Check casher finds a bank

City retailer to work with Wachovia

Sun Follow-up

October 17, 2006|By Laura Smitherman | Laura Smitherman,Sun reporter

Three Brothers, a West Baltimore retail institution whose livelihood was endangered when local banks stopped doing business with check cashers, has found another bank willing to work with it.

With a new account at Wachovia Corp., Three Brothers -- which has remained in its struggling neighborhood for 48 years as many businesses have fled -- will be able to keep operating, owner John Rothenhoefer said yesterday.

He had been looking for another bank since Carrollton Bancorp said three months ago that it would shut down his account, and those of all other check cashers, after losing $1.8 million in an alleged check-kiting scheme.

"Oh, my gosh, am I relieved," Rothenhoefer said. "We provide a needed service. Check cashers are in areas where banks don't want to be, and if the banks were to drop everybody, there really would be a problem."

Three Brothers offers groceries, bus passes and services such as utility bill payment and Social Security check pickup. Customers often rely on being able to cash checks to make their purchases.

Rothenhoefer, who bought a liquor store in 1959 and built the business that also has a laundromat and carwash, said four banks approved his application and that he chose Wachovia.

Still, he said, the process was arduous. Some banks required him to produce years' worth of account statements and tax returns, and Wachovia required him to put $50,000 in an interest-bearing deposit certificate. "It really was a nightmare," he said.

Some banks have been dropping check cashers as customers over concerns that the banks would be held liable if those businesses failed to comply with federal regulations meant to thwart money laundering and terrorist financing, such as those enacted under the Patriot Act.

Account closings accelerated after three area financial institutions revealed this summer that they had had lost more than $10 million in a kiting scheme later traced to A&B Check Cashing, a Baltimore chain that has since closed and declared bankruptcy.

Carrollton and Baltimore County Savings Bank, another victim, said they would no longer serve check cashers and mentioned the risks involved.

Meanwhile, the check-cashing industry has been fighting criticism of its fees, arguing that people who don't have bank accounts rely on them and that bank fees have been on the rise for years.

Check cashers found a champion in Maryland banking Commissioner Charles W. Turnbaugh. He has said that if banks can't afford to open branches in poor neighborhoods, he wants them to provide services to check cashers.

"The commissioner has met with a number of the larger institutions in the state to encourage them to take these accounts," said Elizabeth L. Williams, a spokeswoman in Turnbaugh's office. "They seemed interested and some have accepted applications, but we don't know where they are in the process."

While some banks are working with check cashers, many are charging more in service fees or requiring security deposits or property liens in case of losses, said Neil Goldstein, owner of Gold's Check Cashing and president of the Maryland Association of Financial Service Centers.

"The playing field has changed," he said. "The cost of doing business has risen dramatically."


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