Bubba and Arnold on the "Unbanked"

Katherine Mangu-Ward | January 24, 2008

A pleasingly sober look at payday lending from the dynamic duo of Bill Clinton and Arnold Schwarzenegger in today's WSJ. People spend a lot of money getting checks cashed and paying interest on payday advances, this odd couple notes, an average lifetime cost of about $40,000 to a full-time, unbanked worker.

Imagine the economic and social benefits of putting more than $8 billion in the hands of low- and middle-income Americans. That is the amount millions of people now spend each year at check-cashing outlets, payday lenders and pawnshops on basic financial services that most Americans receive for free -- or very little cost -- at their local bank or credit union.

That money would be better spent elsewhere. No finger pointing--payday lenders aren't the villains here, no matter what Sen. Chuck Schumer (D-N.Y.) thinks--and no legislative proposal. What more can a girl ask?:

Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the "unbanked" enter the financial mainstream by opening checking and savings accounts, and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won't cost taxpayers a dime.

More on payday lending, check cashing, and banking on the fringe here and here.

UPDATE: Looks like the made-up term "unbanked" doesn't cover quite as many people as implied. Payday lenders require customers to have a checking account, so that population is "banked" after all. It's mostly the check cashers who tend to be "unbanked."

Also, I should have made clear that I don't love the implied threat to banks--do it voluntarily, please, or else...--but this op-ed is still far better than I would have dared hope.

Comments

Ventifact|1.24.08 @ 3:18PM|#

I can't remember if he was quoting someone else or not, but Thomas Sowell quipped that "it's expensive being poor."

The Wine Commonsewer|1.24.08 @ 3:21PM|#

Full-time workers without a checking account typically pay $40 on average to cash their paychecks

Absolutely not true. Standard rates across So Cal is 1% of the check.

First Little Pig|1.24.08 @ 3:22PM|#

Most people who resort to payday lending are not people who are destitute but rather unable to manage their finances.

What happens when a large number of these people start writing bad checks against their new-fangled, publicly sponsored accounts? Will we be expected to bail them out? Will the banks be forced to maintain them as clients?

|1.24.08 @ 3:23PM|#

That caught my eye, too, TWC. It also doesn't say "per check" or give a timeframe.

Heinrick|1.24.08 @ 3:24PM|#

The whole 'bad check' thing comes to my mind too.

|1.24.08 @ 3:26PM|#

"Open some banks in the poorer areas on your own or the govt will open them for you."

Are people ever going to get tired of this refrain?

|1.24.08 @ 3:26PM|#

Wow, seems like "poor" and "criminal" are just interchangeable to some people.

Abdul|1.24.08 @ 3:28PM|#

The pay-day lending lobby often argues that their industry is cheaper for poor people than paying bounced check fees, minimum balance fees, ATM fees, and the sundry other fees banks invent.

R C Dean|1.24.08 @ 3:32PM|#

Could somebody 'splain to me why it would be better for the economy as a whole to shut down the payday lending industry?

Its not like the payday lenders take that money and burn it in the parking lot. Presumably they use it to pay their employees and suppliers, and provide a return on investment to their shareholders.

Why is that less of a benefit to the industry than poor folk taking the money they spend at payday lenders and spending it somewhere else (where presumably it will be used to pay that business's employees, suppliers, and investors).

Ventifact|1.24.08 @ 3:36PM|#

R C -- just as speculation on my mostly ignorant part, maybe the idea is that the expense of short-term credit prevents poor people from ascending to a more comfortable financial state, leaving them more dependent on e.g. government services?

|1.24.08 @ 3:38PM|#

It's never been easier or cheaper to open a bank account. In the old days, the poor might have transportation problems even getting to a bank. Now, my paycheck is direct-deposited, most of my bills are automatically paid, and I can get cash from ATMs. The account is interest-bearing, and I don't pay a fee for any of this.

A lot of people who don't have bank accounts don't want them. They're hiding under-the-table income from the IRS, dodging child support garnishments, etc.

Ventifact|1.24.08 @ 3:41PM|#

Heh joe, funny, I had to remark on that same conflation a short time ago. Of course, we might pause, for the sake of symmetry, to observe that there's plenty of blind dislike for rich folks too...

First Little Pig|1.24.08 @ 3:42PM|#

Joe, if you mean me, I take umbrage. I am saying no such thing. I am not saying that poor people are criminal, what I am saying is that uneducated people are more likely to a) be poor, and b) be unable to manage their finances.

TWC and Joe: Until recently, here in New Mexico the interest rates charged (ex-post) on payday loans averaged something on the order 35% and it led to caps being put on them. Interestingly the way they got that passed was noting how many military people were being driven bankrupt over payday loans.... it was all anecdote, of course, but it highlighted an actual problem.

So the number quoted in the article was of no surprise to me.

jbk|1.24.08 @ 3:46PM|#

The reason people do not use banks for those services is that banks blacklist anybody they want. Once you've been blacklisted, those check-cashing places are a godsend.

|1.24.08 @ 3:51PM|#

With the surge in these payday loan places all over the place I think the bigger question that goes unasked is why do so many people need payday loans to begin with.

Could it be that their pay has not gone up at the same rate their expenses have? Or could it be that they are paying more and more of their money in some form of taxes leaving them less of their check to pay off bills?

To me this is another problem the government itself has created that it now seeks to fix. Much like childcare for working families and how many working families have 2 incomes simply because they needed the wife's income to offset the taxes now being paid by the husband. Yet this is a problem according to the government in that we need more affordable childcare and subsidies for it as well. Maybe what we need if families can't afford childcare is for government to not force us to need it to begin with by allowing us to keep our money in the first place.

This also goes along with the new drug market for sleeping pills becoming so big. No one bothers to ask why all these people need sleeping pills they just go along with them as being needed and play it off as being a great new medicine to help those with trouble sleeping. Perhaps they are having trouble sleeping because they are over worked and over taxed causing them stress which leads to a need for sleeping pills to get some rest.

Forget all the reasons why these things are growing in demand and lets just look at how to fill it with a supply.

I know some people can't budget their money but I find it hard to believe the % average of those that can't has increased at the same rate as these new payday loan businesses are opening.

|1.24.08 @ 3:56PM|#

RC Dean,

This isn't about shutting anything down, but about opening something up.

If the people with bank accounts and access to the real financial economy want to go to check-cashing stores, for some reason, nobody is going to stop them.

Blamo|1.24.08 @ 3:59PM|#

"People spend a lot of money getting checks cashed and paying interest on payday advances, this odd couple notes, an average lifetime cost of about $40,000 to a full-time, unbanked worker"

Just think of it as a way to counter the redistribution of wealth from rich to poor.

|1.24.08 @ 4:00PM|#

One more thing- The sleeping pills known as Ambien are some of the SCARIEST drugs I have ever seen made. How this drug is considered effective and non harmful is beyond me.

Years ago my wife and I dabbled with all sorts of sorts of mind altering substances which the WoD idiots considered dangerous and deadly.

Let me say beyond a shadow of a doubt none of these illegal substances holds a candle to Ambien in what it does to you or can cause you to do unknowningly. My wife got some prescribed and I had to throw them out, she would not recall nor believe anything I said about her actions when she took them.

SCARY SHIT to say the least, but its legal so ask your Dr. if it's right for you!

BTW- I work for big Pharma and I still think its one of the most dangerous drugs out there, period legal or not.

|1.24.08 @ 4:01PM|#

If they traced the roots of poverty to payday lenders, they may have learned where a lot of that cash goes, and that would lead them to...strip clubs.

|1.24.08 @ 4:02PM|#

Ack, I forgot to put my point after my snark: you can't just sign people up for a bank account and alter their culture and habits. Though its a good initiative.

First Little Pig|1.24.08 @ 4:05PM|#

Joe,

It's easy to open an account. The same check borrowed against at the payday loan shop can be used to open an account. Conversely, one can use cash. People have access. Maybe they don't have the information, but then the solution is for banks to advertise for their business... oh, that's right: the banks are none to keen for this business......

So maybe the solution is that the upcoming government stimulus checks can only be deposited into checking accounts and that might spur some people to open one up for themselves. .... Then, when -- or if -- they decide that they don't want an account, we can end this debate with a "we gave it our best shot"

|1.24.08 @ 4:06PM|#

I agree with First Little Pig to the extent that it could lead to more problems if these people never had to watch their finances as it applied to rules with their bank. Are we then to require that banks don't charge people under a certain level of income check-bouncing fees, overwithdrawl fees, or any other kind of fee simply because it's not their fault they're bad at managing their account?

|1.24.08 @ 4:07PM|#

Did you even read the article, First Little Pig?

boston|1.24.08 @ 4:09PM|#

Having worked at a Bank in Mass, in order to cash a paycheck all you needed was $10.00 in a savings account. This was a local bank so things might be different at larger places. But there would be no fee or anything of that note. As an aside, IIRC, the check cashing places had something like %3 for pay checks and something like %15 for personal checks.

Ventifact|1.24.08 @ 4:13PM|#

Could it be that their pay has not gone up at the same rate their expenses have? Or could it be that they are paying more and more of their money in some form of taxes leaving them less of their check to pay off bills?

Dee, I don't see how it would be this. Credit is not the same as extra money. At best, you'd have to combine your speculation with previous speculation about individuals exercising poor financial management.

First Little Pig|1.24.08 @ 4:19PM|#

Joe, I did. The main message seemed to be that people spend too much on check cashing largely because they are "either leery of banks or believe they do not have the products they need." Which goes back to my "unable to manage their finances" statement earlier. Ignorance is a terrible thing, but not a crime perpetrated against them. I saw nothing in the article where these folks were barred from using banks.

Show me where there is some form of discrimination that forces these people into dire straights and I will join your side.

|1.24.08 @ 4:20PM|#

Glad to see that prominent people are talking about this issue.

But I'm not sure this is exactly an "untapped" market for banks. I'm sure banks have tried to tap these consumers for a long time, but there's just not a financial incentive to do so. Banks go where the money is, and if there were strong revenue streams to be had in this market, the banks would already be there.

God, am I sticking up for banks?!

|1.24.08 @ 4:25PM|#

Right now, payday loans are a cheaper alternative to bounced checks, and restart fees on utility bills. If a business can provide cash advances to high risk consumers at lower rates then payday lenders, bounced check fees, and utility restart fees, then those new businesses should try to compete in the market. Price fixing and usury limits do not have the intended effect of forcing legal lenders to lower their fees. Instead, legislating price caps simply forces legal lenders to stop offering loans to certain consumers.

In other words, if legislators cap the fees on short term loans or bounced check fees, then lenders and banks simply stop offering credit to a large segment of the market. This is not a solution, as persons living paycheck to paycheck will resort to "unregulated" lenders. Prohibition failed in other arenas, driving people to unscrupulous providers, and the same occurs when legislators outlaw payday loans. Typically, when states eliminate payday lending, the consumers turn to unregulated foreign based Internet payday lenders.

See the following article from the Federal Reserve Board regarding How Households Fare after Payday Credit Bans, for more information: www.newyorkfed.org/research/staff_reports/sr309.html. It would be far better to regulate and monitor short term loans, and to find ways to encourage competition, then to simply legislate these consumers into the hands of unregulated lenders.

|1.24.08 @ 4:27PM|#

Just a quick clarification...payday lending customers are not the "unbanked"--they have to have a checking account as a requirement to take out a payday loan. Every single payday lending customer has an account with a bank or credit union. The reality is that people use payday loans to avoid the overdraft and other fees at their bank or credit union.

|1.24.08 @ 4:27PM|#

I saw nothing in the article where these folks were barred from using banks.

And I saw nothing in the article that suggested anyone was claiming such a thing.

Pray tell, what is "my side?" What are you arguing against?

Ventifact|1.24.08 @ 4:28PM|#

Ignorance is a terrible thing, but not a crime perpetrated against them.

[...]

Show me where there is some form of discrimination that forces these people into dire straights and I will join your side.

These key statements stand on one's view of the proper role and current state of public education...

|1.24.08 @ 4:28PM|#

JH is also fighting the good fight against the phantom hordes.

alisa|1.24.08 @ 4:31PM|#

"That can't be a dollar bill on the sidewalk! Somebody would have already picked it up!"

It's not impossible that banks could have overlooked a lucrative market. For a long time, nobody had thought of microfinance -- now there's gold in them there Bangladeshi loans.

Ignorance is a big part of the problem, but it's not the only thing. If you live in a neighborhood without a single bank, but with a Currency Exchange on every corner, and especially if you don't own a car, it's a lot harder to open a bank account -- and a lot more tempting to go into debt.

sv|1.24.08 @ 4:43PM|#

Dee,

can you elaborate on what makes Ambien so frightening?

Russ 2000|1.24.08 @ 4:45PM|#

Don't we get stories like this every time banks are desperate for deposits?

People in these kind of financial straits are usually the kind of customers banks drive away because their balances are so habitually low that they either have NSF hassles with them or the few dollars in the accounts aren't worth the bank's overhead in executing the account.

First Little Pig|1.24.08 @ 4:48PM|#

(Alisa makes a great point, but the proposal in question would not force banks to open in these neighborhoods. I don't have a solution for that.)

Joe,

You seem to be in favor of this non-market solution for the "un-banked": namely that the government should have a role opening up accounts for people. You said: "This isn't about shutting anything down, but about opening something up."

So I think that "your side" is that the government should have a role in opening accounts for people and my side is that this should be left for the markets unless you have some means of protecting the taxpayer, and the banks, from poor financial management of said accounts by these same people.

By stating that "If the people with bank accounts and access to the real financial economy . . ." You imply that the people in question do not have access to the real financial economy .... something I doubt.

I used to believe that everyone should have an account opened for them when they turned 18 so that they would have this access, build a credit history, possibly obtain a return on the money, have access to check writing, open credit card accounts, not have to stash cash on their person or under the matress, etc etc etc.

But I have since realized that those who are responsible with their money can easily enter the banking system and those that are not probably shouldn't.

Full disclosure: I have a sister who used to write bad checks all the time, run up credit cards, and do other really stupid things with her money. It was only after everyone in the family stopped lending her money did she change her ways.... She went through a payday loan period but got out of it on her own by wising up.

First Little Pig|1.24.08 @ 4:54PM|#

And after we get those payday loan people, let's go get those car title loan sharks!

Ventifact|1.24.08 @ 4:56PM|#

It's important not to over-villainize short-term credit, or its users. I knew a guy who to my evaluation was doing his best to be responsible, but he moved and didn't have enough money to cover the expenses of establishing a residence in a new town. He had a decent job and worked hard, but he couldn't wait until the first pay period was over to have cash on hand, so he needed to visit a loan store. Now, while it might have been better to save a little dough before moving (since he was going to have to go without as much money as usual later on anyway, since he would have to pay the high interest on the loan), for him the very act of moving was an important way for him to put his life back together, by getting away form harmful people and staying in a healthy relationship.

|1.24.08 @ 4:57PM|#

Full disclosure: I have a sister who used to write bad checks all the time, run up credit cards, and do other really stupid things with her money. It was only after everyone in the family stopped lending her money did she change her ways.... She went through a payday loan period but got out of it on her own by wising up.

I think everyone has some close relative in this sort of situation. My sister and her husband never did the payday loan thing (as far as I know), but they did use those expensive checks that came with their credit card, which they can't seem to manage either.

Bank accounts aren't for everyone. Credit cards or debit cards aren't for everyone. Some people just don't know how to not spend more than they have unless having the cash to pay for something is the only way they can buy something.

|1.24.08 @ 4:58PM|#

"Why is that less of a benefit to the industry than poor folk taking the money they spend at payday lenders and spending it somewhere else (where presumably it will be used to pay that business's employees, suppliers, and investors)."

Or it could be used to pay for education, or child care, or, the person could afford to work that much less, allowing more time for education or child care.

Click \'n\' Learn|1.24.08 @ 5:05PM|#

Now, here's what Clinton, Arnold, and Reason aren't telling you about the program mentioned. And, it's a whopper.

alisa|1.24.08 @ 5:12PM|#

I don't think I'd want the government forcing banks to open in certain locations. If it were up to me, I'd want a temporary tax break for banks that open branches in low-income neighborhoods, to encourage them to try the experiment; in time, banks might benefit from having a brand new market. It's not clear to me whether poor people don't use banks because they can't manage their finances, or that they can't manage their finances because they have no banks.

|1.24.08 @ 5:12PM|#

You mean they tooker bank accounts too?

Billie|1.24.08 @ 5:17PM|#

"And, it's a whopper."

To help those of us at work who have surfcontrol, could you provide an executive summary?

|1.24.08 @ 5:29PM|#

I summarized it for you: They tooker bank accounts.....damn foreigners.

Fluffy|1.24.08 @ 5:30PM|#

Click and Learn is offended that some banks allow non-citizens to open accounts using ID cards from their own countries.

Which is fucking abysmally stupid of Click and Learn.

I can open a bank account in Switzerland, retard. Why shouldn't Mexicans be allowed to open bank accounts in the United States? Oh right, I forgot, because you're a racist cocksucker. Well, excuse me, but to me your racist cocksuckery is not a good enough reason to prevent banks from accepting deposits from ANYONE WHO WANTS TO MAKE A DEPOSIT.

The real abuse here is the government reporting requirements the banks are subject to, under various sections of the law; we should place FEWER burdens on banks accepting deposits, not more, and the banks should have LESS role in policing tax law, currency transfer law, and citizenship law, not more.

|1.24.08 @ 5:30PM|#

Perhaps Clinton and Arnold could use their considerable assets to open banks in poor neighborhoods and charge more benevolent fees.
Or sponsor speakers in public schools to clue students in on the real world of managing their money after graduation. But, like many posters, I've known many people who didn't want to deal with banks for many reasons (didn't trust them, didn't want wife to know how much they made, earned the money under the table, etc.)

R C Dean|1.24.08 @ 5:32PM|#

This isn't about shutting anything down, but about opening something up.

Opening what up, exactly? There's no "banking access" problem here, at least not one that payday lending has anything to do with.

Every single payday lending customer has an account with a bank or credit union.

The hell this isn't the first step toward driving payday lending down.

And I'm still wondering what the benefits to the economy as a whole might be.

|1.24.08 @ 6:21PM|#

Hey LoneWacko,

What happened to your comment section?

Click \'n\' Learn|1.24.08 @ 6:25PM|#

Even those who support MassiveGovernmentCorruption as indicated by a federal agency trying to help banks profit from money that was earned illegally will hopefully not support the level of ignorance shown by KMW in this post, and the level of deception shown by Bubba and Arnie. But, perhaps even ignorance and deception can be forgiven just as long as some small group of people can make money.

|1.24.08 @ 6:34PM|#

I wouldn't really think "unbanked" as a made up term having seen it used in The Economist several times.

|1.24.08 @ 6:36PM|#

Might I add, I would assume being unbanked gives you a bit more privacy than your average bank, plus more control of your money.

Doesn't sound to bad to me.

|1.24.08 @ 7:04PM|#

So, in Cali, you can smoke weed because your doctor told you to, but your employer can fire you for it:

Workers can be fired for using medical pot off duty, Calif. court says

SAN FRANCISCO -- California employers may fire workers for using medical marijuana with a doctor's recommendation while off duty even if the drug does not impair an employee's performance, the California Supreme Court ruled 5 to 2 today.

...The court majority upheld the firing of Gary Ross, an Air Force veteran whose doctor recommended he use marijuana for chronic back pain and whose disability qualified him for government benefits.

Ross, 45, was hired by Raging Wire Telecommunications Inc. in 2001 as an administrator. Before taking a required drug test, Ross provided a copy of his physician's recommendation for marijuana. The company fired him a week after he started the job because of his marijuana use.

I guess I can sort of side with the employer here, but don't they usually fire you for, say, drinking, after they've tried to help you first, or after you've puked on the boss?

(humble apologies for threadjack, but it's Calfornia AND weed related!)

|1.24.08 @ 7:17PM|#

Drugs should be legal.

Firing employees at the employer's discretion should be legal.

People who want to use drugs will need to seek employers who don't mind.

The only surprise is that the court seemed to take a libertarian stance: "The Compassionate Use Act does not eliminate marijuana's potential for abuse or the employer's legitimate [this term is questionable] interest in whether an employee uses the drug."

Ventifact|1.24.08 @ 7:21PM|#

... Notice that all of the quoted dissent, which is ostensibly in favor of drug freedom, is statist duff:

"The majority's holding disrespects the will of California's voters who, when they enacted the Compassionate Use Act, surely never intended that persons who availed themselves of its provisions would thereby disqualify themselves from employment."

A blanket disqualification? Nope, that's not what is happening in reality and it's not what the ruling has promoted.

"The court is claiming that California voters intended to permit medical use of marijuana, but only if you're willing to be unemployed and on welfare."

Or, uh, find an employer who isn't gonna care? And way to inextricably link unemployment and welfare...

|1.24.08 @ 7:28PM|#

Bubba and Arnold wrote:

"The American dream is founded on the belief that people who work hard and play by the rules will be able to earn a good living, raise a family in comfort and retire with dignity.

But that dream is harder to achieve for millions of Americans because they spend too much of their hard-earned money on fees to cash their paychecks or pay off high-priced loans meant to carry them over until they get paid at work."

Here is a minimal idea: Let them keep all of their paychecks until April 15 of the following year (and let's how glad they'll be of writing a check to the U.S. Treasury). Better yet: Let them keep all of their paychecks period.

UpStart Battery|1.24.08 @ 8:26PM|#

The challenge with over regulating the Payday loan industry is that it would push the users back into the arms of criminal loan sharks, who are only too happy to charge even higher rates.

This is another fine example of how regulation designed to help an 'exploited' group, often ends up hurting them more.

But there are no easy alternatives either. In the 90's I had a company that basically provided "subprime computer mortgages" (sigh) to new business, prior bankrupts and bad credit.

The expectation was that people would work hard to rebuild their credit. The reality of the business was that poor credit history tended to repeat itself. As a result, the only way the business could function was by charging very high interest rates, much like the Rent To Own furniture market, which is very similiar.

The high rates were necessary to pay for the default rates, which rose as high as 35%. The business was a financial success, but only by focusing hard on bill collection and cost reduction, and by keeping rates high.

And worst of all, at the end of the day, I felt like I was ripping off the good people, that "needed a break", in order pay for the bad people that were ripping us off. Not a very satisfying occupation - even though it all looked good on paper.

I am a lot happier now selling batteries. But people should have a legal choice to use subprime services if they want to.

|1.24.08 @ 10:55PM|#

alisa | January 24, 2008, 4:31pm | #

"That can't be a dollar bill on the sidewalk! Somebody would have already picked it up!"

It's not impossible that banks could have overlooked a lucrative market. For a long time, nobody had thought of microfinance -- now there's gold in them there Bangladeshi loans.

Quite right, Alisa. Supermarkets are another good example.

|1.24.08 @ 11:00PM|#

First Little Pig,

When you react to the observation that there is a problem by assuming that those who are aware of it are arguing for a solution that violates your political ideology, you are merely admitting that your political philosophy is unable to account for that problem.

|1.24.08 @ 11:04PM|#

R C can't imagine why there could be a reason to do something that doesn't benefit "the economy as a whole."

The idea that something could be worthwhile just because it helps people who are in a rough spot is baffling to him.

There's no "banking access" problem here, at least not one that payday lending has anything to do with. So in other words, you acknowledge that there is a banking access problem. Good.

The use of these expensive services because real banking isn't available is the symptom, not the cause.

Ventifact|1.25.08 @ 4:56AM|#

When you react to the observation that there is a problem by assuming that those who are aware of it are arguing for a solution that violates your political ideology, you are merely admitting that your political philosophy is unable to account for that problem.

So that would make someone what, something other than a utopian dreamer? Does your political philosophy account for all problems?

I have to admit it's not clear (to me?) what problem exactly you're saying FLP's philosophy neglects anyway, so I should add that perhaps you're referring to a problem we all agree is not acceptable to overlook. But I don't know...

Casey Miller|1.25.08 @ 8:50AM|#

Uh...these people go to check cashing services and payday loan services because they have a history of stiffing lenders. That's the plain and simple truth.

|1.25.08 @ 9:53AM|#

Does your political philosophy account for all problems?

It's not afraid to acknowledge they exist. It doesn't require me to refelxively deny them out of a certainty that liberalism is incapable of formulating a response.

|1.25.08 @ 11:47AM|#

How short is our country's collective memory? Clinton passed this exact same proposal during his presidency -- he called it "First Accounts". The federal government paid banks per account for every person they converted to a bank account. It cost us a fortune, the banks made a mint and less than 1% of those accounts were open 5 years later.

Ventifact|1.27.08 @ 3:17PM|#

It doesn't require me to refelxively deny them out of a certainty that liberalism is incapable of formulating a response.

Well, hmm, I suppose that is an important distinction...