Race, Class, and the Visibility of High-Cost Financial Markets

• In Event: Linking Racial Capitalism and Urban Politics

Abstract

Payday lenders, check cashers, and other fringe economy services have always garnered attention because they are considered more expensive than traditional banking and target the poor, credit-poor, and racial minorities. I ask how the visibility of high-cost financial markets varies across race and class. Combining interviews and geospatial analysis within a policy feedback framework, I argue that built environments signal an individual's position in the social hierarchy. The presence of fringe economy services decreases as neighborhood incomes increase, yet these services tend to be disproportionately concentrated in communities of color regardless of income. For white people, submerged exploitative credit markets such as high-interest credit cards have grown alongside the physical visibility of mainstream services such as banks in the neighborhoods. The types of credit cards and loan providers that cater to credit-poor white consumers tend to lack brick and mortar storefronts in these neighborhoods. As a result, white people are less aware of the degree to which the government is abdicating consumer protection safeguards and emphasizes market actors as solely responsible for business practices. For racial minorities, the decline in mainstream financial services and the density of financial services with exploitative terms that limit or eliminate their long-term benefits in the neighborhood have created a uniquely visible manifestation of the private-government link in their lives. These industries' density indicates government failure to regulate akin to other state failures commonly experienced by racial minorities. This work reflects the disparate economic vulnerabilities of racial minorities, illustrating how financial markets reinforce an individuals' political and economic status in the sociopolitical hierarchy.

Author

• Patricia Posey, University of Chicago