When the US Partnership on Mobility from Poverty wanted to learn from residents and local leaders in the South, we engaged Partnership member Bill Bynum.
Bynum is chief executive officer of Hope Credit Union and Hope Enterprise Corporation, expanding credit access to often overlooked communities throughout the Mid-South: Arkansas; Mississippi; Louisiana; and the Memphis, Tennessee area. He helped us plan a 140-mile learning trip through part of HOPE’s service area, the Mississippi Delta.
The trip was part of the Partnership’s ongoing efforts to hear from diverse communities across the country. Reflecting on what we saw, Bynum sat down for a conversation about regional inequalities and the needs of rural areas. This transcript has been edited for clarity and space.
Who banks with Hope?
When you look at a national map of counties where the poverty rate has been higher than 20 percent for at least three decades, one-quarter are in Hope’s footprint. We focus on serving those individuals and making sure they have access to the tools to support their families and live a reasonably prosperous life.
US banks closed nearly 5,000 branches between 2009 and 2014, spurred in part by the financial crisis. This creates what you and others have called “banking deserts,” where people have little to no access to mainstream banking services. How big of a problem is this?
The financial crisis exacerbated, and brought to the surface many issues that already existed. To some degree, it was beneficial, as it focused the nation on problems that have been plaguing the country for a long time.
Next to a job, a relationship with a bank is one of the most important assets that families and individuals can have. Your credit score, qualifying for a credit card or mortgage loan, paying your utilities—all of those things are grounded in a relationship with a financial institution.
Banks close, and in their place have flourished payday lenders, check-cashers, and cash-for-title operations. That forces people who can least afford it to pay the most.
Beyond individual financial services, when you consider schools, hospitals, businesses, grocery stores—at some point, capital is necessary for all of the facilities and organizations that residents depend on. In the absence of those basic services, these communities suffer—the Mid-South more than most because of our disproportionately low access to reasonable, affordably priced capital.
Describe life in a banking desert.
There's a community not far from Jackson, Mississippi, called Utica. Utica used to be a thriving town. It had bustling businesses and a main street that supported jobs and provided services to its residents over the years. As has happened in many parts of the country, people left. They moved to cities for more opportunities. The only bank there was profitable, but not as profitable as branches in larger metro areas, so it closed. That left the residents, particularly the blue collar residents who did not have the ability to drive 20 to 30 miles to conduct banking services, and the elderly, in a significant bind.
Slowly, you saw the grocery store close, which also housed the only pharmacy in town. As those types of services start to fade, more people move, and so a problem that was already challenging becomes worse. Fortunately, we were able to go in and negotiate with the bank to sell us that branch. People found that they actually were able to get more services from Hope than they had from the prior bank, which didn’t even have an ATM.
The domino effect that accelerates once a community loses its only bank is devastating but also foreseeable. Does that mean the regulations governing access to banking services are inadequate?
Some important regulatory elements are in place, but, unfortunately, they’re woefully under-enforced. The Community Reinvestment Act requires banks to reinvest in communities where they extract profits. The law was enacted in the seventies and based on the paradigm from the time, when branch-banking was prominent. Fast forward to today, and many people don't use bank branches, but they still get banking services, often online. The banks invest and buy mortgages from all around the country. They're deriving profits from those communities, but they're not required to reinvest in those communities because they don't have a physical branch in those locations.
The Community Reinvestment Act needs to be updated, and it needs to be enforced. We saw that this summer: the largest bank in Mississippi was fined by the Consumer Financial Protection Bureau for red-lining [i.e. denying services to people because of race and geography]. This is a practice that has been outlawed. It was prevalent in the sixties and seventies, but it's, unfortunately, still all too present today, particularly in low-income communities that are not a priority for banking regulators.
When you've got a banking crisis that almost tumbles the world's economy, you've got to pick your focus. Clearly, we needed to stabilize the overall financial system. Unfortunately, addressing the needs of poor people often falls through the cracks.
You’ve contributed to a group within the Partnership thinking about the salience of place. Work by Mobility Partnership member Raj Chetty and others reports lower rates of economic mobility in the South. Considering this and the depopulation of many rural communities, how do you determine which areas might benefit from investment and which might not be able to revive?
It is certainly possible to get overwhelmed by the challenges that face rural areas and small towns. I was born in New York, grew up in East Harlem, and moved to North Carolina then Mississippi. Every place where I've lived and worked, I've seen similar challenges to some degree. The resources available to combat them certainly vary from place to place. They're quite limited in places like the Delta, but in each of those communities, each of those places, every place that I've lived, I've been impressed by people's attraction, their tie to their place. I think often those who are the best and brightest are encouraged to move, but there are still many people who cannot move, or who don't want to move because of that deep-seated connection.
They've invested over generations, purchasing land and homes. Even if those homes need significant upgrades, it's still their place. At HOPE, we have learned that if you build on the assets in a community and stabilize it, you can bring to bear many of the resources that a community needs to succeed.
After two decades doing this work in one of the nation's most distressed regions, I am not inclined to write off any place. I've found that everywhere has assets. It takes a bit of elbow grease to do the work. You've got to roll up your sleeves and be committed to it, but there's commitment and there's capacity in these communities.
It sounds like you’re arguing that at a minimum, take stock of what’s there. Bring people together and think about what the area can be instead of assuming it should be written off.
Absolutely. The move-somewhere-else-paradigm is just not practical for everyone. It's not grounded in reality.
Are there regional inequities in federal funding and programming?
For example, every year, the New Markets Tax Credit Program directs billions of dollars into economically distressed places to attract private capital. Hope actually worked closely with the Clinton administration as they were designing the program. We did an analysis of where those resources went from inception through last year. There are 384 US counties that are considered persistently poor. Of those 384, six of them (Baltimore; Bronx, New York; Brooklyn, New York; New Orleans; Philadelphia; and St. Louis) got 72 percent of all awards that went to persistently poor counties. That leaves 378 poor counties fighting for the balance.
There has to be more intentionality when it comes to allocating federal resources.
It's not just a lack of banking infrastructure and disparities in some federal programs. The South and rural areas also have a smaller philanthropic footprint than other parts of the country. Fewer foundations are headquartered there. How does this affect access to resources, programming, and capital?
It's absolutely a limiting factor. It means we have to import capital into poor regions. That’s more easily said than done, because people see many challenges in their own backyard. It takes exceptional effort and perspective to appreciate the relevance of investing in places like Mississippi, when you’re based in New York, Chicago, or Los Angeles.
We've got to make people realize that we share a common humanity. To paraphrase Martin Luther King, "When one suffers, we all suffer." The economy of this country is not going to reach its potential if we have not invested in significant segments of the population. Over half the children below age 18 are non-white. When you play that forward, if you don't invest in closing the gap for those on the outside of the economy looking in, where's the future tax revenue going to come from? Where is the future workforce going to come from? Who's going to provide healthcare services?
I think Mississippi is a petri dish for the rest of the country. It's the epicenter of the most pernicious social and economic challenges that have faced this country for generations. By demonstrating success in places like the Mississippi Delta, by showing what is possible when we make smart investments in people and places here, we find lessons that can be applied in distressed communities anywhere in America.