No bank + no photo ID = 2nd class U.S. citizen

It may be news to you that at least 17 million U.S. adults have no bank account, and 43 million adults are considered "underbanked."  Taken together, that's about 26 percent of all U.S. households!  These are disproportionately located in the South, of course.

(Similarly, it is probably news to most people that at 25 percent of all blacks and 18 percent of all senior citizens have no picture ID -- because they have never needed one.  And to get an ID, you need an ID, a nice Catch-22.  But since 2008, 15 Republican states have started requiring photo ID to vote, thereby creating a need; meanwhile, there has not been any corresponding government outreach to help poor folks get state photo IDs.  It's all about suppressing Democratic votes.  But I digress.)

As for the un- and under-banked, financial institutions -- including banks bailed out by U.S. taxpayers -- are more than happy to smack them with usurious interest rates, outrageous fees and hidden penalties.  If it were up to me -- and up to them, if Congress would let them do it -- the U.S. Postal Service would be the low-cost bank for all comers.  Japan Post bank, for example, holds 25 percent of that country's household assets!

So by all means, let me join in piling on Magic Johnson (figuratively, definitely not literally) for his apparent blacksploitation.  Indeed, according to the FDIC, 54 percent of black households are either unbanked or underbanked.  But to be fair, Magic isn't alone: recently U.S. banks "have turned to an array of celebrities, including reality TV star family the Kardashians, rap mogul Russell Simmons and personal finance guru Suze Orman" to hawk these awful financial products, which are disproportionately purchased by minority groups.

So Magic, my man, please have more integrity than the Kardashians (who evidently enjoy screwing black people) and stick to more wholesome products for the black community... like Coors beer.  And tell your people to open a damn checking account and stay away from the payday lenders, rent-to-own stores, and money order windows!  Knowledge is power; ignorance is slavery.

Shame on you, Magic Johnson

By Dion Rabouin

July 11, 2012 | Huffington Post

URL:  http://www.huffingtonpost.com/dion-rabouin/magic-johnson-prepaid-debit-card_b_1663671.html

Big banks' payday loans dressed up as 'checking advance products'

And before you blame poor minorities for this phenomenon, chew on this statistic: "Social Security recipients, whose financial situations can be especially precarious, make up nearly a quarter of payday-loan borrowers."

We know that fewer than one-third of U.S. households have more than $100,000 in retirement savings. No wonder retirees need emergency loans! Meanwhile, Republicans want to cut Social Security and Medicare.

Banks Increasingly Use Payday Loans Despite Crackdown On Predatory Lending: Study

By Alexander Eichler

July 22, 2011 | Huffington Post

Two years after the recession officially ended and one year after the creation of a landmark financial law meant to prevent another financial crisis, predatory lending practices remain a part of mainstream American banking, a new report from the Center for Responsible Lending shows.

On Thursday, the CRL, a nonprofit research organization, published a report saying that some mainstream banks are offering payday loans -- short-term, high-interest loans that can take customers months to pay off.

Payday loans have long been offered by non-banking establishments, such as shops that cash checks and money orders. But in recent years, well-known banks have started offering them too.

Here's how a payday loan works: You, the customer, borrow money from the bank. The bank lends it to you at a high APR, or annual interest rate.

When your next paycheck comes, the bank repays itself out of your direct deposit -- taking the loan, plus whatever interest the bank charges. It doesn't matter if you don't have enough money in your account; the bank goes ahead and repays itself anyway, even if this triggers overdraft fees. Often customers end up having to take out another loan to get by until the next paycheck -- and so the cycle continues.

The CRL report isn't the first indication that mainstream banks have adopted this practice, which is sometimes called a "direct deposit advance" or a "checking account advance."

In 2010, Bloomberg reported that banks including Wells Fargo, U.S. Bancorp and Fifth Third Bancorp were offering services called "checking advance products" -- which functioned very similarly to payday loans -- as a way to recoup billions in lost revenue after new overdraft-fee regulations were passed.

Wells Fargo, Fifth Third and U.S. Bancorp were also among the banks named in a 2009 piece for the Twin Cities Star Tribune. That article, by Chris Serres, noted that in 2003, John Hawke, then head of the Office of the Comptroller of the Currency, spoke strongly against payday loans and warned such lenders to "stay the hell away from national banks."

According to the Center for Responsible Lending report, the average 10-day payday loan from a bank carries a 365 percent APR. The one-month payday loan has an interest rate of 120 percent -- significantly higher than the average interest rate on a credit card, which is only 13.1 percent, the report notes.

Social Security recipients, whose financial situations can be especially precarious, make up nearly a quarter of payday-loan borrowers, according to the report.

In addition to offering payday-style loans directly, banks have also been accused of financing non-banking establishments, like the check-cashing shops, that make payday loans available. In 2010, a report from National People's Action and the Public Accountability Initiative linked payday loan companies like Advance America, First Cash and EZCORP to financiers including JP Morgan, Wells Fargo and Bank of America.

According to the Center for Public Integrity, payday lending is one of the practices that consumer groups would most like the Consumer Financial Protection Bureau, which launched on Thursday, to address.

What 18th century American economy was really like

Git yerself edumacated about the glorious golden age of America's founding:

Tea Party history insists ordinary, hard-working Americans of the founding era wanted nothing more than to reduce government and keep it out of economic markets. But what those Americans really wanted can be gleaned from their terminology. The rich called them rioters. The people called themselves regulators.

Tea Partiers Have a Very Mixed-Up Notion of What the American Revolution Was About

By William Hogeland

March 1, 2011 | AlterNet

[...]

The only real money in 18th-century America was metal — silver and gold coin from England, Spain, and Mexico — and for long, terrible periods, money was rarely seen by ordinary people. Small farmers and artisans, wanting to survive and improve their lot, had to borrow. Merchants, gaining access to metal through imperial trading networks, used their money to make money, becoming lenders. Well before the Revolution, Americans defined themselves in practical terms either as "debtors" — poor and working people in small-scale enterprise — or "creditors" — well-heeled merchants growing their money by lending it.

Workings of the debtor-creditor relationship will sound unpleasantly familiar. Merchants had the money supply conveniently sewn up. Small farmers and artisans had to post the land and shops they hoped to develop as collateral for the credit they needed. Merchants might set interest rates as high as twelve percent — per month. Default, often predictable at the loan's outset, subjected borrowers to foreclosures, which in bad times were epidemic. Families became indigent while their land, tools, and homes were snapped up at bargain prices, often by the merchants themselves, who speculated in land as well, and were building immense parcels. The rich got richer.

Is it any wonder that ordinary people viewed this disastrous economic predicament not as some incidental fallout from vigorous free-market competition, but as an egregious, systemic injustice with political, moral, even spiritual implications? They were being held back, exploited, and even ruined by a monopoly on money and credit. And unlike today's populist right, founding-era Americans did not imagine that government's simply leaving markets alone would create new and exciting opportunities for them. They believed their governments should make laws to restrain the overwhelming power of the creditors' metal and protect those who labored and produced goods from those who planned dynasties of descendants living in luxurious idleness.

And remember: unless people had property in excess of certain amounts, they couldn't vote. Whig elites — the ones who became patriot leaders, lionized today — axiomatically equated the right of representation with property. It took even more property to run for office. Legislatures erected counties to ensure that representation favored the rich and the cities. They placed cash fees on every imaginable transaction, paralyzing working people's efforts to pursue legal recourse and enriching lawmakers' friends and families appointed as collectors and administrators. Roads and other infrastructure built at public expense (and by coerced labor taxes) served the merchant interest, not the people's. Hardly an embryonic American democracy, representative colonial governments were monopolized by forces that small-scale debtors and tenant farmers could only view as a creditor conspiracy to exploit their labor, prevent their participation, and take what stuff they had.

So they organized in vociferous protest. "Mob" is a loaded term; "crowd" is perhaps more fair, and early American crowd action should be understood as a tactic, in the absence of access to the franchise, for pressuring and even changing government. One of the most famous outbreaks occurred in the 1760's in North Carolina, when ordinary people briefly had a few champions in the legislature. They forcibly closed courts, tore down corrupt officials' homes, and finally went to war against the provincial government. Royal Governor William Tryon put that rebellion down — but the King's appointee was more sympathetic to the people's plight than upscale American legislators and merchants were.

Crowds could be flamboyantly scary and even violent, but they did not run amok, merely venting. In carefully organized disruptions, people moved en masse into courthouses where debt cases were heard, shutting down a judicial process they considered unjust. They felled huge trees across roads to prevent sheriffs from repossessing homes. They enforced no-buy covenants when foreclosed property went up for auction. They staged daring rescues of prisoners held on debt charges. Serving on juries in debt cases, they refused to convict. Well before the famous Stamp Act riots and other acts of resistance to new British trade laws, American life involved orchestrated crowd actions to prevent financial injustice and push government to act on behalf of ordinary people. After the Revolution, the event known as Shays' Rebellion became only the most famous of the debtor uprisings that continued the people's struggle in a new political context.

While emulating Shaysite and other debtor crowd actions today would pose an interesting counter-demonstration to Tea Party efforts, the question this history really raises has to do with what Americans want from their government. Do we really want to roll back "nanny state" protections like RESPA, for example, under which an ordinary citizen like Patrick Rodgers was able to interrogate his bank? RESPA is but one detail in a program — and a power — that our ancestors painfully lacked.

Tea Party history insists ordinary, hard-working Americans of the founding era wanted nothing more than to reduce government and keep it out of economic markets. But what those Americans really wanted can be gleaned from their terminology. The rich called them rioters. The people called themselves regulators.

Bailed-out banks lend back to Little Guy at 455% interest

First they destroyed the economy. Then Dubya bailed them out. Then they got to borrow money at zero percent interest from the gov't to pay back their gov't loans. Then they finally started lending to the Little Guy whom they had crushed, economically -- but only through payday lenders at an average interest rate of 455 percent.

And you teabaggers are mad about mosques. Suckers.

Bailed-Out Banks Finance 'Legalized Loan Shark' Payday Lenders, Says New Report

By William Alden

September 14, 2010 | Huffington Post

Big banks that received TARP bailout money are funding payday lenders -- companies Senator Dick Durbin (D - Ill.) termed "bottom feeders" -- and which charge high interest rates and fees for short-term loans, according to a report released Tuesday.

The banks, which include Wells Fargo, Bank of America and JP Morgan, currently provide roughly $1.5 billion in credit lines to publicly-held payday loan companies and between $2.5 to $3 billion to the larger payday loan industry, says the report, which was issued jointly by community group network National People's Action and non-partisan watchdog Public Accountability Initiative.

The payday lenders, including Advance America, Cash America and ACE Cash Express, which allow customers to borrow against future paychecks, and which, according to the report, charge an average interest rate of 455 percent on top of fees of $15-18 per $100 loaned, often depend on the big banks' financing for their business.

"The very same banks that helped tank the economy and then needed hundreds of billions of dollars in taxpayer-funded bailouts are now aiding the bottom-feeders of the financial industry, as they seek--the payday lenders--to strip even more wealth away from everyday Americans," NPA executive director George Goehl, who also called payday lending "legalized loan sharking," said in a telephone press conference. "If Al Capone was alive today you might even get a better loan from him." (Goehl is also a HuffPost blogger)

The report, called "The Predators' Creditors," which features a picture of three sharks on the cover, says that some banks abstain from business with payday lenders because of what Advance America itself calls "reputational risks." The report also notes, though, that some of these payday lenders have ties to Wall Street. For example, the board of Advance America includes former executives from Bank of America, Morgan Stanley and Credit Suisse.

PAI co-director Kevin Connor, who co-authored the report, said in the press conference that big banks are attracted to the payday loan industry because "Americans were losing their jobs and homes in record numbers but they still had their family treasure to borrow against"

Connor also noted that the big banks themselves pay close to zero interest when they borrow from the Fed, a stark contrast to the high interest rates paid by consumers.

NPA and PAI are calling for an end to these credit lines from banks. Goehl said a protest campaign will launch today in Ohio and continue in Iowa, Kansas, Missouri and Illinois through next week, culminating in a meeting of the organizers in Chicago. "This report is really the beginning, not the end," he said.

Screw the banks: Use cash

I'm sure there is a downside to this which I haven't considered, but it's a viscerally compelling argument. I like it. BTW, I lived in a country where 10-15% retail discounts for payment in cash were common and it certainly made me think twice about using plastic. (I was told that global credit card banks were lobbying the government to outlaw the practice, no big surprise if true.) Of course, the author assumes consumers have the financial wherewithal to pay in cash, and especially in this recession, many do not.


A Simple Plan to Screw Big Banking. Use Cash.
By Chaz Valenza
November 28, 2009 | Chaz Valenta

Here's a simple plan that will bring Big Banking to its feet: Use Cash.

For decades Big Greed has been selling us the idea that markets are just perfecto! Don't regulate them. Don't even bother chasing down fraud. "The Market" (Angelic Voices: Ahhhhh!) is so beautifully simple even scams cannot long survive.

Let's take the "Wisdom of The Market" stick it up Big Banking's rectum, twist, turn and otherwise shove vigorously and often.

Face it, the cavalry is not coming to the rescue if your name is not Goldman Sachs.

Government of the people, by the people, and for the people is temporarily out-of-order, like a soda machine that is taking dollar bills from customer after customer but relinquishes not one quenching 12 oz. can.

No legislation or regulations are in the offing to cap the rising tide of usury interest rates, curb punishing banking fees on debit cards or curtail demonic payday loans.

Here's the bill of fare:

Credit Card Interest: 30%
Merchant Credit Card Fees: 3.5 - 5%
Merchant Credit Card Receivables Loan: 36 – 97%
Payday Loans: 100 – 500%
Debit Card Overdraft Fees,
Over limit Fees, Late Payment Fees, etc:
Interest Equivalent to 12% - 300% and otherwise unlimited

Throw stones – millions of them. Every plastic transaction denied is a slice in the skin of Big Banking.

As a buyer: Use Cash. It's going to save you money verses paying with credit card or making a mistake with a debit card.

As a merchant: Discount 5% for Cash. It's going to save you money in reduced merchant charges and days waiting for credit card receivables. It's also an advantage against the Big Box stores and Big Food restaurants.

Think about it. Who would you rather have that 3.5% you give to Big Plastic on every credit or debit card transaction: Your customer or Big Banking? Isn't that worth the extra 1.5% in the discount?

But it gets better. It's guerilla warfare. It's a simple insurgency. Avoid the banking system to bring it to its knees. Use Cash.

How low-tech is this? How unstoppable? How inconvenient? Yes. But worth it!

Put it on bumper stickers. Make it your email signature. Pass the word in whispers to everyone who works for a living. Write it in magic marker on T-shirts. Design a flag and boldly embroider. Print up window signs. Post it on every blog you visit. Tweet it from the highest mountain. Two simple words: Use Cash.

Will they fight back? Of course they will. They will end Absolutely Free* Checking that is costing us all billions. They may lower their rates and switch up the penalty fee structure. They might even lobby for the end of printed dollars. That's how we'll know it's working!

Here's the future and the future is now. Personal loans? Small business lines of credit? Only to those who don't need them or at a killer rates of interest.

Use Cash.

Every cash transaction snatches a dime, a dollar, thirty-five dollars, a hundred dollars or more out of the greedy, blood soaked hands of Big Banking. Each transaction denied is a cut. Together it's death by a billion cuts daily.

5% Discount for Cash.

You'll be shooting at Big Plastic's feet. Smile as you watch 'em dance. They have us hooked on plastic. They claim it's faster, quicker, better. People spend more. Yes, they do. Until the abusive fees take your customers' last penny of discretionary cash and they're broke.

Debit or Credit, plastic is really just one thing: a cash substitute provided by a commission taking broker who charges you a fee at every cash register. They intend to milk it for all it's worth. Cut up your cards, today, right now.

And here's the beauty part: We don't need no stinking badges to fight back. Just: Use Cash. Wow! I'm starting to agree: The Market Rules!

Don't worry about freeing up credit or ending the banking abuse, etc. This is action you can take right now, and again and again, day after day after day.

Sure, there are bigger fish to fry: End the Fed, local currency, non-profit banking, total monetary reform, but this is something we can do right now.

It's easy, fast, effective: Don't give Big Banking any small change.

Yes we can nickel and dime the banks to death! Spread the word: Use Cash.

Chaz Valenza is writer and small business owner in New Jersey. He earned his MBA from New York University's Stern School of Business.