By Juleyka Lantigua
The first time a loan shark showed up at my door, I had no idea who he was.
When the well-mannered man rang our doorbell, I thought he was a salesperson. But he did the oddest thing: He asked for my mother by her first name.
"Please tell her Leo stopped by," he said after I told him she wasn't in. He then wished me a good day and strolled away.
"Don't worry about who he is," my mother told me later. But that week I guessed his identity as I watched her and my stepfather put together a couple of hundred dollars from their rationed dollars.
The encounter with the moneylender was seemingly harmless. There was no threat of violence. There was no impending foreclosure on anything we owned. There was simply a need not to have that man show up at our door ever again.
As an adult, I've never had such an experience, but I live in a community of immigrants who have them regularly. Washington Heights, N.Y., has fewer than 10 bank branches to service the 250,000 residents living within its three-square mile area.
According to Credit Where Credit is Due (CWCD) the only credit union in my community there are five bank branches per 100,000 people here, compared to at least 40 for the same number of residents in other parts of New York city. Some of my neighbors have to walk more than 10 blocks to reach a bank, and, once there, wait more than an hour to receive basic services.
My community presents favorable conditions for the ever-present loan shark (or "prestamista" in Spanish). Because it lacks established banks, and because residents have an average annual household income of only $12, (the national median in 1999 was $40,816, according to Census figures), my community is vulnerable to these opportunistic individuals.
Last week I sat in on a personal-finance workshop at the credit union. Israel Rosario, the education director, spoke candidly to the handful of people gathered in a small classroom, eager to learn about financial independence. And he warned against the perils of using prestamistas.
He said there are possibly thousands of unregulated money lenders in Washington Heights who helped launch a large number of local businesses with funding arrangements. After $800 monthly interest payments choke many entrepreneurs out of their hair salons, livery cab companies, first homes or grocery stores, the borrowers then turn to institutional loans to pay off street collectors.
But it's hard making people understand the risks when they need money. Even when there are banks in a community, sometimes they won't lend to the poor or to immigrants who have no credit history. Sometimes immigrants are intimidated by financial institutions, especially if they think their immigration status will be questioned or scrutinized.
Oddly, among the participants at the workshop, one was a prestamista who wanted new business from everyone in the room.
"You know, he's here to recruit," Rosario said. He seemed not at all surprised by the special visitor, and he made a point of introducing the loan shark as a local businessman. Rosario asked him to explain his services.
Borrowers can get a loan at 2.5 percent per week as long as "you have a recommendation from two trusted people," said the prestamista. That's 132 percent per year, compared to 14 percent at the local credit union or 16 percent at many banks.
My enterprising yet underserved neighbors, and others like them across the country, should not be denied the chance to fulfill their dreams by a banking industry that neglects them and by loan sharks that prey on them.
Juleyka Lantigua is the managing editor of Urban Latino magazine in New York. She can be reached at firstname.lastname@example.org.