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Are We Helping Families With Little to No Access to Banks?

Along with African-Americans, black people, Latinos are the hardest hit populations during this COVID-19 pandemic. Emerging data indicate that Latino and Black individuals make up a disproportionate share of confirmed cases and hospitalizations, and Black individuals make up a disproportionate share of COVID-related deaths. Additionally, the pandemic has disproportionately impacted the work conditions of Latinos; 57 percent of Hispanic adults report that they or someone in their family has lost a job or had their work hours or wages reduced because of the pandemic.

One can conclude that the federal relief aid for citizens due to coronavirus may not be reaching those families most in need. This includes Hispanics. The Coronavirus Aid, Relief, and Economic Security[CARES] Act is supposed to provide rapid economic relief to Americans. Relief checks, capping at $1,200.00 for single tax filers, and up to $2,400.00 for married couples filing jointly and $500.00 for each dependent child, were delivered to American households beginning in April. Either direct deposit or by check, the funds pose a threat to those without bank accounts or limited access to banks.

According to data from the Federal Deposit Insurance Corporation (FDIC),  in 2017, 30 percent of low-income Hispanic and Black family households (defined here as households including two or more related people with a total income up to $30,000) did not have a bank account, compared with 11 percent of low-income White family households.The majority of Hispanic and black low-income family households have little to no access to banks.

These families and individuals tend to rely on ‘alternative’ financial services, check cashing businesses, to carry out their financial transactions. Money orders and payday loans also are the alternatives to banking traditionally. These alternative service providers usually are accompanied by high fees and interest rates that place additional burdens on low income families.

In poorer communities, ‘check cashers’ are found in abundance, and traditional banks are scarce. It is the exact opposite in higher income communities, usually predominantly white populations. Choices. Some have choices between check cashing services, others have choices of traditional FDIC-insured banks. When relying on services where they must pay high fees, it is yet another unfair burden on families- the un-banked or under-banked. This reality is, of course yet another part of the overall systemic design, in which the ‘rich’ get richer and poor get poorer. Plainly illustrated, whites retain and are given unobstructed access to wealth-generating resources, and people of color are strategically left out of the ‘loop’.

In the wake of the COVID-19 pandemic, the economic fallout and the impact on all Americans is felt most harshly among the poor. Low-income Hispanic families disproportionately live in crowded housing conditions and have limited access to employer-sponsored health insurance. Furthermore, 1 in 4 Latinx children has at least one parent who is an unauthorized immigrant. Compounding all of this distress, unauthorized immigrants are deemed ineligible for relief checks, similar to mixed-status families.

It is essential that all families are able to access the financial institutions designed to serve the consumers’ interests. Particularly now, the federal aid is critical for the ability of all of us to weather this pandemic and financial hard times. Twelve hundred dollars is not much help, in the scheme of life responsibilities for adults today. To receive help and have to basically give some away, even if it amounts to $2.00, is unfair. These alternative services are the default for many low income black and Hispanic people, and there should have been an exception applied to the Stimulus checks. Traditional banking institutions should have allowed EVERY individual in receipt of the funds to use their services free from charge.

As our elected officials and policymakers contemplate providing financial supports to Americans, it is imperative that they align the delivery of the relief with the ways households access financial resources. Doing this will ensure that aid reaches every family equitably and does not further exacerbate already existing economic disparities.

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