More than a million American households lost access to basic banking services like savings accounts last year, bank regulators say.
Those families are among 30 million households that have little or no access to such services, according to a survey released Wednesday by the Federal Deposit Insurance Corp. Poor, minority and immigrant families are especially hard-hit.
In all, 25.6 percent of U.S. households either lack bank accounts or use payday loans, check-cashing services and other costly alternatives to traditional banks, according to the survey.
Next step, “public option” banking?
Sounds like earlier concerns about bringing the “unhoused” into the housing market. That worked out well.
Maybe the government could quit trying to rig the market, seeing as it always blows up in our faces at some point down the road? Just a thought.
I admit that this article was an eye-opener for me. I wouldn’t have guessed that a full one fourth of American households were so poor that they had no bank account. 25%!? That’s pathetic.
But the solution can’t be for the broke Federal government to spend more money trying to fix the problem, no matter how serious it might be.
David Handy+
Spread the wealth.
Surely, in the land of multi-million dollar banking executive bonuses in institutions “too big to fail” there is room for banking regulation that would provide a basic limited checking account for low income people. If nothing else, some need this in order to receive their social security payments without having them stolen out of their mail boxes. The federal government should not have to spend anything on this.
The current arrangement smacks of giving deference and the best seats in the synagogue to the rich and famous and standing room, if that, in the back to the paupers. Seems to me I read something about this somewhere. 🙂
NW Bob
“for banking regulation that would provide a basic limited checking account for low income people.”
Uh? I’ve had banking accounts when I was making part time minumum wage salaries. I’ve had banking accounts when I’ve been unemployed. I’ve have banking accounts when I was a child. Some how I doubt the problem is that “low income people” can’t afford a bank account.
I just Googled “no fee no minimum checking account.” Lots of hits. I’m guessing this is like health insurance: many people with none chose to have it that way, for whatever reasons. So we don’t really have a problem, just a meddling government that can’t stand the choices some free people have made.
#6 With all due respect, it sounds like you also lived in a decent neighborhood. I had a bank account when I was in the fifth grade administed by another fifth grade class as an educational venture sponsored by the Society for Savings, now Key Bank. We put in nickels and dimes. But, this was in a great neighborhood school system. The people who are enslaved by payday check cashers often do not have a real bank as an option. Nor can they just log on to an internet bank in their homeless shelter.
#7 Google, eh! Most likely from your broadband connection just like me. But, please see my last sentence in my response to #6. HOw many of the poor have internet access or know how to use it if they had it?
I don’t mean to belittle it, Bob. I’m just saying, it is not as simplistic a problem as the government thinks.
Phil: I understand your point and I agree that this may not be drop dead simple. All I am saying is that there must be a way to get banking services to crummy neighborhoods so that people trapped there at least have a safe place to put what little money they have. I still think that BOA, JPM Chase, and the like could do this if they wanted to without charging $3.00 for a $10.00 ATM withdrawal.
Well – as long as you mention it, the one link I clicked on (yes, on broadband!) was for BB&T – $50 minimum to open, but no minimum balance or maintenance fee after that, and no ATM fees.
#3: Dave, the statistics are a little hard to decode. According to the banking industry representative, only 8% of the population has NO bank account. The other 15%+ are “underbanked,” meaning that they have some bank account(s) but they’re using pawn shops, check-cashing services, etc. to get loans. The article isn’t necessarily trying to distort the facts, but it’s easy to get a false picture if you don’t read the fine print — possibly the old “figures don’t lie, but liars figure.”
In this economy, I’ve heard (also on NPR, I believe) that some very pricey merchandise in some very affluent areas is being pawned — by the owners, not thieves — so even those individuals, who presumably have a number of traditional financial accounts, would fall into the “underbanked” category. It’s true that a bank is not going to loan someone money when they have no visible way of repaying it (what a concept!), so there are doubtless people who are temporarily in need of non-bank financial options who appear in the 2008 data, but would not have in previous years.
Hursley’s wife
Must we look at every symptom of poverty as if it were a new revelation? I bet the hungry suffer from unusually high amounts of abdominal discomfort. Perhaps we should study that, too.
The problem is not that the poor lack banking, but that they lack either the necessary skills, motivation, health, etc. to earn a better living as well as the self-discipline to save rather than spend what they have on non-necessities. If we can address those issues, then housing, health care, banking and all those other “positive rights” will take care of themselves. We need to address poverty at its roots, not its symptoms.
Sorry. I’m skeptical of surveys like this — on many counts. I’ve studied and written about survey taking, and in one glaring case, sent Gallup back to the drawing boards after pointing out major errors in data groups; the analysts had to act quickly to bring figures into line with known realities, and did that simply by adding and subtracting “weights” to individuals polled. For example, if a respondent in a certain category said “Yes” to a question, instead of counting that person as representing 200 people, he now was counted as representing 300 or 400. A person in a different category, instead of representing 500 people, might be counted as representing 150 instead. Ah, the stretchability of facts. And this was called “a scientific survey.” (Shades of global warming trends!)
Most surveys start with someone who wants to make a point. The FDIC once had a very simple mission: insure individual bank depositors against losses from bank failures up to a certain amount on deposit. The FDIC’s mission apparently now has been expanded to make it an agent of social change. It has a point to make on behalf of somebody on high. The point can be made in part with a carefully structured survey. The media love to report survey results (otherwise known as free publicity), the more stunning the better. For credibility, the Census Bureau is hired to conduct the survey. Census in turn hires contractors to carry out the contact work, and they in turn hire subcontractors. It might be by phone, door to door, or random man in the street. It is not inconceivable that college sociology students are among the interviewers — as well might be neighborhood organizers who wear an ACORN hat on other days. I don’t know the details of this survey, but it might also include interviews with bank employees who offer uneducated guesses and guestimates about their clientele and the numbers.
Everyone knows it is impossible to interview 25.6 percent of households among our 300 million residents. We also know that all these households are NOT without bank accounts. So, the survey makers apply creativity (determining how many people a single respondent represents, etc.) and make some smoke. Notice one of their favorite words: “underbanked.” That helps to cover their backsides (a lot of these people do have bank accounts) yet paint a more dire picture (showing the huge need for greater governmental assistance).
Etc. etc.–you take it from there. Bottom line: these kinds of surveys are useless as measurements of truth.
w.w.
A good friend worked his way through college in the check cashing industry, and his impression was that most if not all the clients had or could have had bank accounts, but were looking to avoid the paper trail that one creates. Lots of people paying illegal immigrants, the immigrants themselves, lots of folks hiding money from spouses. A large subset were men getting cash for “stripper money” that their wives wouldn’t know they had. Took two or three hundred in ones and fives.