Aberdeen, Washington, is a far Northwest outpost of JPMorgan Chase & Co., with one lonely branch perched near the Pacific, 2,900 miles from Wall Street.
Now the bank is planning to depart the rainy timber town that gave the world Kurt Cobain. The next-closest Chase branch is 40 miles away.
At the same time, JPMorgan plans to open 70 branches in the vicinity of the other Washington — the wealthy national capital. Among the new locations is suburban McLean, Virginia, the 25th richest town in the U.S.
These two different communities are in fact part of the same story. For years the nation’s largest banks have been shrinking their vast branch networks. They’ve been cutting back faster in relatively poor neighborhoods than in more affluent ones.
Even with the spread of online banking, JPMorgan and its rivals have said storefronts remain a critical part of their growth. The banks say they’re committed to serving all their customers regardless of income, a requirement of the Community Reinvestment Act.
Yet, consumer advocates warn that the closings risk widening the wealth gap by leaving scores of low-income areas with less competition for services such as personal checking and small-business lending. A 2014 study by an MIT economist found that, even with other banks nearby, branch closures in low-income and minority neighborhoods made it harder for local businesses to get loans.
“Bank branches are a crucial part of financial access,” said Scott Astrada, a policy advocate at the Center for Responsible Lending. “The argument that we all live in this digital society so we don’t need bank branches is completely false.”
No major bank exemplifies the industry trend of leaving lower-income areas better than JPMorgan.