Reader comments are listed below. Comments are currently closed and new comments are no longer being accepted. Don't we -- and it tears at my heart to say this -- have to acknowledge that the lenders have a problem? If they DON'T make credit available to the "poor" then they are accused of "red-lining" or some such nonsense.
If the DO make such credit available and the poor misuse it -- and it is a lead-pipe cinch they will -- then the lenders will be accused of "predatory lending. I wish I could say that all the credit problems of the poor are due to a shortage of appropriate financial tools but it is not true. So many of the bottom ten percent mismanage their money that there is little the rest of us can do for them.
There is a reason they are in the bottom ten percent. Payday loans are usurious and the sooner they are reined in, the better. Let us do what we can.
But, don't be overly-optimistic. Short-sighted people will abound in every generation. They will blow off their education, handle money poorly, have babies out of wedlock, divorce easily, use controlled substances and live on credit.
Then, they will welch. Wish it weren't so -- but it is. My wife worked at one of those payday loan places for several months she got out of there as soon as she could.
You would be surprised how many people use those places and often not people you'd expect. There are many people who come in every 2 weeks to pay off their last loan and get a loan on their next paycheck.
It never occurs to them to let the utility bill be late one time to just catch up and make a huge earnings boost. But then again my wife now works at a bank and sees what these people spend their money on and there are plenty of poor purchases they could live without fast food and casinos are not necessities. Some people just can't be helped. Another trend that increases the likelihood of unbanking are the increasing documentation and legitimacy proofs that are required in efforts to combat money laundering and terrorism funding.
The homeless and the marginal find this as another hurdle in establishing a mainstream lifestyle. Legislators must remember unintended consequences are always forthcoming with every new rule they impose!
It seems the biggest issue with America's poor is that the American people are still waiting for tens of trillions of dollars in corporate fraud to come back to government coffers and individual pockets. Many of these people aren't poor The driver of American poverty outside of massive corporate fraud is the stagnant economy and job creation.
The downsizing of US corporations that would result simply by enforcing Rule of Law would be the start to creating a healthy economy, but getting rid of Ben Bernanke and his Fed policy would be the other. All under the guise of domestic job creation! That is what America's poor have to deal with now that the Western nations are no longer Rule of Law countries and massive fraud and corruption has them at Third World status What a wonderful piece. It sounds like someone could do the job of informing and educating millions about opening a bank account.
Also, it sounds like there is a viable market for a personal finance publication focused on informing and educating millions of low-income people about what they can do to live cost-effectively and learn to be more financially responsible. Honestly I don't think it ever crosses their mind so long as they can be "though on X, Make Y better for the average person, or do Z for the children.
Corporate fraud is driving the poor? How one can come to that conclusion is beyond reason. Corporations create jobs and ecomonic growth. What corporation generate is an economy. No one else can do that. Some of us have set ourselves free from the tyranny and exploitation of the leaches and vultures of the crony corporate set.
We do our banking with depositor-owned cooperatives known as credit unions. The more people that open their eyes and decide that they are going to stop being willing victims of the big banks and sharp operators that want to do nothing but milk them for all they are worth, the sooner we can all take back our money, our country, and control over our own lives. The nascent Consumer Financial Protection Bureau CFPB has held a public hearing on the subject, boosting speculation that the federal government may start regulating payday lending.
If you have ten thousand regulations you destroy all respect for the law. Is it a coincidence that Italy, Portugal, and Greece three of the countries with high tax evasion rates have higher "unbanked" populations? My guess is that many people, besides not trusting banks themselves, don't trust that the banks won't turn over financial info to the tax man. I suspect that this may also be the case in the U. If Bluebird had no issues, in other words if it all went without a hitch, there would be no need to call the worst customer service on the planet.
Amex subs out service to a group of non English as a first language Indians. Banks will not, "follow suit. The first bank to start offering sub-prime loans to these 'poor' people will make a killing.
If Congress can restraint itself, low cost bank accounts for the poor may be possible by cleverly using technology. That said, limited credit for people with limited income may not be a bad thing - it is easy to loose the financial foothold at the low income bracket. Prudence is advisable, even of not popular. Land of the free? More financial information and education in early ages! Go ahead and make the payday loans illegal. It is a waste of money and the people who use them don't understand that you can pay bills late and do without beer until you have the money to pay.
Finance and the American poor Margin calls. Readers' comments Reader comments are listed below. Newest first Oldest first Readers' most recommended. I was going to rebuke your post, but you seem so confused that even that is difficult. Seriously, how are retail banks not completely obsolete already? What Constitutional provision permits the federal government to regulate payday lenders? The horrible online reviews are everywhere.More...