100-block area, the newspaper said. Today, while almost every major bank has opened a branch there, the neighborhood still has one of the highest concentrations of unbanked households in Manhattan, according to Pew data.

The reasons include a mistrust of financial institutions, reliance on check-cashers for cash and post offices for money orders, and the fact that many Manhattan households feel more comfortable placing their savings in pillow cases, closets and brown lunch bags than financial institutions, the paper said.

In the meantime, a lower-east side restaurant owner, Humberto Vargas, has been trying for eight months to convince one of his deliverymen, Che Che Matos, to join a financial institution and build a credit history. Since Matos had bad experiences with banks and fees, Vargas suggested Matos join Lower East Side People's FCU. However, Matos still refuses to put his money in any type of account, the paper said.

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