Where cash is king

A check-cashing variety store is a `bank' for poor people. Now an unrelated banking crisis could put a stop to that

August 13, 2006|By LAURA SMITHERMAN | LAURA SMITHERMAN,SUN REPORTER

At Three Brothers shopping plaza in East Baltimore, residents buy groceries, tools, wine, bus passes, socks, cherry slushes and wedding rings. They get their cars washed, or wash their laundry. They cash Social Security checks, pay utility bills and get their license plates.

Longtime customers often hand clerk Michael Ruby their paychecks, bills and spare cash and ask him to sort it out.

More often than not, he knows their brand of cigarette or liquor, or their favorite scratch-off lottery ticket, and has it ready for them.

This is a neighborhood where one-fourth of the households live on less than $10,000 a year. Few residents can afford to get out to the suburbs where there are more options for shopping, so they depend on Three Brothers.

FOR THE RECORD - An article in the Business section Sunday incorrectly reported the location of Three Brothers shopping plaza. The store is in West Baltimore.
The Sun regrets the error.

It's the tale of many inner-city neighborhoods that have been abandoned by banks, grocery stores and retailers.

Just as the neighborhood's lot is cast with Three Brothers, so is John Rothenhoefer's lot cast with the store named for him and his brothers, Tom and George, who also worked there.

John Rothenhoefer grew up on Morley Street a few blocks from the store, and though he no longer lives in the apartment above the store, he still tends to his place as if it were his garden.

Now the store that has served the neighborhood for nearly 48 years is having its own troubles.

If cash is king anywhere, it is king at Three Brothers. Many residents don't have checking accounts or credit cards, so to buy things, they need their checks cashed.

But after being burned for more than $1 million in losses in a check-kiting scam that has shaken up the local banking industry, the Rothenhoefers' bank decided to drop all business with check cashers - and gave Three Brothers notice it would soon shut down its account.

Other regional banks had already dropped check cashers, saying they posed too much of a risk and required too much monitoring.

The store is still cashing check, but the family is scrambling to find another bank willing to process the enormous flow of checks coming in and money going out. If it can't cash checks, Three Brothers might be forced to close.

"I guess my son could hop along," said John Rothenhoefer, who has transferred majority ownership of the store to his son Mark, though he still comes most days to help out.

Mark Rothenhoefer takes a dimmer view: "If we can't do check cashing, I'd say we're out of business, or we'd have to greatly downsize."

Three Brothers shares its block on Frederick Avenue with three bars and package liquor stores, two churches, one bail bondsman, a McDonald's and Mount Olivet Cemetery. Only two bank branches are in the same ZIP code as Three Brothers, and both are about 2 miles away.

Tikeia Ben, 14, cashes checks at Three Brothers from summer jobs. One day last week, she was doing laundry at the store. "The people who work here are nice, and it's mostly people from around here who come here," she said. "The rest of the neighborhood is like liquor stores and fast food."

"It's got a lot to do with the area, with socioeconomic factors," said customer James Fleming, 63. "Many people don't have cars to get to the bank, and Three Brothers is convenient. You can pay your utility and phone bill there; that's something banks won't do for you."

The business was started when John Rothenhoefer was working as a soda jerk at Rossberg Pharmacy and studying to be an electrical engineer at the University of Maryland.

He had heard about a liquor store going out of business down the street, and while chatting with a local banker at the counter, he said he'd like to be his own boss.

"How are you going to own your own business with no money?" Rothenhoefer recalls the banker asking.

His reply: "I'll borrow it from you."

And he did. He got a $14,500 loan along with about $2,000 from a two aunts and his parents, and he bought that liquor store in 1959.

He branched out with two gas stations, a crab shack and a discount retailer, eventually selling or leasing out those businesses to other proprietors. Three Brothers remained and expanded in its own right. It's one of the few enterprises he started that made money.

Along the way, John Rothenhoefer stopped hanging out in bars at night and married Charlotte, a former nun. In 1982, he tried his hand at politics by running for governor as an independent, a bid that ended when state election officials said he was 11,000 signatures short of getting on the ballot. He campaigned on a zero-based budget, limiting real estate tax increases and legalized sports gambling.

Meanwhile, his neighborhood underwent its own transformation, mirroring a demographic shift in urban America.

In 1950 the area around Three Brothers was predominantly white; only two "nonwhite" residents were recorded by the Census Bureau. Today, about 70 percent of residents are African-American. Nearly 28 percent of families live below the poverty level, three times the national average. And only 50 percent of residents have graduated from high school, compared with 80 percent nationwide.

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