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How About a Small Bank Specializing in Loans to Ex-Cons?

by Jeffrey Ian Ross, Ph.D., Stephen C. Richards, Ph.D. and Nicholas Vasquez, M.D.

Our nation's population of ex-convicts, growing and showing no signs of slowing down, is a billboard for dysfunction. Americans say they want to reduce crime, punish the criminals, and then repatriate them to society, if possible, as productive people with jobs and families. When it comes to former prisoners, rehabilitation remains a distant goal of our legal and social institutions. The message on that billboard is: Commit a crime, serve your time - but you will never be trusted again. The question is: Is that what we want?

Once released from a correctional facility, there are many hurdles for formerly incarcerated men and women to rejoin society, some as profound as learning how to talk to others. One of the worst difficulties is finding a job that pays a living wage. You typically have to reveal your criminal background on an employment application, and this and other kinds of background checks simply and thoroughly disqualify even the best candidates for a job. Some ex-cons - those with resilience, an actual skill set, and some entrepreneurial talent - often try to set up their own legitimate businesses: lawn services, painting, home repair and the like. But eventually this approach can become a dead end, too, given the challenges of establishing credit and applying for a loan. Sure, you can start a business, but you can't grow it. The ex-con's credit problems can also show up in something as everyday as trying to buy a car for work, or renting an apartment. Banks, for good reasons, are not friendly to former lawbreakers.

Without casting aspersions on any particular institution: this is not acceptable. The roughly 2.3 million Americans now incarcerated - a stunning figure that puts us ahead of every other country on Earth in terms of percentage and sheer numbers - cannot be expected to leave prison and wander aimlessly for the rest of their lives. Recidivism is a real threat to our national well-being, and to our democratic ideals. We need a better way for those who have "done time" to stop doing time and live right.

We propose a market-based solution: a financial institution that specializes in small business loans to ex-convict entrepreneurs. Call it the "First Bank of Last Chances." This concept would build on the success of similar models developed in lesser developed countries and now gaining acceptance elsewhere. Fundamentally, the bank would provide microcredit - small loans delivered on favorable terms - to the many ex-cons who don't have collateral or steady employment. The goal would be to spur entrepreneurship among this population of former prisoners. They would use their skills to open or increase their own businesses, and, in time, take possession of a major incentive to never commit a crime again: they're too busy growing their own company to think about it. Eventually, they could hire other trustworthy former prisoners and provide a forum for their entry or re-entry into the work force. Meanwhile, the bank for ex-cons is checking on their progress, supporting them through rough patches, and celebrating with them as the business grows. It's a network - the kind that most of us take for granted in our daily lives.

We're not naïve. The failure rate of an ex-convict running a small business is going to be relatively high; the bank would be subject to a higher risk premium from any backer. The outlook probably would be similar to that of former prisoners who go to work as dishwashers or nighttime cleaning crews: some just can't hack it, and quit for no real reason at all. But again, market incentives could mitigate this problem for those who start their own companies. The ex-convict who completes courses in small business management and career counseling, and who engages in a formal relationship with a business mentor, could be rewarded with better terms for credit. When you learn how to properly make use of the money you're being loaned, you'll be offered a better deal.

Some might joke about it: Yeah, right, this bank is going to loan money to people who might've robbed it! But isn't that the point? Sure, the ex-con is guilty, but he did his time, paid his debt to society, and his sense of desperation should not be listed among his crimes. Show a desperate person the way out of a bind, and he may not act out again.

The First Bank of Last Chances is a particularly American expression of independence and the entrepreneurial spirit. Our country was founded by people who got the boot and decided to make their own way. It's how we bonded, and how we continue to see ourselves. But now we must find room in our hearts, our minds, and our daily business for the former prisoner. When you choose to lock out the offender, even years after the government has told him that his debt to society is paid, you lay the groundwork for recidivism. But when the ex-con is encouraged to move on by adhering to the social contract, then we all win.

Jeffrey Ian Ross, Ph.D. is a criminologist at the University of Baltimore. Stephen C. Richards, Ph.D. is a criminologist at the University of Wisconsin, Oshkosh. Their most recent book is Beyond Bars: Rejoining Society After Prison. Nicholas Vasquez holds an M.D. from the University of Michigan and practices emergency medicine at St. Joseph's Hospital in Phoenix, Ariz. He is completing a master's degree in Health Sector Management at Arizona State University.

Contact info for Jeffrey Ian Ross: 202 607-5661;

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