LA People 2009: Financial Field-Leveler Berdell Knowles
Berdell Knowles set up shop under the basket, stuck his butt out, knocked back his defender, called for the basketball and put three quick fakes on the tall teenager towering over him, just waiting to swat his shit into the stands. Then Knowles, 5 feet 9 and 200 pounds of brains, brawn and brash bravado, delivered a chicken-wing elbow right into the kid’s bare six-pack to get his 36-year-old legs a little more shooting space. Finally, he lofted a can’t-touch-this baby–hook shot high over the kid’s flailing arms, kissed the backboard and fell through for the game-winning hoop.
“Ball game!” Knowles shouted, following it inevitably with his signature sound: a high-pitched, triumphant cackle — “heh-heh-heh” — that just naturally invites everyone else to join in. “Who’s next? We need some real competition here. . I think these last guys were shaving points.”
As Knowles walked off the court at the legendary Live Oak Park in Manhattan Beach, Randy Gordon, the white kid he had just torched, slapped him a no-hard-feelings high-five and hit him with a quick question.
“Did you look at the new résumé I sent you?” he asked. “I made those changes you suggested. . It’s real clean now.”
Knowles agreed it looked a lot better than the first one.
“It looks pretty professional,” he said. “I can show it to some people now who might be hiring.”
“I’ll take anything,” Gordon said. “I need a job bad . I’m hurting.”
Knowles nodded sympathetically.
“A lot of folks are hurting,” he said. “But you’re moving in the right direction.”
It was just another day at the office for Knowles, who has a midtown space as a consultant at the black-owned-and-run Broadway Federal Bank but whose real office is all the disparate little communities of crazy-quilt L.A. An honors graduate of the Massachusetts Institute of Technology, who walked away from a big, fat corporate paycheck in 2003, he has been volunteering for the past half-decade with at-risk kids through the Telecom Opportunity Institute, providing everything from mentoring and tutoring to precollegiate counseling and general life-management skills, while preaching the same message he learned growing up on the wrong side of the Florida Panhandle: The only real way to get ahead is to work hard, get a good education and respect your teachers and parents.
Lately he has turned his professional focus to solving a standard feature of urban life that has long bugged him: the predatory financial practices still used on low-income residents who are unsophisticated about financial matters, don’t have checking accounts and live in what used to be called “redlined” or “no-loan zone” communities.
Knowles wasn’t in the L.A. Times picture with all the public and private officials crowded around Mayor Villaraigosa at a community-outreach event last month, because he was off working on another corporate/community project. But he played a key role in Broadway Federal’s participation in the mayor’s “Bank on Los Angeles” initiative, announced at the City Hall photo op. The program is designed to bring people on the economic fringes — immigrants and nonimmigrants alike, regardless of legal status — into the financial mainstream. It targets those who do not have the paperwork to open a bank account and are fearful of mainstream banks. At least a dozen financial institutions, from bigtime players like Bank of America to smaller, community banks like Broadway Federal, agreed to waive their usual fees for a checking account, and to streamline the application process.
Beyond helping to bring his bank into the mayor’s financial-literacy program, Knowles and his former MIT roommate, Tim Rowley — who was a senior vice president at Bank of America — have spent six years using their elite financial skills to draft a comprehensive public/private plan to stop the predatory practices of so-called “Payday” loan shops, check-cashing operations and other bottom-of-the-food-chain financial companies that target low-income, predominantly black and Hispanic neighborhoods.
“These are underserved communities, with a high concentration of minorities and immigrants and low-income people,” Knowles says. “It just never sat well with me that the lower-income families had to pay the highest fees to access what little capital they had, whereas wealthy Americans were paid a fee by earning interest on their considerable capital.”
The plan is complicated, he admits, but the key is using high-tech efficiencies to get these underserved people into the financial mainstream.
“We studied the data closely and noticed that there were a finite set of services these communities continued to consistently use: international wires at ridiculous fees, check-cashing at ridiculous fees, payday-advance loans at crazy fees, and even tax-refund-anticipation loans.
“The rate the payday places advertise is 25 to 30 percent, but if you factor in the fees, the effective rate turns out to be more than 100 percent. With tax-refund-anticipation loans, the effective rate can run as high as 200 to 300 percent. These customers have an asset almost as good as cash, but they’re being treated like high-risk borrowers.”
One typical solution in Knowles’ plan eliminates the high fees paid for international wire transfers.
“Instead of paying $50 to wire money to another country, if you have a banking account, you can have multiple debit cards so the wire fees go away, the check-cashing fees go away and you and your family members actually have access to all the capital you earned,” he says.
Another idea: using advanced technology to prevent first-time account holders from writing too many checks too quickly, a common mistake that quickly kills credit.
They can effectively have a progression into higher bankability,” he said. “Initially, banks used to be exposed to high-risk markets where customers could write checks to infinity, but now banks can manage consumers’ check-writing abilities and their debit-card capacity through technology so they can’t run into trouble.”
When he graduated from MIT a decade ago, Knowles admits, he took a job in L.A. with AT&T Solutions because he was excited about earning bigtime corporate money.
But after a few years, the lure of the money faded and he became a consultant working with companies receptive to his message of corporate responsibility.
“I have to admit that working within Wall Street and corporate America, it did come to seem like it was all about greed and the next dollar,” he says. “There was no real meaning in the work I was doing. No spiritual side at all.”
Now the spiritual side is a slam dunk. It’s the financial side that has taken a serious hit during his switch from corporate drone to corporate do-gooder. But, he insists, that’s fine with him.
“A lot of people had to sacrifice and open doors to help me get from Florida to MIT,” he says. “I don’t mind making a little sacrifice if it opens more doors for more people.”
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