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It's all about the rents, part one million and ten

[Welcome, Crooks and Liars readers! You can check out other posts in this series using the links at the bottom of this page. For an explanation of rents and rent-seeking behavior, see "Rent Party". -- lambert]

It seems that 1 in every 12 households is "unbanked"*, according to the Treasury; they have no bank accounts, and rely on check cashing services and cash cards. That's because they did the math, and they figured out that paying the banksters rent for a bank account** wasn't worth it. Yes, it's really better to do business with Joe's Cash X-Press than Bank of America. Who knew?***

So, now Treasury wants to set up a program of "safe" accounts so that the "unbanked" -- and, hey, the "underbanked" too! -- can have confidence that they'll be paying "reasonable" fees, and not "exorbitant" fees... So it's safe to come bank to the loving arms of JP Morgan Chase. Alrighty then.

What I would like to know -- and I would bet something like this is happening in MI -- is whether people aren't "unbanked" but "rebanked." Michiganders?

For example, via hawalas. Or tandas, cundinas, sou sou, and hui. And please, not Wal-Mart, OK?

Is anyone on the left doing this? Like "Move Your Money" is great, as far as it goes -- but is there anyone out there who's moved to create an entirely new banking system? One not based on usury?

NOTE * Treasury calling people "unbanked" is like a Christianist calling people "unchurched."

NOTE ** Or, in the jargon, "entering the financial main stream."

NOTE *** Most of these people are poor. It's hard work to be poor, and most don't have the time to be pulled out of line so some "Associate" can upsell them on the kind of "innovative" financial products that require marketing collateral printed on glossy stock to successfully exploit their hosts. Yeah, Joes' Cash X-Press has all the atmosphere of a Soviet airport lounge, but at least there you don't get accosted by time-sucking marketing weasels.

NOTE Via Yves.

UPDATE Joseph points out in comments that not all the "unbanked" are "unbanked" by choice. Which is true. But the article quotes those who have chosen: "'Forget it with the banks,' " she said. "I just lost hope with them."" Indeed. It would be interesting to have hard data on the breakdown, but I would guess that a decade's extraction of brutal and arbitrary overdraft fees would have gotten a lot of people's attention. Particularly people to whom $25 or $30 bucks is real money. (Well, maybe no money is real, since it's all fiat, or all money is real, because even the smallest amount buys something, but you know what I mean.)

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basement angel's picture
Submitted by basement angel on

We're not earning much money and I got hit with an overdraft fee on an ATM charge that left my account overdrawn by 49 cents. I don't need that. Until I have a real income again, I'm staying out of the system. My part time job pays into a value added card account which charges me 25 cents for every transaction. So I transfer the money into my Paypal account which doesn't charge per transaction. The only thing I can't do is write checks.

editor_u's picture
Submitted by editor_u on

"My part time job pays into a value added card account which charges me 25 cents for every transaction."

Do they charge you for cash withdrawals, too?

(Partly curiosity, partly that I have a detailed reply if that's the case, but no sense in typing it out if that's not the case.)

gqmartinez's picture
Submitted by gqmartinez on

At least as far as what the left is doing. I hinted a while back at setting up a liberal non-profit microcredit loan system and no one bothered to comment on that. Its all well and good to complain about banksters and try to get oneself out of "the system" and prepare for collapse. Its entirely different to venture into collective action.

Submitted by ohio on

Why don't you do it then?

Not one person is stopping you from starting a microlending entity. Not one. And yet here you are whining that no one's doing what you want.

gqmartinez's picture
Submitted by gqmartinez on

Nor do I have financial resources right now to be taken seriously. Nor do I have the legal expertise. Plus, fuck, I work 8-5:30 and need to get at least an hour of exercise in for health reasons. I was hoping some of the technical people would share their expertise. And microcredit, which doesn't necessarily need millionaire backers, requires many donors. And if *this* blog has no interest in even the discussion, well i'm not sure how useful my idea is.

I'll repost my question.

chicago dyke's picture
Submitted by chicago dyke on

once i tried to start a discussion (just fucking discussion, mind you) with a large and vocal liberal e-list of people about starting our own health care collective. i had business people ready to step in and help go thru all the legal paperwork stuff and everything, for a very reasonable fee. response: nada. progressives love to bitch, but actually doing something seems to be too hard for many of us. it's fascinating to me that right now the right is more actually active than the left in this respect.

i can't speak for this whole state, lb. but we do have islamic charity groups who do this, i know that is a fact.

i just had a discussion with a friend this morning who told me this story: a friend of his was setting up a new banking account, and chose one of the Evil giant banks instead of the local credit union. my friend said "why would you do that?" and the response was "i don't want to be out in the middle of somewhere that charges fees for using a CU atm card." when my friend pointed out that the Evil bank would charge more in mandatory fees every month than would be the total of the occasional extra ATM use fee, he got a blank stare.

americans iz stoopid, i'm sorry to say.

gqmartinez's picture
Submitted by gqmartinez on

My credit union allows me access to ATM from scores of other credit union atms. In fact, I have access to more free ATMs than any big bank in town. Its a disinformation campaign. Chase et al have their billion dollar ad campaigns about # of ATMs, the little credit union doesn't.

Joseph Cannon's picture
Submitted by Joseph Cannon on

Lambert, I question your assumption, and the assumption underlying the linked article. The poor are "unbanked" not by rational choice but by circumstance. The circumstances are these:

1. Banks require two forms of ID to open an account. When you swear off credit cards -- and that IS a rational choice -- providing two forms may prove difficult. The best second form is a passport, but acquiring one of those costs money and requires a birth certificate. (The short form will do!)

2. The growing number of people who have reason to fear garnishment live cash-only lives.

3. For a while now, banks have used computer programs which make it very easy for you to accumulate overdraft fees even when using ATMs. The result is often a closed account -- and your name will be lodged with Chexsystems, which will prevent you from opening another bank account even if you pay the overdraft fees.

During the Bush and Clinton years, banks kicked out the working poor. Hence the growth of check-cashing services. Now, it seems, the banks want those accounts back.

Submitted by Elliott Lake on

I like the idea, don't have the time or the health to do it, but I can contribue some research if you get others interested...

My trade group does a yearly charity binge (our birthday present to ourselves), we are voting on which charities to donate to right now, and kiva is getting a lot of votes. I'm sure there is room in the world for more entities like them.

connecticut man1's picture
Submitted by connecticut man1 on

I was up in Canada and used an ATM with the pleasant surprise of only a buck and a half for using the ATM. Most ATMs around these parts are up to 3 bucks. 3 bucks for a "service" that was supposed to cut down on the costs of banking by eliminating a task that used to pay someone to do the job.

Before ATMs? They never charged me to withdraw money from the bank... Even though they paid a salary to someone to do that job.

Getting screwed out of our money with the bonus of screwing someone out of a job.

And that is the free market at work!*

* For the elite, that is.