Deregulation of banks in 1980 has resulted in proliferation of predatory, fringe banking

In doing a little research on pawnshops, it appears that their numbers have drastically increased since 1980. Apparently bank deregulation has played a big role. Prior to that year, service fees for checking accounts or for carrying a minimum balance either did not exist or were very minimal. As a result of the Depository Institution and Monetary Control Act of 1980, banks started charging all sorts of fees on checking and savings  accounts and kept raising such fees as long as the market allowed it. One of the consequences of this was increased competition among banks which led to many of the country's smaller banks having to close shop.

This development left many lower-income families with less access to banks. Even when they did have banks nearby, the new fees the banks were imposing made it very difficult to carry checking and/or savings accounts. Perhaps because of this, the percentage of lower-income families with no checking/savings accounts started to increase. The vast majority of poor people in America are either unbanked or underbanked. According to the FDIC, in 2009 there were about 9 million people in the US who had absolutely no dealings with US banks. The number of people who use banks on very few occasions, was about 21 million in the same year.

Credit Infocenter reports :

These unbanked and underbanked consumers represent a considerable market opportunity for financial services companies. The unbanked and underbanked bought upwards of $3 trillion of goods and services with cash and money orders. Too often, these consumers pay a premium to get access to their funds at fringe financial outlets.

These fringe outlets include small loan houses, payday loan outlets and pawnshops. Not surprisingly, these predatory businesses, as you can see on the map below, are mostly concentrated in Laredo's poorer areas. While this particular map details the locations of pawnshops, the same pattern holds true for loan houses and payday loan services.

Concentration of Pawn Shops in Laredo


A. First Cash Pawn         1501 San Bernardo
B. EZ Pawn                    1019 Farragut
C. Cash America Pawn   419 East Saunders
D. El Buffalo Pawn          202 Flores
E. EZ Pawn                    1012 Santa Ursula
F.  Crown Duty Free       1600 Water suite 4
G. AmeriAdvance Inc.     4420 San Bernardo