Elected officials, community members and residents have come out strongly against the proposal to increase the fees that currency exchanges charge every time a customer cashes a check. 

State Rep. La Shawn K. Ford (8th) teamed up with Woodstock Institute, a Chicago-based economic equity advocacy group, to hold a town hall event on Dec. 6 so that Austin residents would know about the proposal and encourage them to lobby against it. 

While those who spoke were divided on whether currency exchanges were good for the community, everybody agreed that the rate hike will hurt it. And many felt that, with the West Side severely “underbanked,” the elected officials should do more to encourage banks to invest in the communities they represent. 

On Feb. 10, the Community Currency Exchange Association of Illinois asked the Illinois Department of Financial and Professional Regulation to increase the maximum rate currency exchanges can charge for cashing checks.  

For checks worth $100 or less, the fee would go up from 1.4 percent of its value plus $1 to 2.5 percent of the value plus $1.00. For checks worth between $100.01 and $1,250, the rate would go up from 2.25 percent to 2.5 percent. For checks worth more than that, the rate would go up from 2.25 percent to 3 percent.

A fee for cashing a $100 check would go up from $2.40 to $3.50. For a $1,000 check, the fee would go up from $22.50 to $25. And for a $10,000 check, it would go up from $225 to $300.

According to an IDFR report, CCEA argued that the increase was necessary because it was struggling to make a profit in the face of growing expenses. Under state law, the department must ensure that rates aren’t “unreasonable and unconscionable,” while allowing currency exchanges to earn a “reasonable” profit. 

On June 19, the department recommended approving the request. In its report, it stated that its own analysis supported CCEA’s arguments. However, IDFR still hasn’t given its final recommendation and that recommendation would need to be reviewed by the Joint Committee on Administrative Rules, a 12-member Illinois General Assembly committee evenly split between Democrats and Republicans, before it takes effect. 

Woodstock has been a major opponent of the proposed increase. According to its website, the non-profit develops and advocates for policies that would increase economic opportunities in lower-income residents, especially in communities that haven’t seen much investment.

The organization is proposing to keep the fees for cashing government-issued checks the same and capping the fees for all payroll checks at 2.25 percent. The fees for other types of checks, such as personal checks, would go up the way currency exchanges want. 

According to a Crain’s Chicago Business report, Woodstock was responding to the currency exchanges’ argument that fees help offset losses when the checks they cash bounce. Since government checks can’t bounce and checks from employers are less likely to issue bad checks, currency exchanges can afford not to raise fees on those checks in particular. 

Ford, who serves as chair of the Financial Institutions Committee, and State Sen. Kimberly Lightford (4th), who serves as vice chair of the Senate Financial Institutions Committee, have spoken out against the proposed increase, with Lightford testifying in support of Woodstock’s proposal. State Rep. Camille Lilly (78th) also expressed support. 

The three legislators, along with Brent Adams, Woodstock’s senior vice president of policy, took part in the Dec. 6 town hall. A large contingent of members of the Westside Health Authority’s Good Neighbor Campaign attended the meeting as well, as did a number of local community activists. 

Ford said that the issue was particularly important on the West Side, where banks are rare and where currency exchanges are often the only convenient way to cash checks. He added that while, normally, he likes to avoid using currency exchanges, he sometimes uses them because of the convenience. 

Lightford described the proposed fee increases as predatory. 

“I know the government likes to prey on communities where there’s low income,” she said. “To me, this is another attack on us, and shows that [Governor Bruce Rauner] cares more about businesses than people.”

Lily said that the increase would hurt people who are most vulnerable.

“With the unemployment rate rising, you can correlate currency exchange fees to people who are unemployed,” she said. “Can you imagine being unemployed and having one check and those fees [on top of that].”

Brent said that, if the rate increases are approved, his organization and the legislators attending the town hall will push for a bill that would reverse it.

In the meantime, the panelists encouraged everyone to call Rauner on Dec. 7 to let him know how they feel about the situation. And to help bolster their case, Woodstock staff asked everyone in attendance to write down what they would have to give up if the fees increase. 

While Ford said that he wanted the discussion to be about currency exchange rates rather than currency exchanges themselves, the conversation wound up veering in that direction several times. 

Otis Monroe, founder and head of Monroe Foundation, a non-profit business development organization, said that the issue wouldn’t be as significant if banks were willing to invest in the community.

“[Currency exchanges] want to raise profits because they see uptake in need,” he said.

Rev. Walter Jones, founder of Fathers Who Care, said that, ultimately, he’d like to see the community move away from currency exchanges altogether.

“It’s still more cost-effective to have a bank account than keep giving money to currency exchanges,” he said. “We should have workshops on importance of having bank accounts.”

Phyllis Logan, the Chicago Branch Westside NAACP’s second vice president, said that improving access to job opportunities was the key.

“Once we’re employed, banks will come, as well as other services,” she said. 

“A lot of people in Austin, in Lawndale work, but banks still don’t care,” he said.

The town hall revealed a divide between how residents approach currency exchanges. 

Catherine Jones, member of Douglass High School Local School Council, said she personally stopped using currency exchanges when she was 16 because of the fees.

“We got to engage people,” Lightford said. “We got to empower our people to go into banks.”

Community activist Tara Williams argued that there are good reasons why some residents don’t have bank accounts.

“Everybody can’t get bank accounts,” she said. “A lot of us have to go to currency exchanges. [And] a lot of people don’t want to deal with banks.”

Taisha Brownlee a volunteer at Good Neighbor Campaign, noted that bad financial decisions can keep people from getting bank accounts.

“[Bad checks] follow you, they never disappear,” she said. “Plus, a lot of banks do credit checks.”

Brownlee said she has been using currency exchanges her whole life. She said that it was going to hurt her, especially with smaller checks, but she added that there are people who would be hurt more.

“It’s going to especially affect people on fixed incomes,” she said. “They gotta pay rent, they gotta eat.”

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