The Real Reason The Poor Go Without Bank Accounts • Hacker News Board

Re: The Real Reason The Poor Go Without Bank Accounts

#91

Post by anaccountonhn » Sat, Sep 21, 2013, 7:16 PM UTC

bunderbunder wrote: post #88

morgante wrote: post #78

The meat of this article, hidden underneath all the fluff, is simply that fees are higher and poor people end up paying more of them. Honestly though, they probably deserve that. I've never in my life been charged an overdraft fee because it doesn't take much to just track the payments you make and never go over. Of course, an inability to plan is probably why they're poor in the first place...

It's amazing how much more biting a simple arithmetic mistake can be when you don't have the luxury of being able to accumulate any significant amount of padding money into your banking account. Almost as amazing as how blind we the privileged can be to the myriad advantages we enjoy.

Ignore trolls please.

Re: The Real Reason The Poor Go Without Bank Accounts

#92

Post by jellicle » Sat, Sep 21, 2013, 7:19 PM UTC

notahacker wrote: post #28

cryptoz wrote: post #13

Earlier quoted context omitted.

I disagree very strongly with that. Here are a few rational reasons that someone may choose to not have their money in a bank: - Moral conflicts. Most banks use your money for purposes that many people consider evil, so choosing to not give them your money is a rational choice. - Lack of trust. Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonabl…

Mistrust of banks' ability to honour withdrawal requests is largely irrational in a developed country given the existence of government-backed deposit insurance (and the much greater risk of having your cash stolen). I'd actually consider this to be the classic example of irrational mistrust based on a limited understanding of who actually loses out as a result of bank failures, and overconfidence in one's ability to…

> Mistrust of banks' ability to honour withdrawal requests is largely irrational in a developed country given the existence of government-backed deposit insurance (and the much greater risk of having your cash stolen). I'd actually consider this to be the classic example of irrational mistrust based on a limited understanding of who actually loses out as a result of bank failures

Pretty much every developed country has spoken in the last few years of forcing depositors to take losses in the event of bank failures, and some have actually done it. Governmental deposit insurance SHOULD be inviolate, but that isn't the way the regulators are talking and acting.

Meanwhile, how many HNers are currently praying that Mt. Gox will stay liquid long enough to give them back their money?

Re: The Real Reason The Poor Go Without Bank Accounts

#93

Post by anaccountonhn » Sat, Sep 21, 2013, 7:21 PM UTC

morgante wrote: post #78

The meat of this article, hidden underneath all the fluff, is simply that fees are higher and poor people end up paying more of them. Honestly though, they probably deserve that. I've never in my life been charged an overdraft fee because it doesn't take much to just track the payments you make and never go over. Of course, an inability to plan is probably why they're poor in the first place...

Please don't troll.

Re: The Real Reason The Poor Go Without Bank Accounts

#94

Post by shawn-furyan » Sat, Sep 21, 2013, 7:25 PM UTC

Plasmoid wrote: post #74

_delirium wrote: post #24

Earlier quoted context omitted.

> Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. Within the last century, yes, but quite far back within it: the last time anyone with modest amounts of money in the U.S. lost deposits in a bank failure was 1933, the year the FDIC was created. You can still l…

The bigger risk if your poor is not having access to your money while the FDIC sorts out the problems. Now, I don't know how long it would take to restore access to your money in a bank closure but, for a lot of these people, having your funds frozen for a week or two would be crippling.

There was a This American Life episode during the financial crisis when interest in bank failures was high. They followed an federal takeover of a bank, and from what I recall, it was an extremely swift and surgical procedure. The don't inform the bank ahead of time when they're going to take it over, because the last thing they want is a bank run. For that reason they also try to disrupt banking hours as little as possible if at all.

[edit: here's the episode, very interesting listen: http://www.thisamericanlife.org/radio-archives/episode/377/S...]

Re: The Real Reason The Poor Go Without Bank Accounts

#95

Post by foobarbazqux » Sat, Sep 21, 2013, 7:33 PM UTC

sliverstorm wrote: post #89

Glyptodon wrote: post #76

Earlier quoted context omitted.

Even if you aren't poor, moving frequently or living on the road can cause you all kinds of problems with traditional institutions. So many things in our society rest on an unquestioned assumption that people 'live' in one place and don't move more than once a year and maintain a steady mailing address.

Oh, I wouldn't say that's an assumption so much as a premise upon which services etc are offered, because the people who move every week are both a pain to support and not a significant portion of the population. In other words, all of this is not brought about by myopia, but simple business decisions.

In a balanced society, the needs of businesses do not outweigh the needs of citizens.

Re: The Real Reason The Poor Go Without Bank Accounts

#96

Post by arjie » Sat, Sep 21, 2013, 7:40 PM UTC

bradleysmith wrote: post #17

notahacker wrote: post #10

Earlier quoted context omitted.

Not having any paper trail to attract the attention of people and organizations you owe money to is arguably the only rational reason for being unbanked in an urban area of a developed country.

no slack in your income, and $35 overdraft fees are unarguably rational motivators to avoid big-box banking.

Even that great Satan, Bank of America, allows you to disable overdraft 'protection'. It's what I do.

Re: The Real Reason The Poor Go Without Bank Accounts

#97

Post by [deleted] » Sat, Sep 21, 2013, 7:40 PM UTC

nowarninglabel wrote: post #87

patio11 wrote: post #40

Some reasons which are cited in the literature, of which there exists lots ( http://www.kansascityfed.org/publicat/research/community/Unb... is a good entry point): 1) Many poor people mistrust banks, for reasons ranging from cultural ("Where I come from, they're far more likely to vanish with your cash than the mattress") to personal experience ("I was just going about my business one day but then I ran the account…

Very good points. #4 is a lot of why Kiva exists and works here in the U.S. as well as the rest of the world. By being charitable we can offer these higher risk loans, and in the end we end up still having a very high repayment rate.

[deleted]

Re: The Real Reason The Poor Go Without Bank Accounts

#98

Post by a3n » Sat, Sep 21, 2013, 7:42 PM UTC

_delirium wrote: post #24

cryptoz wrote: post #13

Earlier quoted context omitted.

I disagree very strongly with that. Here are a few rational reasons that someone may choose to not have their money in a bank: - Moral conflicts. Most banks use your money for purposes that many people consider evil, so choosing to not give them your money is a rational choice. - Lack of trust. Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonabl…

> Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. Within the last century, yes, but quite far back within it: the last time anyone with modest amounts of money in the U.S. lost deposits in a bank failure was 1933, the year the FDIC was created. You can still l…

If a bank failed, how long would it take to be reimbursed by the FDIC? Probably much longer than a poor person could weather.

Also, if you chose to forgo paper statements to "save the environment" (and reduce the bank's costs), and you were lax in downloading your statements, it would probably take even longer to be reimbursed.

Re: The Real Reason The Poor Go Without Bank Accounts

#99

Post by a3n » Sat, Sep 21, 2013, 7:43 PM UTC

foobarbazqux wrote: post #95

sliverstorm wrote: post #89

Earlier quoted context omitted.

Oh, I wouldn't say that's an assumption so much as a premise upon which services etc are offered, because the people who move every week are both a pain to support and not a significant portion of the population. In other words, all of this is not brought about by myopia, but simple business decisions.

In a balanced society, the needs of businesses do not outweigh the needs of citizens.

I agree! Where is that?

Re: The Real Reason The Poor Go Without Bank Accounts

#100

Post by ben1040 » Sat, Sep 21, 2013, 7:47 PM UTC

shawn-furyan wrote: post #94

Plasmoid wrote: post #74

Earlier quoted context omitted.

The bigger risk if your poor is not having access to your money while the FDIC sorts out the problems. Now, I don't know how long it would take to restore access to your money in a bank closure but, for a lot of these people, having your funds frozen for a week or two would be crippling.

There was a This American Life episode during the financial crisis when interest in bank failures was high. They followed an federal takeover of a bank, and from what I recall, it was an extremely swift and surgical procedure. The don't inform the bank ahead of time when they're going to take it over, because the last thing they want is a bank run. For that reason they also try to disrupt banking hours as little as p…

There are also instances though where the FDIC can't find another bank willing to acquire the failed institution, so it can't just close on a Friday and then reopen on Monday as a branch of a new bank.

One of those happened just last week:

http://www.fdic.gov/bank/individual/failed/commbank-ct.html

So it seems like in an instance like this, while you get a check for your insured deposits from the FDIC, your bank is gone and presumably any auto-debits or outstanding checks would fail to clear. You get to wait for the FDIC to mail you a check. Then you'd have to find yourself a new bank. This seems like something that would be fairly disruptive even if you are not poor.