CASH COSTLY FOR THE POOR.

Byline: Brent Hopkins Staff Writer

Check-cashing services outnumber banks by nearly a 4-to-1 ratio in the San Fernando Valley, mainly targeting poor communities and reinvesting little money in them, researchers said in a report that will be released today.

There are more than 300 check-cashing stores in the area, according to the Valley Economic Development Center report. And nearly half of the stores are part of chains that the Van Nuys-based nonprofit group claims prey upon people with few other options.

The report is part of the center's long-running campaign to add more financial-services firms in poorer areas.

VEDC has also worked with Councilman Alex Padilla, who represents the northeast San Fernando Valley, to open a credit union in Pacoima. Padilla said Tuesday that the organization has just received accreditation from the federal government, paving the way for an opening by the second quarter of 2005.

It will be the culmination of a five-year effort.

``Hopefully, we can make this an issue of economic justice,'' said Roberto Barragan, VEDC's president. ``This community should have the access to financial services like any other one. In any other community, you can talk about banking, so you should be able to get the same conversation in Pacoima as you do in Sherman Oaks.''

The report, commissioned by the Valley Interfaith Council, urges check-cashing services to lower their fees on cashing checks and making payday-advance loans, which can hit the annualized equivalent of nearly 500 percent, as well as to invest in community development and financial education.

It also calls for banks to add more services in disadvantaged communities and for government agencies to limit the licensing of check cashers and not allow their expansion in redevelopment areas.

For Mike Frias, a San Fernando laborer without a bank account, this was largely an academic argument. He likes check cashers for their ease of access, using them to get money from checks he gets from jobs and from donating blood.

``It's cheaper for me,'' he said. ``Plus you don't have to wait in line, and the service is faster.''

Bernie Flaherty, president and chief executive officer of Popular Cash Express, one of the largest operators in the local market, said his industry fills a niche that most banks ignore. For a paycheck-to-paycheck consumer, he said the speed and readily understandable fee structure have their advantages.

``The bank model doesn't work in that environment, but the check- cashing model does, both for the proprietor and customer,'' he said. ``How you move mainstream banks into the (low-income) neighborhoods is a problem that the government, community-activist groups and financial services groups have looked at for years.''

He said that in the next three years, PCE plans to add more in-store financial-literacy training and to partner with nonprofit groups for added community development.

He also disputed the report's suggestion that check cashers don't contribute to their communities, noting that his stores offer scholarship programs and donate to charities. Banks, he said, have often had trouble in low-income communities, so they choose to locate elsewhere.

But that wasn't the case for Wells Fargo, which opened its first branch in Pacoima in 1993, the community's first new bank in 17 years. To cater to the largely Latino community, the branch began accepting Mexican matricula consular identification cards and set up wire-transfer programs so clients could remit money to their home countries.

`'We're finding we're doing very well in this market,'' said Marla Vasquez, a district manager for Wells Fargo. ``Sometimes, people don't understand the opportunities that are available. A community like that is very successful, because the people are very willing to learn about other options than what they're currently using.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com