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WASHINGTON – Check cashers want some respect, and their trade association is working to make it happen. One of the Financial Service Centers of America’s (FiSCA) chief policy goals is to change the prevailing opinion, among the public, elected officials and financial regulators, about check cashers. “When it comes down to the bottom line, our members make the brick and mortar investments in these communities,” said Manny Levy, member of FiSCA’s Board of Directors and convener of the group’s 14th annual conference in Washington D.C. “We hire the minorities that live there to work in our stores and we know the people who live there as our customers. We are definitely mainstream.” FiSCA represents about 5,000 of the nation’s check cashing stores, which FiSCA estimates to be about 6,000 overall. About 1,000 people, including Credit Union Times, attended the group’s conference, which was held in Washington D.C. over October 4-7. Check cashers have moved more into the news in the last year as many municipalities and states have sought to regulate so-called cash advance or payday loans, which many checks cashers offer. The credit union industry had taken greater note of check cashers after $9.6 million Bethex Federal Credit Union in Bronx, New York and $68 million Actors’ Federal Credit Union, based in Manhattan, entered into a relationship with a check cashing firm to allow their members to make deposits through the check cashers. Bethex has also taken the step of using some grant money to advertise in a few of the stores, specifically to people standing in line at the check cashers’ counter, according to Joseph Coleman, president of RiteCheck, the company which owns the check cashing outlets involved in the project. Coleman said he backs Bethex advertisements and recommends credit unions to people who want a relationship with a financial institution. But not everybody wants such a relationship, he noted, and the people who don’t have such a relationship need financial services too. Indeed, their service to the folks who fall, either accidentally or as a matter of choice, through the cracks in the more recognized financial services system means that check cashers deserve more respect than scorn, FiSCA officials told conference attendees. They also argued that their member check cashing stores should not be scapegoats for the other financial institutions which either choose to forsake inner city neighborhoods or demand fees for their most basic services that the poor choose not to pay. It is a message, they told the conference attendees, which has gradually begun to be heard in the corridors of power. “It is not how many times you call [legislators] on issues, it’s how many times they call you,” said William Sellery, president of Sellery Associates, the group’s governmental relations and lobbying firm. “As these issues have been unfolding before us – payday advances, the unbanked, bank discontinuance – we are receiving more and more inquiries from members of Congress about the nature of these issues and how they affect your business,” he said. “Bank discontinuance” is the term for the practice of banks, often under pressure from federal and state regulators, to completely sever their relationships with check cashing firms. Such severance is not just limited to withdrawing direct investment in check cashing firms, or no longer being part of check cashing and payday lending operations, Sellery said. But includes closing the check cashers’ accounts at the bank and refusing to accept the checks for deposit. Marty Lieberman, president of the New York based Central Clearing Company, complained that this had happened when his firm had been asked to sever its relationship with Citigroup, even though the firm had been a Citi customer for many years. Earlier this year Representative Michael Oxley, Chairman of the House Financial Services Committee, wrote a letter taking the Office of the Comptroller of the Currency to task for allegedly instructing national bank examiners to bring up bank participation in check cashing or pay day loan operations during the course of their exams, Michael Lyke said. “This is regulatory overkill and nothing less than a baleful attempt to prevent national banks from entering into a lawful agency relationship,” Lyke quoted from Oxley’s letter. Sellery cited the response from Oxley and from Representative Bob Ney (R-Ohio) and unnamed other congressional representatives to the Bank Discontinuance issue as a example of where check cashers have “gained traction” with federal regulators. “Members of congress, regardless of what they might think about various aspects of our industry, don’t like the fact that banks may be just throwing overboard entire industries without just cause,” Sellery told the meeting, adding that the industry had begun to look at drafts of federal legislation addressing the practice. The difference between how federal and state financial regulators view, and interact with check cashers also came up at several different points during the meeting. FiSCA Chairman William Siegel and other speakers noted that the OCC had been invited “numerous times” to address the group’s meeting, but had declined. But S. Kathryn Allen, the Commissioner of the District of Columbia’s Department of Banking and Financial Services, did come and gave the group a brief overview of the regulations governing the District’s 117 check cashers. In conversation after her talk, Allen said that in the opinion of the Department, “these guys [the FiSCA members] are not the problem,” because they were willing to be licensed and undergo regulation. The Department’s problem, she said, were the dozens, perhaps over a hundred, of unlicensed, unregulated, “mom and pop” shops in the city which cash checks for a fee. “There is a real need in some of these neighborhoods and folks will come forward to address that need, but it’s usually the unlicensed and unregulated ones that give the whole group a bad reputation.” Allen’s comments reflected the bottom line of the FiSCA meeting; that there are people in low-income neighborhoods that need financial services and that, unless and until, banks or credit unions commit to serving them there will a place for the check casher. [email protected]

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