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Beyond Payday Loans (Note Authors)
Wall Street Journal ^ | 24 January 2008 | WILLIAM J. CLINTON and ARNOLD SCHWARZENEGGER

Posted on 01/24/2008 7:21:04 AM PST by shrinkermd

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...

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.

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.

....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.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Editorial; Politics/Elections; US: California
KEYWORDS: loans; payday
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1 posted on 01/24/2008 7:21:06 AM PST by shrinkermd
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To: shrinkermd

“helping the “unbanked” enter the financial mainstream by opening checking and savings accounts”

I didn’t know they weren’t allowed to. The credit union I belong to only has a county residency requirement.


2 posted on 01/24/2008 7:23:34 AM PST by goodwithagun (My gun has killed less people than Ted Kennedy's car.)
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To: shrinkermd

Is it me or does this sound like another plan to help undocumented illegals stay under the radar in the U.S.?


3 posted on 01/24/2008 7:24:05 AM PST by SMARTY (Public opinion has the power of the lie/creating it is the work of radical politicians in a democra)
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To: SMARTY

It’s not just you.


4 posted on 01/24/2008 7:24:41 AM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: shrinkermd
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.

Walmart's the only group with the power to pull this off -- and they'll need it because lberals will fight them tooth and nail.

5 posted on 01/24/2008 7:27:00 AM PST by GOPJ (McCain's NOT the man for the job.)
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To: shrinkermd

helping the “unbanked” enter the financial mainstream by opening checking and savings accounts...


The UNBANKED?????????????? Here in the real world the only way the banking industry might not ‘Bank’ you is either
1. A history of bad checks so bad the bank says go away.
2. No valid id/documentation because you are on the lam,
or not suppose to be here in America (illegals).
3. A credit score under 500.

Pay day loans are great for those who have no other option!
Government intervention will not improve the lot in life for those who have screwed up their lives.


6 posted on 01/24/2008 7:29:53 AM PST by JohnD9207 (Lead...follow...or get the HELL out of the way!)
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To: shrinkermd
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.

This isn't a bad idea...but Thomas Sowell addresses this issue in his book "Basic Economics". Banks don't open branches in the neighborhoods where check-cashing outlets thrive because there is no incentive to do so. Costs are too high.

What the heck is keeping people from going a mile or two away to a real bank and opening an account? Nothing.

Maybe government ought to make it worthwhile for banks to do that--but instead government tries to blame the banks for offering loans and accounts where they make a profit. (Profit is baaaaaaaad according to the left!)

Look, it would be great if poor people participated in the economy and learned about how the economy works. They might realize what a PONZI scheme Social Security and welfare is. Rush Limbaugh has been saying that for YEARS. Nice to see the impeached President and the liberal RINO from Kalifornistan figure that out, too.

7 posted on 01/24/2008 7:30:28 AM PST by SoFloFreeper
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To: shrinkermd

$8 billion paid to payday lenders and the like? Wow... I picked the wrong business to be in!


8 posted on 01/24/2008 7:30:46 AM PST by pnh102
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To: shrinkermd
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...

Umm... No.

It's founded on equal opportunity, not on a guarantee of results.

You lefties should really try coming up with another shtick. The class warfare thing is really getting old.

9 posted on 01/24/2008 7:31:52 AM PST by TChris ("if somebody agrees with me 70% of the time, rather than 100%, that doesn’t make him my enemy." -RR)
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To: shrinkermd

As a Kalifornian, I’ve got other things for the Governator to be doing with his time, rather than kibitzing with Slick. Our state budget is a mess and he’s got time for this nonsense. Maybe we ought to recall him, too. And for the record, this is a capitalist country. People get to make mistakes, like getting payday loans, and we don’t protect them because they are adults, and if you can’t make a mistake, you are not free. Freedom is more important than this feel good hokum. Humbug!


10 posted on 01/24/2008 7:33:16 AM PST by RKV (He who has the guns makes the rules)
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To: SMARTY

BINGO ! We have a winner.


11 posted on 01/24/2008 7:34:14 AM PST by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: TChris

And I have to wonder: what, exactly, does Clinton know about hard work and playing by the rules??


12 posted on 01/24/2008 7:35:35 AM PST by susannah59
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To: susannah59
And I have to wonder: what, exactly, does Clinton know about hard work and playing by the rules??

He knows that people who do are his enemies.

13 posted on 01/24/2008 7:37:34 AM PST by TChris ("if somebody agrees with me 70% of the time, rather than 100%, that doesn’t make him my enemy." -RR)
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To: shrinkermd
This year, California will become the first state in the nation to launch an effort to help unbanked residents open starter accounts -- the first step into the financial mainstream. Approximately 11% of California households, including 25% of Latino and African-American households, do not have a checking account. And nearly half of households in the state don't have a savings account.

no where does the article mention "why" these people don't have bank accounts.
14 posted on 01/24/2008 7:37:39 AM PST by stylin19a
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To: goodwithagun

I didn’t know they weren’t allowed to. The credit union I belong to only has a county residency requirement.<<<<<<<<<<<

Aside from the obvious implication involving illegals, many who use these services are denied checking accounts by banks due to NSF checks. Once they end up in the “bad check” database, it probably takes a few years to get it off the record. I suppose we will somehow subsidize them, now.


15 posted on 01/24/2008 7:42:46 AM PST by Mjaye (Some folks close their mouth only long enough to change feet)
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To: shrinkermd

What a great argument for reducing tax rates.


16 posted on 01/24/2008 7:42:53 AM PST by sourcery (Electile Disfunction: The inability to get excited about any of the available candidates)
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To: JohnD9207

Add 4) the inability to understand that checks take time to clear and if the ATM screen says your balance is $200, you cannot withdraw $140 if you wrote a $100 check earlier that day.


17 posted on 01/24/2008 7:43:50 AM PST by NonValueAdded (What Would Hobson Choose?)
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To: Mjaye
Once they end up in the “bad check” database, it probably takes a few years to get it off the record. I suppose we will somehow subsidize them, now.

Well sure, but there's nothing keeping them from having a savings account (no checks) and then getting money orders from the credit union. Why people can't use the tools that exist is beyond me.

18 posted on 01/24/2008 7:49:39 AM PST by whd23
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To: NonValueAdded

They ought to concentrate on educating school kids in the basic financial facts of life. We had small school savings accounts when I was a kid..taught us to write checks etc.
Kids shouldn’t graduate from grade school without knowing this stuff and having their own little savings account.
Let the illegals and idiots pay even more for cashing their checks..get them to clean up their act.
Next thing you know..they will have the state cashing their checks..even if they bounce.


19 posted on 01/24/2008 7:50:44 AM PST by Oldexpat
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To: shrinkermd

Payday loans are pretty much a scam, and can really smoke someone who doesn’t use them right — but they’re voluntary.

H


20 posted on 01/24/2008 7:58:04 AM PST by SnakeDoctor
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