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.
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.