By Federal Financial Analytics
Reflecting a lot of questions and commentary, the American Banker last week published an op-ed by Karen Petrou showing how to build the bankers’ banks to solve at least some of our economic-inequality problems. Many proposals seek to do so via the U.S. Postal Service, but an Equality Bank is at least as powerful and comes only from the private-sector. Continue reading “How to Craft a 21st-Century Equality Bank”
By Karen Shaw Petrou
On May 23, the Office of the Comptroller of the Currency (OCC) issued a bulletin allowing national banks into the short-term, small dollar lending often stigmatized as payday lending. The policy shift is intended to spur regulated banks into a business prone to predatory practice, thus giving vulnerable borrowers a better way to tide them over short-term financial hardships. Will banks start making short-term, small-dollar loans now that they have the OCC’s blessing? Not if they can’t find a way to make money.
By Karen Shaw Petrou
Yes, I know – getting the post office into finance when you despair of getting your own mail, not the neighbor’s, is a stretch. But the economics of small-dollar banking under the post-crisis monetary and regulatory framework force a hard choice: create an equality-focused utility for otherwise-unbankable customers or consign them to the only financial sector that profits from them: predatory companies. Maybe someday fintech will figure out a way to handle huge volumes of small transactions, but some day is far away and un- and under-banked customers are losing income and wealth every day they cannot obtain affordable, sustainable financial services. Continue reading “What a Post-Office Bank Can and Can’t Do for Economic Equality”
By Karen Shaw Petrou
It is a truth known to all who seek consumer protection from predatory lending that payday lending is a scourge. However, it is also a truth among business analysts that financial institutions will not willingly go broke. Regulated companies will exit a business which cannot generate profit regardless of unmet demand. It is also a truth among business analysts that unregulated companies then rise to meet this demand, often undeterred by the social-welfare scruples that underpin the consumer-protection rules.
Continue reading “Paternalism, Payday Lending, and the Post Office”
