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In Nogales, some signs of banks pulling back from doing business along border

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NOGALES – A Chase branch outside of Mayor Arturo Garino’s office has consolidated with the bank’s other branch in this border city. Bank of America recently sold its two branches here to Washington Federal as part of a larger deal involving 23 locations in Arizona and Nevada.

But while U.S. Sen. John McCain is raising red flags about major banks closing branches along the U.S.-Mexico border, Garino said he and his staff haven’t heard of any flight from this city.

“It might be a little premature to find out exactly, but every time you hear something affecting a region when it comes to economics, there’s always a concern,” he said. “So let’s see what happens.”

In late September, McCain wrote letters accusing Bank of America, Wells Fargo, Chase and Citigroup of scaling back services and closing branches in communities along the U.S.-Mexico border, as well as placing some restrictions on cross-border transactions. In a news release, McCain said the moves were creating “higher transaction costs and substantial difficulties.”

McCain’s letters asked the banks to answer questions such as how many border-area branches and closed and the reasons for closing them.

“We cannot deprive our citizens just because they live along with border with the same accessibility to capital and financing that other citizens do,” McCain told Cronkite News recently at a book-signing event.

Julie Tarallo, McCain’s deputy press secretary, said all the banks have responded, but she declined to release those responses.

“In the responses the banks attributed their closures to the general economic decline in the area as well as regulatory and compliance burdens,” Tarallo said in an email. “The Permanent Subcommittee on Investigations, of which Sen. McCain is ranking member, is currently following up with some of the banks to get more information on the closures.”

Representatives of each bank declined to comment and referred a reporter to McCain’s office.

The Bank of America sale to Washington Federal also included branches in Yuma, Douglas and Bisbee.

Douglas Mayor Danny Ortega said Chase has closed its branch there, meaning those with accounts have to travel an hour to Sierra Vista to visit the closest branch.

“By losing these two big banks, it just sends a bad message when we’re looking for investors,” he said. “I think it erodes the confidence of the people in the community.”

Garino, Nogales’ mayor, said he’s had to drive 45 miles to Green Valley for banking services after Bank of America closed here. But he said that people will find a way to bank whether it’s in Nogales, Tucson or another city.

“This is just an inconvenience of not having it right by the border,” Garino said. “If you were to lose all the banks in Nogales, naturally it would hurt one way or another, but that’s not going to happen.”

Garino said it’s too early to tell what the economic impact could be if banks were to scale back further. He said those in the produce industry or working in maquiladora factories would be most affected because those workers on both sides of the border have accounts in the U.S.

Bruce Bracker, chairman of the Greater Nogales Santa Cruz County Port Authority, said he’s concerned for businesses seeking loans. He said changes by banks can sever relationships between business owners and loan officers.

“If it’s a cyclical business, they’re looking at its low point of the season, they could be, ‘Why are we giving this guy money?’” he said. “They don’t understand the cycle.”

Meanwhile, Bracker said he’s left to wonder why things have changed.

“The banks didn’t all of a sudden one day decide, ‘We don’t want to do business on the border because it’s too risky,’” he said. “They’ve been doing business on the border for years. Obviously something else is going on where it’s becoming cost-prohibitive for them to do business on the border.”

EDITOR’S NOTE: Cronkite News reporters Justin McDuffie in Washington and Elle Johns in Phoenix contributed to this report.