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PLATFORM : A Two-Tier System

<i> GILDA HAAS, who heads Communities for Accountable Reinvestment in Los Angeles</i> ,<i> chaired a City Council advisory committee on consumer services</i> . <i> She commented on the exodus of banks and thrifts from South-Central Los Angeles:</i>

There are two kinds of financial worlds operating in Los Angeles.

There are people who use banks and develop a basic relationship with a financial institution that allows them obtain credit or a home mortgage. And then there are people who use check-cashing outlets and loan brokers who sometimes charge high fees and never give back a thing to the community in terms of jobs or business development.

Because of the absence of banks in South-Central, there’s been a threefold increase in home-equity-loan rip-offs. Lenders sometime work with unscrupulous home-repair companies or satellite-dish salesmen. If you travel around South-Central, you’ll see big satellite dishes in lots of yards. Companies persuade people with a lot of equity in their homes--mostly elderly, longtime residents--to take out a home loan to pay for these expensive things.

The banks say we should regulate the bad-check cashers and lenders. But if there were simply more banks and savings and loans offering reasonable credit terms, fly-by-night lenders and expensive check cashers would go out of business.

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