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Where Have all the Bank Branches Gone? or “Deja Vu All Over Again”

Lawrence Peter “Yogi” Berra passed away in 2015, leaving us a legacy not only of his Hall of Fame baseball career with the New York Yankees, but with malapropisms and homespun wisdom that have become part of our daily lives.

As the vote tallies slowly advanced on election nights in November 2020 and January 2021, many of us repeated Yogi’s immortal counsel, "It ain't over 'til it's over." He reminded us, as well, that history often plays out, like déjà vu, “all over again.”

On March 22, NPR’s Scott Horsley reported on a recurring issue in the banking system: 'What Are We Going to Do?': Towns Reel as Banks Close Branches at Record Pace.” He highlighted towns in the rural Southeast that have lost branches, becoming “banking deserts.”

It’s neither a new nor a singularly rural issue. In the early 1980s, we saw a wave of bank branch closings — then, as now, disproportionately concentrated in low-income and minority areas. Then, as now, the triggers were economic (sky-high Interest rates that squeezed bank profit margins) and technological (the spread of ATMs). Today, it’s the economy, ravaged by the pandemic, and the growing use of smart phones and digital banking.

When I hear the distress of rural Southerners talking about the loss of their bank branches, it sounds much like what I heard decades ago in the neighborhoods of New York City, where I worked for the National Federation of Community Development Credit Unions (now Inclusiv). Horsley quoted Darrin Williams, the CEO of Southern Bancorp, who remarked that “In a lot of the rural communities we serve, the bank branch is part of the social fabric.”

Steven Jackson, a parish commissioner in Shreveport, LA, is watching the closures with alarm. “What message are we sending" when a bank branch is abandoned and stands empty, he asked. "Is my neighborhood not a priority?"

Thirty-seven years ago, in 1984, I heard a similar question from a housing group on New York City’s Lower East Side. They had learned of the planned closing of the only commercial bank branch serving their low-income, largely immigrant community of 100 square blocks and 55,000 people. “What signal does it send,” they asked, “just as we had begun to make progress driving out the drug dealers and turning the neighborhood around?”

The neighbors mobilized, threatened a Community Reinvestment Act (CRA) challenge, and with my organization’s help, waged a two-year campaign to charter a community development credit union (CDCU). Serving the community through the 9/11 attacks, the Great Recession of 2008, and most recently, a pandemic, the Lower East Side People’s Federal Credit Union has thrived. With $72 million in assets and 8,000 members, it has added branches in East Harlem and Staten Island.

Banks closed a record 3,300 branches over the last year, in rural America and distressed urban neighborhoods alike. It is not only the large banks that have departed. My own bank, a relatively small institution with a famously progressive social policy, recently closed its branches in low-income neighborhoods of Brooklyn and the Bronx. I can vouch for the inconvenience it has caused.

The good news is this: High-performing community development financial institutions (CDFIs) like Southern Bancorp (headquartered in Little Rock, AR) and Hope Credit Union (Jackson, MS) have been working to take up the slack.

The most recent COVID-19 relief legislation earmarked $12 billion in appropriations for CDFIs and minority banks. It may not be enough to close all the gaps and revive “banking deserts,” but it offers the greatest opportunity I’ve seen in my 40-year career to advance financial equity in communities of color.


Clifford Rosenthal is a life-long Yankee fan, the author of Democratizing Finance: Origins of the Community Development Financial Institutions Movement and a member of the NYS CDFI Coalition's Advisory Committee.

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