Opinion
Blacks, Latinos: the Under-Banked
“Challenging People to Shape
a Better Future Now”
B ERNIE F OSTER
Founder/Publisher
B OBBIE D ORE F OSTER
Executive Editor
T ED B ANKS
Advertising Manager
J ERRY F OSTER
Account Executive
L ISA L OVING
News Editor
H ELEN S ILVIS
Multimedia Editor
B RUCE P OINSETTE
Reporter
D AVID K IDD
Graphic Designer
M ONICA J. F OSTER
Seattle Office Coordinator
J ULIE K EEFE
S USAN F RIED
Photographers
a
e,
at
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M
ore than 37 million
American households
were either unbanked or
under-banked in 2011, according
to a new report by the Federal
Deposit Insurance Corporation
(FDIC). African-American house-
holds represent 34 percent of all
under-banked consumers, the
highest percentage among demo-
graphics surveyed.
When under-banked African-
American and Latino households
are combined, these two commu-
nities of color comprise more than
60 percent of the nation’s under-
banked households.
Unbanked Hispanics households
use alternative financial services
(AFS) more actively than any
other racial or ethnic group.
FDIC defines a household as
“unbanked” if no one in the fami-
ly has a checking or savings
account. “Under-banked” house-
holds are those that have a
checking or savings account but
rely on AFS to transact personal
business.
Another new FDIC finding is
that the use of prepaid debit cards
is growing, particularly among
those who have never banked and
the previously banked. From 2009
to 2011, use of prepaid debit cards
by consumers who have never
R ESPONSIBLE
L ENDING
Charlene
Crowell
held bank accounts nearly doubled
from six to 11 percent. Previously
banked consumers’ usage grew
from 19 to 27 percent.
Beyond racial disparities,
either did not make small-dollar
loans or the consumers did not
qualify.
More than half of 2011’s under-
banked consumers felt purchasing
non-bank money orders or using a
non-bank check-cashing service
was more convenient than bank
services. Unbanked consumers
agreed by more than 29 percent.
On a state-by-state basis, FDIC’s
analysis found the highest inci-
dence of unbanked consumers in
the South: Alabama, Arkansas,
Louisiana, Mississippi, Oklahoma
Payday loans’ debt cycle generates
$3.5 billion in fees alone each year
unbanked and under-banked con-
sumers find that AFSs are more
convenient, easier to access, and
present lower barriers to qualifica-
tion than traditional banking. Ease
of access was most often men-
tioned by consumers as the
deciding factor in their choices.
The second most frequent reason
unbanked and under-banked con-
sumers chose AFS was that banks
and Texas. Of those states, the
highest percentage of unbanked
consumers live in Mississippi
(more than 15 percent.)
FDIC’s metro area data revealed
that Texas’ most populous city,
Houston, had the highest percent-
age of under-banked consumers
(more than 28 percent). Other
metro areas with 20 percent or
higher numbers of under-banked
consumers were: Austin, Texas;
Baltimore, Md; Kansas City, Mo.;
Little Rock, Arkansas; New
Orleans, and Rochester, N.Y.
Uriah King, vice-president for
state policy at the Center for
Responsible Lending (CRL), said,
“Payday loans are no easy fix.
Borrowers have to take out loan
after loan just to stay afloat.”
Earlier CRL research found that
payday loans lead to long-term
debt. The payday industry’s $27
billion annual loan volume is
largely derived by “loan churn-
ing,” the practice of taking out a
new loan in order to pay an earlier
one. Payday loans’ debt cycle gen-
erates $3.5 billion in fees alone
each year, and the typical borrow-
er is in debt most of the year – 212
days.
Other CRL research on overdraft
fees found that most debit card
transactions were triggered by an
average expenditure of $20, but
the typical fee charged for each
overdraft is $34 per transaction.
As a result, each year overdraft
fees cost consumers $23.7 billion.
“Usurious payday loans and
overdraft fees are clearly predato-
ry products,” King said. “No
wonder so many consumers sim-
ply opt out completely.”
Games Played in Fiscal Cliff Showdown
I
t should be embarrassing
enough that President Obama
and House Republicans post-
poned making tough fiscal
decisions by kicking the can down
the road to New Year’s Day –
when certain automatic budget
cuts will go into effect unless they
act to avoid what is called a fiscal
cliff. Instead of moving quickly to
solve their self-created problems,
both sides continue to misrepre-
sent basic facts.
For example, House Speaker
John Boehner [D-Ohio] has criti-
cized the Obama administration
for refusing to give list of specific
cuts. He said the administration
“put $400 billion worth of unspec-
ified cuts that they’d be willing to
talk about.”
FactCheck.org stated flatly
http://factcheck.org/2012/12/duel-
ing-fiscal-cliff-deceptions/
:
“Boehner is wrong.” It explained,
“The president’s deficit-reduction
plan, as proposed to Congress in
September 2011, itemizes ‘nearly
$580 billion in cuts and reforms to
mandatory programs, of which
$320 billion is savings from Fed-
eral health programs such as
Medicare and Medicaid.’ Those
proposals are also listed in the
president’s fiscal 2013 budget pro-
posal in a section, beginning on
page 23, titled ‘Cutting Waste,
Reducing the Deficit.’
“The Medicare proposals, for
example, are a mix of reduced
payments to certain providers,
including teaching hospitals and
post-acute care facilities – as well
as the higher premiums and new
fees for certain beneficiaries…”
FactCheck.org, an organization
that holds public officials account-
able, also noted that Republican
are running a numbers game.
“In a Dec. 3 letter to the presi-
Page 4 The Portland Skanner December 12, 2012
T HE C URRY
R EPORT
George E.
Curry
dent outlining the GOP counter-
proposal for deficit reduction,
Boehner and other GOP leaders
said there is ‘four times as much
tax revenue as spending cuts’ in
the president’s proposal,” the
organization recalled. “The GOP
Republicans’ spending cuts-to-tax
hike ratios is that Republicans do
not count the $1 trillion in discre-
tionary spending cuts agreed to in
the Budget Control Act of 2011,”
FactCheck.org states. “The White
House argues those are part of the
ongoing negotiations to resolve a
deficit crisis. Nor does the GOP
include the $800 billion ‘saved’
from ending the wars in Iraq and
Afghanistan.”
President Obama and Secretary
of Treasury Timonty Geithner
overstate exaggerate the amount
of spending cuts in the president’s
plan, according to FactCheck.org.
“On NBC’s ‘Meet the Press,’
Amid the word and numbers games,
the public is clear about what should
be done, even if Washington isn’t
math works like this: Obama’s
proposal includes $1.6 trillion in
new tax revenue and roughly $400
billion in spending cuts. In an
email to us, Boehner spokesman
Brendan Buck said that ‘when
Sec. Geithner made his proposal to
us, the number he used – repeated-
ly – was $400 billion.’ However,
as we mentioned earlier, on sever-
al Sunday talk shows, Geithner
said the total savings comes to
$600 billion over 10 years.”
Both Republicans and Democ-
rats are playing being selective in
their choice of words.
“In part, the discrepancy is a
matter of language. Republicans
are saying ‘spending cuts’ while
Democrats are saying ‘savings,’
‘reforms’ and ‘spending cuts.’ But
the more substantial difference
between the Democrats’ and
Geithner said, ‘We have laid out a
very detailed plan of spending
cuts, $600 billion dollars in spend-
ing in mandatory programs over
10 years.’ The president made the
same claim in a Dec. 4 interview
with Bloomberg News, saying his
proposal has ‘$600 billion in addi-
tional
cuts
in
mandatory
spending.’
“It’s true that there’s nearly $600
billion in estimated savings from
mandatory programs: $326 billion
in health programs, including
Medicare and Medicaid, and $254
billion in other programs, such as
farm subsidies. But not all of these
are ‘spending cuts,’ and the
administration’s own deficit-
reduction plan doesn’t label them
as such – instead calling them a
combination of ‘cuts and reforms.’
“There are tens of billions in
new fees and surcharges and
increased premiums in Medicare
alone. Table S-10 of the revised
fiscal 2013 budget proposal out-
lines numerous other new and
higher fees under the section titled
‘Mandatory Initiatives and Sav-
ings.’”
Amid the word and numbers
games, the public is clear about
what should be done, even if
Washington isn’t.
A Gallup poll in November
found, “Forty-five percent of
Americans now say they favor
reducing the federal budget deficit
with an equal balance of tax
increases and spending cuts, up
from 32% last year. At the same
time, the percentage favoring an
emphasis on spending cuts is now
40%, down from 50% last year,
while the percentage in favor of
reducing the deficit primarily
through
tax
increases
is
unchanged at 11%.”
A
Washington
Post-Pew
Research Center poll conducted
Nov. 29-Dec. 2 found that a major-
ity of Americans –53 percent –
would blame Republicans in Con-
gress if Washington fails to reach a
deal in deficit talks to avoid the
fiscal cliff.
The survey found that only 27
percent would fault President
Obama would if negotiations
between the executive and legisla-
tive branches of government fail,
12 percent would split the blame
equally between the two sides and
2 percent have no opinion.
Like Ronald Regan, this could
be Obama’s “make my day”
moment.
George E. Curry, former edi-
tor-in-chief of Emerge magazine,
is editor-in-chief of the National
Newspaper Publishers Associa-
tion News Service (NNPA.)