Banking improvements benefit the poor

Since most METARs are anything but poor, we tend to be unaware of the great difficulty and exploitation the poor are subjected to when trying to manage their financial affairs.

I saw this when preparing the 1040 tax return (as a volunteer Tax Aide counselor) for a worker at the local Goodwill in Sequim, WA. He had migrated cross-country from east to west and had W-2 forms from 3 different Goodwills. He was due a tax refund (including payroll tax deductions and EITC) of $650. He told me that he lived hand-to-mouth and didn’t have a bank account. He asked me to have a paper check mailed to his ex-wife in Georgia. There was literally no way to transfer money directly to this worker.

Millions of poor workers (and non-workers) are in a similar situation. They are exploited by payday lenders who charge stunning interest rates on loans. The ones with bank checking accounts are often hit with high overdraft fees.

The Consumer Financial Protection Bureau was opened to try to mitigate this situation. The situation is slightly improved.

The Rundown
Spotlight on Consumer Finance Wins
Pew Charitable Trust

In this Spotlight, we’re breaking down two big 2022 victories that are making life more affordable for Americans:

1. Overdraft reform became the norm: Most of the nation’s 25 largest banks reduced or eliminated overdraft fees and nonsufficient-funds fees.

:moneybag: Expected savings to consumers: more than $4 billion yearly.

2. Little loans offered big relief: Three large banks launched affordable small-dollar loans that meet our standards, bringing the total to six of the top eight banks.

:brain: Why it matters: These small loans offer much more affordable alternatives to payday loans, title loans, and other alternative financing that struggling Americans often turn to.

:exploding_head: Explosive stat: The new bank-provided small-dollar (up to $1,000) loans cost 15 times less than average payday loans. [end quote]

These improvements can have a Macroeconomic impact on an entire demographic which is often ignored by the financial press.

The article didn’t mention which 6 banks are offering low-cost small-dollar loans. I wonder how the potential borrowers will learn about this new capability.

This demographic lives hand-to-mouth and spends every last penny on goods and services. Enabling them to use more of their scarce money on their needs instead of interest on payday loans will help boost the economy.



Might this be the underlying fund, used by the government to encourage banks, CUs, etc, to set up and offer SDLs?

SDL - Small Dollar Loan.

Certified CDFI - Community Development Financial Institution.

“The SDL Program provides grants for Loan Loss Reserves and Technical Assistance to enable Certified CDFIs to establish and maintain small dollar loan programs. These grants will help unbanked and underbanked populations build credit, access affordable capital, and allow greater access into the mainstream financial system.”

A Google says US Bank offers SDLs.
Google also says Credit Unions offer SDLs.

The concept for Grameen Loans, aka micro loans, won a Nobel for it’s creator M Yunus.

This kicked the “unbanked” into a spotlight for activists.



NU Holdings, an online Fintech, seeks to “bank” the unbanked or under banked in Latin America.
IIRC, the target TAM are people who do NOT have access to brick-n-mortar banks or branches.

This article banks on Buffett’s reputation to promote NU.

@WendyBG OP mentions unbanked people in the US.
NU, afaik, doesn’t offer services in the US.
Is there a US service similar to NU?


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The quick scan a government fund sets up an interest bearing instrument to pay the larger banks marginally as the money is lent in smaller amounts to people of lesser means. There are 6 out of 8 of the larger banks segmenting their operations for this type of lending.

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