I finished
a mortgage on a property and suddenly found my bank account being raided. The bank had required I have a small checking
account with them in order to also have the mortgage, so I put $100 into an
account I never used. For all the time
that loan was being paid, the account lay dormant, but as soon as the mortgage
was done, they began charging monthly service charges of over $10 a month. I just closed the account. But then I began to wonder what was going on.
What’s happening is that banks are
having a hard time making money on small bank accounts often held by poor
people. For years they simply had hefty
fees for things the poor folks do—overdrafts, low balances, etc. But then came Frankendodd law and now banks
are capped in fees. The Durbin amendment
to Dodd-Frank capped interchange fees on debit cards and just about ruined that
business. The result is that the economics
of banking the poor is now a loser. Thus
my bank, once I had finished my loan, saw me as a small account and started
zapping me for a large monthly charge, about the only recourse they had left to
make money on a small account.
It used to be that banks made money
on all their accounts. Big accounts had
a lot of money just sitting there and the bank could use that as an investment—making
money on the “spread”. Small accounts
often ran into sundry fees. But take the
fees away and a lot of small accounts lose money for the bankers. As a result of Frankendodd and other banking
regulations, banks lose money on small accounts. Thus the poor can’t bank. USA now has one out of 8 people with no bank
account anywhere. That’s the 3rd
highest in the developed world behind Italy and Portugal who have a lot of
Muslim guest workers. We have noticed this trend in our renters. Very few even offer to pay with a check. Only two use money orders which of course
require a hefty charge. So do paycheck
cashing services, pawn shops, and payday loan joints which service the unbanked.
So all that dreamy talk you hear
about how we all will go to online banking is a dream for the well-fixed. It leaves out that 12% who don’t use banks or
the 20+% who are underbanked—have a bank account but mostly deal in cash and
use the pawnshops and payday loans. Dodd-Frank, like practically every other
government program, entraps the poor and keeps them from upward mobility and
makes them more dependent on the government—a cruel foster parent.
I continually hear seniors lament
that Obama is robbing our grandchildren.
True, but don’t think because you are senior you can escape the
inflation to come. Argentina had an
economic crash in 2001 followed by wild and crazy spending by government
officials who vowed to save everyone by Big Stimulus. Sound familiar? Big Inflation came. Result was that seniors
who got government pensions (ANSES, their version of Social Security) were paid
with deflated currency, fifty-cent dollars, so to speak. Result: an old guy sued ANSES in Argentine Supreme
Court and won his case that he must be paid in indexed currency. But the government is doing that slick bureaucratic
trick, delaying payment. It takes about 5 years of paperwork to get an indexed
pension adjustment. Maybe the old duffer
will die in that time, eh? This is similar to the Obama IRS who delays payments
of tax refunds. With all our modern
wizardry of online filing, with all the Golden Hordes of newly hired tax
agents, the IRS has gone from 4 weeks for a refund to 3 months. So if inflation
ever comes--gasoline prices rise, food prices rise, medical costs rise, etc.—the
purchasing power of social security will sink like a stone and ditto the value
of your savings. What? You say those
things are actually happening?
Never fear, Obama wants to raise
minimum wage, which will really help all those poor people get jobs, I am sure. And he demanded that Congress pass
cap-and-trade in his State of the Onion address. Think higher fuel prices, higher utilities,
higher transportation charges on everything sold. What a friend of the poor we
have!
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