Who Hijacked Our Country

Monday, June 18, 2007

A Solution to those Payday Loansharks

San Francisco has come up with a way to help low-income people who’ve been preyed on by payday loansharks. Bank On San Francisco is a group effort by the mayor, the city treasurer and the Federal Reserve Bank of San Francisco.

Whether it’s a bad credit history or the sky-high minimum balance required by most banks, about 50,000 San Francisco households don’t have a bank account. This leaves them at the mercy of sleazy check-cashing services and payday lenders (or worse). A $30 check-cashing fee is a lot of money for somebody on a fixed income. If this money can be spent on groceries and other necessities, it stimulates the local economy as well as helping the individual.

Under this program, fifteen local banks and credit unions are offering free or low-cost checking and savings accounts. They're specifically targeting low-income neighborhoods where the residents are the most likely to be preyed on by sleazebags. They're also accepting alternate forms of identification (e.g. consular identification cards) so that (legal) immigrants are able to open accounts.

So far San Francisco is the only American city with a program like this for getting low-income paycheck-to-paycheck people into the financial mainstream. A few other cities — Seattle, Boston, Atlanta and Los Angeles — have made noises about creating similar programs. Let’s hope they do. When thousands of low-income people are able to open bank accounts and start saving, everybody wins.



Blogger Mike V. said...

Funny enough, San Francisco was the place where A.P. Giannini started out doing sort of the same thing.
The irony is that his bank grew to be what would become BofA.
But his idea of banking for the little people was quite uncommon back then.


June 18, 2007 at 10:25 PM  
Blogger Tom Harper said...

Mike: Interesting link. Funny how things evolve and mutate. BofA (or its predecessor) used to be for the "little guy," and maybe some of the small banks that are part of Bank On San Francisco will mutate into cutthroat corporations.

June 19, 2007 at 1:41 AM  
Anonymous Anonymous said...

Used to be real competition between the banks and the check cashers. Then the banks consolidated and made up for it by charging the rest of us fees for doing nothing.


They can throw high interest credit cards and subprime mortgages at the poor they should at least give them bank accounts.


June 19, 2007 at 2:14 AM  
Blogger LET'S TALK said...

Atlanta has brought this up and that's about all.

This is a Republican State and what is done in our house and senate are for big business.

At one point Georgia tried to get rid of predatory loans in Georgia and up popped payday loans.

The small loan laws of eight states permit payday lenders to operate and charge any interest rate or fees which the parties to the loan agree to pay.

That is mad. We cant do anything about this as long as the Republicans run this State.

June 19, 2007 at 8:11 AM  
Blogger Tom Harper said...

Erik: That seems to be the corporate solution to everything these days: merging with their competitors. No competition, no other choices for the public, and they've become so huge and monolithic that they have a total stranglehold on government regulators.

Let's Talk: Thanks for the update on Atlanta. I guess it's easier to just "talk about" banking reform without actually doing anything. That way they're throwing a bone to those liberal whiners and still not doing anything to offend their corporate puppetmasters.

June 19, 2007 at 10:21 AM  
Blogger Leo said...

It's about time cities and states stood up and did something about this problem. Kudos to San Fran for leading the way and to you for drawing more attention to the issue

June 19, 2007 at 2:14 PM  
Blogger Tom Harper said...

Leo: Thanks for the Kudos. I guess cities and local governments are the only ones who will initiate something like this. The federal government certainly won't. For that matter, if too many cities follow San Francisco's lead, the banking cartel will probably instruct their puppets in Congress to pass a federal law forbidding programs like this.

June 19, 2007 at 5:02 PM  
Anonymous Anonymous said...

What really irks me is that a lot of these people being gouged is the solders, where is the conservative hawk support now?


June 19, 2007 at 10:16 PM  
Blogger Tom Harper said...

Erik: That's absolutely right. "Support Our Troops!" only applies while the soldiers are actively fighting and risking their lives. The moment they get injured, sick or go into debt, the armchair warriors toss them aside like an old newspaper.

June 20, 2007 at 1:11 AM  
Blogger Ron said...

Most interesting - this seems like a really great program. For the sake of the low income folks, I hope as many as possible sign up with the local credit unions.

June 20, 2007 at 9:32 AM  
Blogger Tom Harper said...

Ron: Yup, I definitely hope lots of people take advantage of this program.

June 20, 2007 at 11:27 AM  
Blogger Mile High Pixie said...

Ah! I was going to mention the soldiers. My veteran friends have mentioned that being in the service is the poorest they've ever been, even poorer than being college students.

I'm glad to see someone trying to help the poor actually improve their credit scores and financial wherewithal and acumen, mush as the microloan nonprofits are doing in third-worl countries. But I must ask, why do we feel it's okay to punish the poor in the first place? Why are so many of life's decisions and privileges based on credit score? There may be some correlation to behavior, sure, but it can't be the only indicator of how good an employee or driver someone is.

Kudos to San Francisco. How long til the rest of the nation catches up?

June 20, 2007 at 6:41 PM  
Blogger Tom Harper said...

Mile High Pixie: Yeah, military personnel might make up a lot of customers for that program. When I was in the Navy the credit union on the base was pretty decent; I don't know if that's still true or not in today's military. Maybe not, since soldiers are often victims of those payday loansharks.

It really does seem like people are punished mercilessly for one little financial slip-up. Credit cards tripling your interest rate if you make one late payment (or if you go over your credit line with a different credit card) -- it sucks. I'm glad there's an alternative. I hope the people who need it will take advantage of it.

June 20, 2007 at 8:43 PM  

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