Banks are no friends of the poor

I have a friend who lives below the poverty line. She and others I know do not use banking services. They can’t afford it. At her job, she receives her weekly pay in cash because she can’t cash a check. One time she lost her pay. This meant it was lost for good. She couldn’t go to her employer and say, “Cancel that check and write another.” It was gone.

I volunteer for Circles of Hope, which works to help people get out of poverty. Every month, we hold a “big view” meeting to consider issues that affect people in poverty. We’ve looked at transportation, housing, health care and employment, among others. One evening, a man spoke about financial services and told people to keep in mind that banks are about making a profit.

 

 

You may say, Of course, they have to make a profit. However, as Mehrsa Baradaran of the University of Georgia School of Law argues in her book How the Other Half Banks, by denying financial services to the poor, banks have broken the social contract that justifies their public charter.

In his article “When the Bank Robs You” (In These Times, November), David Dayen points out that “the average unbanked family spends more on financial transactions than they do on food.”

The Ferguson Commission, convened by Missouri Governor Jay Nixon to identify root causes that led to the social dislocation of racially segregated cities around St. Louis, named banking as one of those causes. “Without a bank or credit union account,” Dayen writes, “simple functions like converting government benefits into cash or converting that cash back into a check to pay bills or securing a small loan in emergencies become exorbitantly expensive.”

Dayen refers to Baradaran’s book, noting that modern banking wouldn’t exist without the state. “Customers freely deposit trillions in banks because of government-backed insurance, and the quasi-public Federal Reserve lends directly to banks at slim interest rates.”

Under the Reagan administration in the 1980s, when deregulation ruled the day, “banks won the argument that they should be treated like any other industry, without a public responsibility,” Dayen writes.

With this profit motive in mind, and with the blessing of the government, banks abandoned poor areas because the poor don’t make profitable customers. “Between 2008 and 2013,” Dayen writes, “banks shuttered nearly 2,000 branches.” Of these, 93 percent were in postal codes with incomes below the national median.

Baradaran recounts the history of this kind of behavior. One 19th-century Chicago banker even said his firm levels “a prohibitory charge upon all accounts which average less than $300 for the express purpose of driving them away.”

Most attempts to bring the poor financial services have failed. Even credit unions are today more likely to serve upper- and middle-income customers, and community banks have been overwhelmed by mega-bank consolidation.

What to do? Baradaran notes that from 1911 to 1967, the post office offered savings accounts, attracting millions. She calls it “the most successful experiment in financial inclusion in the United States” and thinks we should restart it.

A USPS bank would not only reduce inequality, writes Dayen, “it would shore up the Postal Service’s finances and sustain post-office employment as a middle-class career.”

It would also eliminate predatory payday lenders and check-cashing operators, “interested only in skimming a hefty take for providing financial services the middle and upper classes take for granted.

The Bible denounces usury, lending money at exorbitant interest rates and preying on the poor. We need banks that provide public, not just profitable, service.

An Evangelical case against alcohol

Magazines like to publish articles that present something in a different light. So when Christianity Today, the flagship evangelical periodical, published its June issue with these words on the cover: “The Case for an Alcohol-Free Life,” the underlying assumption was that most evangelicals use alcohol. Or at least a significant enough number of them do to make being alcohol-free new and different. Times have changed.

The writer of the article, called “Why I Gave Up Alcohol,” is D.L. Mayfield, a 30-year-old Evangelical woman who with her family serves with InnerCHANGE, a Christian order among the poor.

She grew up in a pastor’s home where alcohol was a nonissue. As a young adult, she became “an occasional drinker, a social imbiber, free to live my life in a way that glorifies God.”

Then she and her husband joined a Christian order among the poor. “Our first shock when we moved into our low-income apartment in a Midwestern inner city,” she writes, “was the amount of substance abuse that surrounded us.” She describes the abuse in detail.

Spiritual discipline: After a year of living there, she writes, “I gradually just … stopped. I dreaded going to the liquor store, imagining the faces I would see there.” Eventually she realized she could abstain from alcohol entirely, and this became a spiritual discipline for her.

Mayfield goes on to reflect on Christians of previous centuries who stood against alcohol’s effects. “Temperance movements,” she writes, “often founded and organized by women, were a direct reaction to the perceived social evils of alcohol in the 1800s and 1900s.”

In the 19th century, alcohol was tied to spouse and child abuse, and women had little to no rights in regard to property and possession. Thus women, especially Christian women, writes Mayfield, “started to organize and lobby against alcohol, starting from within their homes and gradually moving into the political sphere.” The temperance movement, while focusing on alcohol, became associated with women’s rights, including suffrage.

Mayfield sees that movement as a model for us today. She writes: “Just as we currently have no problem denouncing slavery, prostitution and, to a lesser extent, gambling—all for the ways they harm persons and communities—we’d be wise to reconsider the valid and pressing reasons why so many Christians before us chose to give up alcohol completely.”

Clearly, she is providing a different reason for giving up alcohol than was used in previous decades for Evangelicals, to be unstained by the sin of the world. She notes that many Christians view drinking as a rite of passage out of “the perceived fundamentalism of our past.”

She sees young people and women in particular embracing alcohol as a sign of liberation. And many of her peers celebrate drinking. She wonders, “Isn’t anyone friends with alcoholics?”

Given that about 1 in 6 Americans has a drinking problem (defined as excessive drinking or alcoholism), they probably do know someone who has a drinking problem.

Evils of the world: Mayfield’s argument is less about purity than about justice. “I didn’t give up alcohol because I wanted to flee the evils of the world,” she writes. “I gave up alcohol as a way of engaging the evils of the world.”

Who we relate to affects our perspective on this issue, Mayfield writes. She has been changed by her neighborhood.

“I am not calling on everyone to become teetotalers,” she writes. “But I am asking us to consider temperance as a valid and thoughtful option.”

Echoing the Apostle Paul in 1 Corinthians 8, she says we are free not to drink because of our relationships with those who struggle, when “love tempers our actions.”