Perhaps my Liberal friends should stop reading now:
I read this article in the Indianapolis Star last week and it pissed me off! It talked about getting checking accounts for people in Indiana who don't currently have a bank account. The article said that there were three primary reasons that the unbanked didn't have accounts:
1. Excessive Overdrafts or below minimum balances
2. Illegal Immigrants
3. Being afraid of the banks.
The article went on to talk about a program that Mayor Ballard is rolling out to help the "unbanked people" of Indiana. I am calling BS! Seriously!
The three reasons listed are clear to me why they don't or cannot have accounts. First of all, the article talks about all of the fees that the unbanked people pay using payday loan services to cash checks. They state the large amortization of paying $4 ($208 yearly) a week to cash a check. Duh...excessive overdrafts can cause a monetary irresponsible person to pay significantly more than that per year. I think that the people who cannot control themselves with a checking account are better off paying the check cashing fees and money order fees than paying exorbitant overdraft fees. Can the bank really teach irresponsible people to become responsible? I don't think so.
Don't get me wrong, I don't think that banks should just cater to A+ credit risks but they should be a bit more responsible. There are already banks that have existing programs to help people who have bad banking history. Why does Mayor Ballard need to become involved. I find this to be a business matter and not a political matter. We already have a bad history of governmental interference in the banking industry. Aren't we currently in a housing crisis for this very reason. Hasn't the government bailed out numerous banks due to poor decision making? When will the madness stop.
The second group addressed in this article are illegal immigrants. I don't agree with special concessions for illegal immigrants. The word "Illegal" says everything. Getting a green card will open many doors. I think our country does a horrendous job addressing the illegal immigrant problem. My belief is to have much tighter border security but also allow significantly more legal immigrants access to our country. The bottom line is I don't think we should make it easy for illegal immigrants to get checking accounts.
The third group was people who are distrustful of the banking system. Is this little program really going to change that groups mind? I don't think so! That is why we live in America, we all don't have to herd together and do the same thing. Why does Mayor Ballard think that everyone should have a bank account even if they clearly don't want it. Why are we spending governmental dollars this way?
The author states that there are 79,000 residents in Marion county without a bank account. The current population of Marion county is 880,380. The 79,000 represents 9% of the population. Is this hoopla necessary? What do you think of this article? Do you agree or disagree with this viewpoint.
5 comments:
Let them just stay at the check cashing places. It is where they belong. I would say that even if I were a member of the "unbanked" class.
I had a conversation with a member of the "unbanked" class last night and they also agreed with this viewpoint.
Actually, my impression was that the housing crisis was partly due to a lack of government activity in the banking industry, not due to "interference".
The cynical side of me suggests that Mayor Ballard is trying to curry favor among groups that do not typically vote Republican.
However, I also noticed that the article did not cite $4 a week or $208 a year as the cost of cashing checks ... that would assume you get only a single check per week. If you are self-employed (think yard work, babysitting, etc.), you might get quite a few more checks than that, which could put you in a situation where you're spending more than you would if you were paying overdraft fees.
I think it is a mistake to assume that people who have done poorly in the past cannot be taught to do better. Perhaps one of the reasons they do not currently learn is that they have no chance to practice: I'm sure we all know banks that charge significant overdraft fees that can, in some cases, be higher than the checks that caused the fees, and we may also have heard of situations where an error by a merchant or by the bank itself caused a number of fees to be imposed upon a customer. Not everyone is aware that in those situations you can appeal to the bank to waive the fees ...
I also saw that the article mentioned similar programs in San Francisco in Houston, although I haven't read anything on those.
Besides eliminating check-cashing fees -- and reducing the need to use costly money orders -- having an account will help people save and establish or rebuild credit, protect their money from theft and natural disaster and monitor their spending, the Ballards said.
Twelve financial institutions that do business in Indianapolis said Thursday they have agreed to relax their standards to allow more Marion County residents the ability to open free or low-cost bank accounts, and a statewide Bank on Indiana campaign will be launched later this month. State Treasurer Richard Mourdock said the state supports the Bank on Indy effort and that financial literacy is the key to overall literacy.
Do you disagree with these assertions by the Ballards and the treasurer? I noticed you did not mention them in your post.
I am all for financial literacy, I just don't think this type of program will teach those skills. I think that it is a way for the banks to prey on unknowledgeable customers, who don't care about outrageous bank fees, just as long as they still have an account.
I don't like that the government tries to strong arm private business to do their bidding. They shouldn't be pushed into giving people accounts, when they wouldn't normally qualify. There are already banks that have these types of programs, what is he accomplishing by creating more?
The article did not mention a $4 fee, I was just trying to use an average check cashing fee to amortize the annual costs.
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