A View of the World to Come

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A View of the World to Come

Postby Sam I Am » Tue Jun 17, 2014 1:30 pm

It used to be that the local banks would know who you are and know if you were generally trustworthy or not. But since 2008 there has been a progressive planned closure of multiple banks throughout the USA, consolidating the assets of the smaller banks into a more limited number of larger banks coffers. This subjects the customer to the judgment of the ‘big banks’ to make decision as to who to do business with.

The article below shows how the big banks are using big databases to make some pretty fundamental decisions that materially affect an individual’s ability to potentially better their standard of living.

This bodes poorly for the future, in my most humble opinion.

Year Bank Closings
2000 2
2001 4
2002 11
2003 3
2004 4
2005 0
2006 0
2007 3
2008 25
2009 140
2010 159
2011 92
2012 52
2013 24
2014 11
REFERENCE: http://www.fdic.gov/bank/individual/fai ... klist.html

http://dealbook.nytimes.com/2014/06/15/ ... blogs&_r=0

Bank Account Screening Tool Is Scrutinized as Excessive
June 15, 2014
Pleas see article listed in link above for the referenced story.

In her early college years, when Charlette Williams started routinely mismanaging her finances and pushing her checking account balance into the red, she never thought the mistakes would haunt her five years later, she said. Now, she is paying a steep price.
Ms. Williams, a 25-year-old resident of Queens, is one of more than a million Americans who have been effectively blacklisted from the mainstream financial system because they overdrew their accounts or bounced a check — mistakes that routinely bedevil young and low-income consumers, financial counselors say. While Ms. Williams paid back Bank of America the roughly $700 that she owed, a record of her youthful transgressions remains in a vast private database, preventing her from opening a new account.
Such databases, used by Bank of America, JPMorgan Chase and other big banks, were intended to weed out serial fraudsters. Now, regulators say, banks are screening out potential customers and swelling the ranks of the so-called unbanked — the roughly 10 million households in the United States that lack even a basic bank account.

The consequences of mistakes — negative marks typically stay in the databases for at least five years — are far too extreme, financial counselors and regulators say.
“People who have overdrawn their accounts by $300 or $400 are forced to live without a bank account for five years,” said Eva Margolis, the director of Eastside Financial Center, a nonprofit in St. Paul.
Without access to a checking account, many have no choice but to rely on costly alternatives for even the most basic transactions, like paying bills, withdrawing money and wiring funds. At first blush, the fees can seem relatively small: $15 to cash a check, for example, or $1 to place a money order. For people already living on shaky financial footing, however, the costs can quickly add up, eroding a chunk of their paychecks before they even have access to their cash.
Lillian Lewis, 28, who was denied a bank account in February because of a black mark in ChexSystems, said that nearly 10 percent of her $450 weekly paycheck was eaten up by fees. “It’s just so discouraging,” Ms. Lewis, who lives in the Bronx, said.
Residents of two neighborhoods in the Bronx paid more than $19 million each year on check cashing fees alone, according to a 2008 study by New York’s consumer affairs department.
Such fees can make saving money, which is critical to building wealth and long-term financial stability, almost impossible, financial counselors say.
“Even if it’s $20 in fees, that is $20 that isn’t being put aside, and it means that a whole swath of people are at a true disadvantage,” said Joseph Frewer, a financial counselor at Neighborhood Trust Financial Partners, a nonprofit in New York.
Some people, like Ms. Lewis, say that they have gotten creative, using a bunch of prepaid cards to effectively simulate a savings and checking account that enables money to be separated from a pot of cash for paying basic bills. But the prepaid cards have their own fees, including fees for monthly maintenance. Losing the cards, loaded with cash, can be devastating, too.
The repercussions of not having bank accounts go beyond costs. For low-income Americans who may already be living in crime-ridden neighborhoods, carrying around money from a check casher can be dangerous. When the Pew Charitable Trusts conducted a two-year study of 1,000 families in Los Angeles that lacked bank accounts, researchers found that one in five lost money — on average $729, or the equivalent of two weeks of household expenses.
It is not just the working poor who end up on the blacklist. An increasing number of young people, shouldering student debt and facing uncertain job prospects, are being shut out of the banking system at the most inopportune time — just as they are trying to become financially independent.
Lauren Pollick, 28, who has a master’s degree in criminal justice, said her inability to obtain a bank account because of her inclusion on ChexSystems set her back just as she was seeking financial independence. For about a year, she paid her gym membership and her cellphone bill on prepaid cards — or “devil cards,” as she calls them, because of the high fees.
At the time, Ms. Pollick, who now has a banking account, tried to hide that she was unbanked from her colleagues at the Doe Fund, a group in New York that helps former prisoners and homeless people.
“How are you supposed to get stability in your life with these barriers?” she asked.


Sam I Am
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Re: A View of the World to Come

Postby aardvark_admin » Tue Jun 17, 2014 1:42 pm

Fortunately here in NZ, I don't think it's possible to go "unbanked".

The government will only pay benefits directly into a bank account so there must be some kind of agreement/regulation in place that requires banks to provide accounts to anyone who wants them -- albeit the potential for fraud is almost zero, now that we've ditched cheques and most banks do not allow for overdrafts on accounts without prior arrangements having been made.
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Re: A View of the World to Come

Postby Sam I Am » Tue Jun 17, 2014 2:09 pm

Now here is a story of a good banker!

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