A New Oppressed Group - The "Unbanked"

Bill Clinton took a break from bashing Barack Obama and joined with the Governator to write an op-ed for the Wall Street Journal. They seem to be trying to create a new oppressed group - the "unbanked":

The American dream is founded on the belief that people who work hard and play by the rules will be able to earn a good living, raise a family in comfort and retire with dignity.

But that dream is harder to achieve for millions of Americans because they spend too much of their hard-earned money on fees to cash their paychecks or pay off high-priced loans meant to carry them over until they get paid at work.

I stop here because I have a simple question. Do you know anybody that doesn't have a bank account or counts on payday loans on a regular basis? I'm sure they're out there, but I doubt it's a big enough group to warrant the attention of a former president and current governor, unless there are other motives (and you just know there are).

Most people with regular jobs have bank accounts, and I would guess that most of them have their check direct deposited. You just don't see people coming into the bank to cash payroll checks much anymore.

Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the "unbanked" enter the financial mainstream by opening checking and savings accounts, and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won't cost taxpayers a dime.

Imagine the economic and social benefits of putting more than $8 billion in the hands of low- and middle-income Americans. That is the amount millions of people now spend each year at check-cashing outlets, payday lenders and pawnshops on basic financial services that most Americans receive for free -- or very little cost -- at their local bank or credit union. Over a lifetime, the average full-time, unbanked worker will spend more than $40,000 just to turn his or her salary into cash.

Many nonbank customers are either leery of banks or believe they do not have the products they need. The result is that the market for basic financial services is booming. Today, the number of check cashers, payday lenders and pawnshops is more than double the number of McDonald's franchises in the United States. More than 20 million Americans cash more than $60 billion in checks each year at check-cashing businesses. Full-time workers without a checking account typically pay $40 on average to cash their paychecks. And payday lenders sell an additional $40 billion in expensive small-dollar loans each year that carry fees 30 times the average credit-card rate.

Let me offer you a little information from my 18 years in the banking business. A lot of people don't have bank checking accounts because they can't have them. They have a history of abusing banking services, such as repeated overdrafts or bad checks, and have found themselves in the database of outfits like Chexsystems which we used to identify serial offenders. People applying for a checking account that had a record on Chexsystems were quickly denied because they had proven unable to responsibly manage their account.

There's also a tinfoil hat crowd out there that don't believe in banks or believe that if they put their money in the bank will lose it or give it to someone else. I remember working as a teller in San Diego when a lady came in and said she wanted to see the bag in the vault that had her money in it. I felt like Jimmy Stewart in "It's a Wonderful Life" trying to explain to her that we don't physically store her money, but it's used to make loans and other things, but we have enough cash on hand to give her all of hers if she needed it. She looked at me like I was robbing her blind. I think she ended up withdrawing everything she had in cash (it wasn't that much).

I can guarantee you that the next step in the plan to help the "unbanked" will be regulations barring banks from denying checking or savings services to people regardless of their past history. There will also be restrictions on charges and fees. They claim it won't cost the taxpayers anything, but it will certainly cost the bank, their shareholders, and their better customers a lot if it's enacted.