‘Nixland—My Wild Ride in the Inner City Check Cashing Industry’
Local entrepreneur tells his side of the rise of alternative financing
Gregg Reese | 4/17/2014, midnight
"…I’m charming, I’m dashing, I’m rental car bashing
I’m phony paper passing at Nix Check Cashing.”
-from “High Plains Drifter,” by the Beastie Boys, 1989.
Once upon a time in the 1980s, a significant number of businesses fled the core of South Central Los Angeles, fed up with the difficulties of doing business in that problematic area. The residents they’d previously served felt victimized by what they saw as unfair practices directed at them because they were Black. These included banks and other financial institutions, possibly discouraged by the erosion of high-paying blue collar jobs in the aerospace industry, the automotive industry (GM in South Gate, Ford in Pico Rivera), the rubber and tire industry (Good Year and Firestone), and steel mills (Bethlehem, Kaiser, and US Steel) following the end of the Cold War and there after.
At the same time, Congress deregulated the whole finance industry, which forced individual banking concerns to pay more attention to their balance sheets. They in turn gravitated to wealthier areas with more affluent account holders, in order to maximize their profits.
The vacuum left in their wake was quickly filled by scores of check cashing outlets and payday lenders. These inner city entrepreneurs inherited the animosity residents previously held for their predecessors—some of it possibly a knee-jerk reaction towards outsider businesses, which came to roost in the inner city—but a lot of the backlash was justified as these newcomers quickly gained a reputation for outlandish percentage rates. For many unfortunates in the neighborhood, these commercial exploiters were their only alternative, since their criminal records, spotty employment history, or other deficiencies categorized them as high credit risks. In short, these businesses officially defined as Alternative Financial Services (AFS) or derisively called the “loan shark industry,” were the only game in town for low income individuals with marginal credit ratings.
Possibly the largest chain of payday lending organs-and the one with the greatest name recognition (as evidenced by the quote that precedes this review, by Hip Hop icons The Beastie Boys) in the Los Angeles Basin is the Nix Check Cashing chain. Founder Tom Nix relates his rise from a hardscrabble San Pedro upbringing to inner city magnate in his self-penned tome, “Nixland-My Wild Ride in the Inner City Check Cashing Industry” ($14. 99, Business Ghost, 2012).
Nix addressed the demand for this new service by continuing his role as a pacesetter, with such innovations as implementing tamper-resistant photo identification cards for customers without driver’s licenses or other credentials.
Other, unforeseen events impeded his progress, as he recounts his enduring the L.A. Riots, circa 1992, and facing down a faction of the Chicago Mafia when they objected to his expanding his business into territory they considered their own rightful domain.
By the time it merged with the Kinectia Federal Credit Union in 2007 (to the tune of $45 million), Nix Check Cashing and its parent company Navicert Financial, Inc. had grown to 55 branches.
Nix strives to portray himself as a benevolent capitalist, a cut about his competition who carry on this trend of “poverty penalty,” in which the underprivileged are charged more for everyday staples by virtue of the location of their residence.
In this, the jury is still out, as Nix has undoubtedly profited from the inattention his customers have experienced at the hands of other, more mainstream financial companies. Nix has garnered his fair share of notables who attest to his community commitment, including current councilman Bernard Parks, former L.A. County Sheriff Lee Baca, and football coach Pete Carroll. Eager to be seen by his clientele in a positive light, Nix, who has been kept on by Kinecta as a senior vice president, is endeavoring to elevate his customer base by increasing their financial literacy, and via his credit union liaison introduce them to savings accounts, deemed to be a major avenue towards middle class stability.