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Making Change: Money Houses Rankled by New Ordinance

February 07, 1988|PATRICK McDONNELL | Times Staff Writer

The letter from the San Diego Police Department arrived in Benito Hernandez's mailbox last week. Others in Hernandez's business--currency-exchange houses, or casas de cambio-- also received the correspondence in recent days. Many didn't like what they read: A new city ordinance will require the city's money-exchange houses, mostly concentrated in the border community of San Ysidro, to comply with a host of new regulations, including police licensing and supervision.

"It's going to create too much paper work, take too much time," said Hernandez, who runs a tiny currency-exchange kiosk outside a feed store on San Ysidro Boulevard, the community's main drag and a kind of Wall Street for the Mexican peso.

Hernandez spoke shortly after he had mounted a ladder and performed San Ysidro's time-honored ritual: adjusting the numbers on the signs overlooking his shop to reflect the latest changes in the ever-fluctuating value of the peso.

"People who want to change money, they want to be in and out in a hurry; they don't want to have to wait," Hernandez explained as he re-read the Police Department letter. "The city will have to modify the law."

Hernandez's sentiment is widespread these days in San Ysidro, an economically depressed community of 25,000 where the 100 or so exchange houses represent one of its biggest employers. The exchange-house operators--entrepreneurs who have journeyed from throughout Europe, Asia, the Middle East and South as well as North America to set up storefronts, trailers and kiosks in San Ysidro--have long been accustomed to working at a frenzied, free-market pace, largely without regulation.

That is about to change, drastically.

Responding to reports that consumers were being cheated and that the physical appearance of San Ysidro Boulevard was deteriorating, the San Diego City Council last month changed the rules about the operation of exchange houses inside the city.

The new regulations reflect a longtime concern about the proliferating exchange houses in San Ysidro, which some experts estimate conduct hundreds of millions--perhaps billions--of dollars worth of transactions a year. Employees of some houses have been linked to drug-related money-laundering schemes. Many money traders are in violation of city zoning, housing and sign ordinances, officials say. Moreover, reports have frequently surfaced that the houses have been defrauding consumers through hidden charges.

Among other things, the new ordinance--passed Jan. 25--requires police background checks on prospective exchange-house operators, as well as mandating that the firms provide consumers with detailed receipts and state clearly if commissions are charged on transactions.

While such money-exchange houses proliferate along the 1,900-mile border, the new regulations in San Diego appear to represent by far the most stringent such initiative in the country. Meanwhile, proposed state legislation aimed at regulating the exchange houses throughout California is currently pending in Sacramento. The bill, sponsored by Sen. Wadie P. Deddeh (D-Chula Vista), is considerably milder than the San Diego statute, and has engendered less controversy.

Threat to Businesses?

Critics of the new city regulation say its enforcement could force as many as half of San Ysidro's money-exchange houses out of business. City officials acknowledge that a third of the firms may have to shut.

"We think the law's unfair," said Franciso Anzar, president of the Monte de Piedad, a major San Ysidro exchange house, pawn shop and precious-metals trader.

Anzar also heads the newly created California Currency Exchange Assn., which claims to represent the majority of the houses, all opposed to the ordinance. The often-competing concerns have banded together and promised a lawsuit aimed at blocking implementation of the new regulations, which are scheduled to take effect April 25.

"The law is just too burdensome; our business will go way down," said Ladislav Svoboda, a Czech-born import-export entrepreneur who heads the Viking Money Exchange and is the association's vice president.

But not all exchange-house operators are so dead set against the new rules.

"I think the ordinance is long overdue," said Fred Sobke, who runs three exchange houses in San Ysidro and basically supports the city statute, although he says the paper-work requirements should be modified. "To be honest about it, people are being ripped off here."

From the city's perspective, the new ordinance contains a prospective dual benefit: Reduction of consumer fraud and a cleanup of the disarray that is San Ysidro Boulevard, where the houses are concentrated. The rapid, helter-skelter growth of the industry since the peso devaluations of 1982 has lent the boulevard the cluttered air of a Third World bazaar. The street, which mirrors commercial strips in other border cities, is currently being widened--a long-awaited improvement.

"It looks like a carnival down here," said Sobke. "It's about time they cleaned it up."

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