Contemporary Authors

• The Intersection of Planning with Gender Issues Council of Planning Librarians/American Planning Association (Chicago, IL), 1993
• Bootstrap Capital: Microenterprises and the American Poor Brookings Institution Press (Washington, DC), 1999
• Bridging the Digital Divide: Technology, Community, and Public Policy Blackwell (Malden, MA), 2002
• Gender and Planning: A Reader Rutgers University Press (New Brunswick, NJ), 2005
• The Unbanking of America: How the New Middle Class Survives Houghton Mifflin Harcourt (Boston, MA), 2017

1. The unbanking of America : how the new middle class survives LCCN 2016498797 Type of material Book Personal name Servon, Lisa J., author. Main title The unbanking of America : how the new middle class survives / Lisa Servon. Published/Produced Boston : Houghton Mifflin Harcourt, 2017. ©2017 Description xix, 250 pages ; 24 cm ISBN 9780544602311 (hardcover) 0544602315 (hardcover) CALL NUMBER HG2491 .S47 2017 Copy 2 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HG2491 .S47 2017 CABIN BRANCH Copy 1 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE 2. Gender and planning : a reader LCCN 2004008239 Type of material Book Main title Gender and planning : a reader / edited by Susan S. Fainstein and Lisa J. Servon. Published/Created New Brunswick, N.J. : Rutgers University Press, c2005. Description vi, 313 p. : ill. ; 24 cm. ISBN 0813534984 (hardcover : alk. paper) 0813534992 (pbk. : alk. paper) Links Table of contents http://www.loc.gov/catdir/toc/ecip0417/2004008239.html CALL NUMBER HQ1236.5.U5 G44 2005 Copy 1 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HQ1236.5.U5 G44 2005 FT MEADE Copy 2 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE 3. Bridging the digital divide : technology, community, and public policy LCCN 2002001498 Type of material Book Personal name Servon, Lisa J. Main title Bridging the digital divide : technology, community, and public policy / Lisa J. Servon. Published/Created Malden, MA : Blackwell Pub., 2002. Description xix, 273 p. : ill., maps ; 24 cm. ISBN 0631232419 (hbk : acid-free paper) 0631232427 (pbk : acid-free paper) CALL NUMBER HN90.I56 S47 2002 Copy 1 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HN90.I56 S47 2002 FT MEADE Copy 2 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE 4. Bootstrap capital : microenterprises and the American poor LCCN 99006513 Type of material Book Personal name Servon, Lisa J. Main title Bootstrap capital : microenterprises and the American poor / Lisa J. Servon. Published/Created Washington, D.C. : Brookings Institution Press, c1999. Description xii, 155 p. ; 24 cm. ISBN 0815778066 (alk. paper) 0815778058 (pbk. : alk. paper) CALL NUMBER HD2346.U5 S47 1999 Copy 1 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HD2346.U5 S47 1999 FT MEADE Copy 2 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE 5. The intersection of planning with gender issues LCCN 96130547 Type of material Book Personal name Servon, Lisa J. Main title The intersection of planning with gender issues / Lisa J. Servon. Published/Created Chicago, IL : Council of Planning Librarians : Distributed by the American Planning Association, c1993. Description 35 p. ; 28 cm. ISBN 0866023038 CALL NUMBER Z5942 .S44 1993 CABIN BRANCH Copy 1 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE

• Lisa Servon - https://www.lisaservon.com/about-2/

  Lisa Servon is Professor of City Planning at the University of Pennsylvania and former dean at The New School. She is the author of Bridging the Digital Divide: Technology, Community, and Public Policy(Blackwell 2002), Bootstrap Capital: Microenterprises and the American Poor(Brookings 1999), Gender and Planning: A Reader (With Susan Fainstein, Rutgers University Press 2005), and Otra Vida es Posible: Practicas Economicas Alternativas Durante la Crisis (With Manuel Castells, Joana Conill, Amalia Cardenas and Sviatlana Hlebik. UOC Press 2012). She has contributed to the New Yorker, the Atlantic, and The Wall Street Journal and has appeared on PBS News Hour, Marketplace Money and Radio Times and her research is featured in the forthcoming documentary Spent: Looking for Change. She lives in Brooklyn with her husband, two children, and a dog named Friday.

• NPR - http://www.npr.org/2017/01/10/509126878/what-is-driving-the-unbanking-of-america

  Quoted in Sidelights: “The real question is if you don’t have any other options or choices, is it better to take out that loan even at the high cost that it is or not take it out at all?” “And so many of the people that I talked to and interviewed said I’m glad that that money was there for me.”
  “In the book, I actually advocate for a financial facts box … that allows you to compare this checking account to that checking account, this payday loan to that one, this debit card to that one so that people can really look side by side and say like, oh, this one is not going to cost me as much or given my particular situation,”
  YOUR MONEY

  What Is Driving The 'Unbanking Of America'?

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  January 10, 20171:39 PM ET
  Heard on Fresh Air
  Fresh Air
  The Unbanking of America
  How the New Middle Class Survives
  by Lisa Servon

  Hardcover, 250 pages purchase

  Author Lisa Servon says a growing number of Americans are giving up on traditional banks and relying instead on alternatives, including prepaid debit cards, check-cashing centers and payday lenders.

  DAVE DAVIES, HOST:

  This is FRESH AIR. I'm Dave Davies, in for Terry Gross who's off this week. If you stroll through certain neighborhoods in big cities, you'll notice check-cashing centers, pawn shops and, in some states, payday lending stores. Our guest, Lisa Servon, says increasing numbers of working Americans are using those services and turning their backs on traditional banking because banks don't meet their needs and whack them with fees and charges they aren't expecting. In 2011, she notes, Americans paid $38 billion just in overdraft fees. Servon didn't just rely on data and interviews in her research. As you'll hear, she got jobs as tellers in a check-cashing center and a payday lending store to see the alternative banking world firsthand and talk to those who rely on it. Lisa Servon is a professor of city planning at the University of Pennsylvania. She's written on consumer financial services for The Wall Street Journal, The Atlantic online and The New Yorker online. Her new book is "The Unbanking Of America."

  Well, Lisa Servon, welcome to FRESH AIR. You write about banking and its relationship with customers and how they've changed over the years. Take us back to the good old days decades ago, if they were good old days. How did banks used to relate to their customers?

  LISA SERVON: Well, it's a good question. I mean, they were good old days, I think, for me and my family, not - certainly not for everyone. But I grew up in the '60s and '70s in a small town in New Jersey called South River. And every Saturday morning, my dad would go off to do his errands downtown. He would go to the barber shop to get his hair trimmed and pick up meat at Mike the Butcher's (ph), which was on my grandparent's corner, and go to the post office and then we would go to the bank. It was called Pulaski Savings and Loan. It's no longer that, which is part of my story. And, you know, all the tellers knew my dad. They knew me by sight. They would, you know, it was this halcyon, fuzzy picture of them reaching across the counter and giving me a lollipop. And so it felt like a community space where you would run into people from town and have small talk. And now, for my children, going to the bank means going to an ATM and pressing a few buttons where the money comes out. They don't see me pay bills for the most part. I usually do it at night in my pajamas, and there is no relationship. If we do go into the bank, I never know who the teller is and he or she doesn't know me.

  DAVIES: It used to be a relationship of trust and...

  SERVON: Exactly.

  DAVIES: ...That personal relationship, that's all gone. Now, are fewer Americans actually banking these days, I mean, having accounts at traditional banks?

  SERVON: Well, the number of savings accounts has dropped and checking accounts, too, to some extent. And we also see a rise in people using alternative financial services. Certainly, some people have switched from checking and savings accounts to just using prepaid debit cards. Some people are augmenting their use of banking services by going to check cashers and payday lenders and pawnshops. Some people have been pushed out of the banking system entirely, and a lot of the people that I worked with told me they simply can't afford it.

  DAVIES: And there are plenty of people who have marginal credit or little income who...

  SERVON: For sure.

  DAVIES: ...Don't have bank accounts.

  SERVON: That's right.

  DAVIES: And there is this alternative banking system that you write about exemplified by check-cashing agencies that you often see in poor neighborhoods. How are they regarded by financial professionals, that whole world?

  SERVON: Well, you know, I think most - certainly by consumer advocates and a lot of policymakers, they are thought of as being predatory, as being institutions that take advantage of customers and sort of take advantage of the fact that they don't have a lot of money. And, you know, there's this kind of attitude that if you don't use a bank account or if you don't only use a bank account, then you are somehow deficient in some way. And that didn't make a lot of sense to me when I thought about this whole problem. And, you know, my my own interest in it began when I started looking at these studies that the FDIC put out called their Survey of Unbanked and Underbanked Americans.

  And, you know, at this point, they've been doing it for about 10 or a dozen years, and about 8 percent - it's been fairly consistent. About 8 percent of Americans don't have a bank account at all, and another 20 percent have a bank account but they also rely on these alternative financial services as well. And it struck me as not quite right that the assumption was that people were too ignorant to use them. I'd been doing research in low-income communities for my whole career, for 20 years, and from my experience, I knew that people who don't have a lot of money know where every penny goes. And so it struck me that there must be some better, deeper answer to that question of why so many people were not using banks.

  DAVIES: Right. The assumption was people only go to check-cashing agencies who wish they could get a bank account.

  SERVON: Or if - or that they don't know better. You know, if they were educated like me or if they lived in a middle-class area like me, then they would use it. And what I found out was that people were making oftentimes very rational decisions, and I also found out that it wasn't just low-income people in places like the South Bronx who were using alternative financial services. It was also people who own their homes, who have college degrees, who make $50,000 or $75,000 a year. And that was a huge surprise.

  DAVIES: All right. Now, you didn't just learn about this from surveys. You got a job as a teller at a...

  SERVON: I did.

  DAVIES: ...Check-cashing agency in the South Bronx. How did this happen?

  SERVON: Well, as I mentioned, I was looking at these surveys and this big data. And during the course of kind of scratching my head about that question of why so many people were not using bank accounts, I invited a guy who runs a chain of check cashers in the South Bronx in Harlem to one of my classes. And my students had read these articles about how awful these guys were and how they take advantage of low-income people and, you know, that - we were all practically salivating over, you know, getting...

  DAVIES: This predatory monster.

  SERVON: ...This guy to come into class and tell us what was going on. And Joe Coleman showed up - he's the person I'm referring to - was a very smart, interesting man who spoke very persuasively about why he believed his businesses were really serving the community. And it made a lot of sense. And so I was trying to really square Joe's story with the data, and it didn't add up, combined with my knowledge that, you know, my feeling and my experience that low-income people do make smart, economic decisions when they can.

  And so I called Joe up and I said, I'm really interested in finding out more about this, and would you hire me as a teller? Because, you know, when you do policy research, you have to figure out what method best serves the question. And the question I was asking really required me to get as close to the problem as I could. I couldn't become a low-income person in the South Bronx, but the closest I could get would be to work behind the counter. And Joe was, to his credit, super open to allowing me to come in and gave me full access, and I worked for about four months as a teller at a check casher.

  DAVIES: So what did you learn about why people use check-cashing services?

  SERVON: It really came down to three reasons, and the first one was probably the most surprising. It was that so many people told me that they were saving money by going to the check casher. And the conventional wisdom is that people should not go to these businesses because they cost a lot of money. At RiteCheck, it cost 1.95 percent - almost 2 percent - of the face value of a check to cash it, $1.50 to send a bill, 89 cents to send a money order, which, frankly, is less than it costs at the post office. And so, you know, all those fees definitely add up. But what people told me was that they could predict those costs. The costs were obvious to them. And if they made one mistake at their bank, that resulted in an overdraft, it would easily be more than that - those costs. And those kinds of things, when you're living very close to the margin, they happen all the time - right? - overdrafting your account. Or, for example, what people found was that if they wanted to deposit a check on Thursday or Friday because they needed the money over the weekend, they wouldn't get it till Tuesday or Wednesday. And the benefit of having the money immediately far outweighed the cost of depositing it into the account for perhaps lesser fees but not getting it for several days. So cost was one of the reasons.

  Transparency was the second. People, those costs that I just listed, they knew what they were. They were posted. It looked like - the store looked like a fast food restaurant without the greasy burger smell, right? You walk in, you see this menu, really, that spans the windows that lists all those fees, and there's no - nothing hidden. So a lot of times people would come in with their paycheck, I would cash it, give them their cash and then they would stand at the window with their bills. You know, their phone bill, their rent bill, maybe a credit card bill if they had a credit card, and they would stand there and figure out how much they could pay each bill that month or that pay period. And oftentimes, they weren't paying the bills in full, which was an insight I could get only by working at the window, not just by talking to people. And I would see, like, OK, that Con Ed bill they're going to pay, which is the electricity bill in New York City, it's going to get shut off if they don't pay a minimum of $50. The bill's $75, but they're going to pay $50 right now because that's what they have. They'd figure out that allocation and then whatever was left, that's what they had to live on until the next paycheck. And so that transparency was critical.

  DAVIES: Did you find some of the customers were, to use a phrase refugees from the banking system, had come there because they used to have checking accounts and had bad experiences?

  SERVON: For sure. So at both RiteCheck and Check Center where I worked as a payday lender later on, my research assistants and I did interviews with about 50 customers in each place where I kind of came out from around the window after doing the four months and said, like, OK you might recognize me from being back there, but I'm actually a researcher and I'm curious about how you manage your money. And I'd say about 50 percent of the people that we interviewed also had bank accounts and another chunk had had bank accounts in the past and no longer did. So most of the people that we talked to and that we served had direct experiences with the banking industry, with mainstream financial services.

  DAVIES: You had one guy who was a contractor come in with - I think the check was for $5,000 he'd gotten on a job. And he paid the almost 2 percent charge, so it cost him $97.50...

  SERVON: Yeah.

  DAVIES: ...To get that check cashed. It would have been free from his bank...

  SERVON: That's right.

  DAVIES: ...If he'd had a banking account. Why would he come to a check-cashing place?

  SERVON: Well, it's interesting that you ask because I asked the same question, and that really - experiences like that really showed me why I needed to be behind that window because even though I was working there and dealing with people every single day, I still, with my own biases and having grown up using mainstream financial services, didn't get that. And so it was one of my tellers who helped me understand it, and she said, you know, Carlos (ph) has this small construction firm. It's Thursday today when we're counting the check. He probably has to pay his guys tomorrow on Friday, and they're probably not documented or they don't have bank accounts, and he's got to pay him in cash. So if he deposits that $5,000 check at his account, he can't pay his guys tomorrow.

  Or maybe he's just gotten another job, maybe at a local church or a business, to paint and put up sheetrock. Well, they want him to start immediately, and he'll lose that job if he can't take that money right now and go to the lumber yard and buy supplies. And so all of these things that may appear irrational to those of us who haven't walked in the shoes of the people who are using these services, most of them turned out to be pretty rational decisions.

  DAVIES: Yeah. You have this stream of people that are coming in with routine transactions and day after day, week after week, this check-cashing outfit takes a cut of their stuff.

  SERVON: That's right.

  DAVIES: And some people look at that and say that's predatory.

  SERVON: Right.

  DAVIES: How did the customers regard the check-cashing agency?

  SERVON: The people who came, our customers, really liked it. They were loyal. They felt like they got treated better than they got treated at the banks. And they often tipped us actually, which was really interesting. The first time it happened to me, I kept trying to shove this money back at the customer because I didn't know what he was doing. But it was a sign of this, you know, this kind of custom or practice of giving somebody a little something back for good service. So here you had mostly lower income folks who were actually saying, you know what? You gave me really good service and you treated me right, and so I'm going to give you a little bit something back. And for most of the tellers, they were maybe - most of the tellers that I knew actually had bank accounts. But there was this sense of community. You know, you help me out, I'll help you out. And so I didn't hear a single person at the check casher say they charge too much.

  DAVIES: Or complain or get into an argument or...

  SERVON: Nope, nope.

  DAVIES: Lisa Servon's book is "The Unbanking Of America." We'll continue our conversation after a short break. This is FRESH AIR.

  (SOUNDBITE OF NAOMI MOON SIEGEL'S "IT'S NOT SAFE")

  DAVIES: This is FRESH AIR, and we're speaking with Lisa Servon. She's a professor of city planning at the University of Pennsylvania who has studied and written about financial services. She has a new book called "The Unbanking Of America: How The New Middle Class Survives." We were talking about your experiences at a check-cashing place that you worked at in the South Bronx and how so many people, not all of them poor, found it a useful financial service and in some ways better for them than banks. Let's talk a little bit about how banks have changed. Compare how they used to make money from how they've come to make money.

  SERVON: So, you know, in the '50s, '60s, '70s, banks were mostly making their money from interest, from small loans and things like that, and from their depositors, from people who held accounts like my parents did and like I did. And they didn't make a ton of money. I mean, we lived across the street from the guy who ran Pulaski Savings and Loan, and they certainly seemed wealthier than we did, but they lived on the same block, and my parents were both teachers. So there wasn't this sense of huge income inequality between people in the finance sector and everybody else like there is now. And that was known as the 363 era of banking, which I think is super funny. So you would get 3 percent on your savings account, you'd pay 6 percent on a loan and bankers were allowed to leave at 3 to go to the golf course, right?

  DAVIES: OK.

  SERVON: That's not the same. Mr. Konopacki (ph), who lived across the street, was home by 5:15 every night for dinner. So there was, you know, it was a regular job. And I almost liken it to the two people I met who run the payday chain and the check-cashing chain because it's almost like having a small chain of dry cleaners or something. They're local businessmen, and that's what it used to be. Pulaski didn't have any branches, and that was typical. So a couple...

  DAVIES: So what changed?

  SERVON: So what changed? Well, in the '70s and '80s, deregulation happened, for one thing. So what that meant was that a lot of banks were able to do things that they hadn't been able to do before in order to make money. Just following the Depression we passed a law called Glass-Steagall that prohibited banks, because of the financial crisis at that time, prohibited banks from engaging in commercial banking, retail banking and investment banking. It kept those things separate. And some people may remember that Glass-Steagall was invoked in the early part of the latest presidential campaign - we need to put it back - because Glass-Steagall was basically repealed and banks were once again able to do more things.

  And the world was a more complicated place. So they were losing money on interest because interest rates had gone a little bit nutty. They were able to merge with each other and branch. They were able to merge with insurance companies and other kinds of financial institutions. So that meant that they got really big. And although it's not a complete causal relationship, when they got big, they moved farther away from their customers and they found other ways to make money. And one of the things that they did was discover fees. And bankers never liked giving overdraft protection. It was something that they would do for their more well-heeled customers, but they saw it as an inconvenience.

  DAVIES: Well, back then, if you had an overdraft, what would happen to you?

  SERVON: You know, they would tell you about it. You'd go to the banker and tell them what happened. And they would just, you know, deal with it. But you wouldn't get charged $30 every time it happened or another $30 if you hadn't rectified the situation in five days. So it was a very different story. It had to do with that relationship that we talked about.

  And so banks realized, with the help of some interesting consultants who kind of walked around and said, look, if you just tweak these numbers in your computer system, you can actually make a whole lot of money. And so, you know, I think the last year that I remember seeing data for it was about $38 billion in overdraft fees in the last year. That's a lot of money.

  DAVIES: So when you said they offered overdraft protection...

  SERVON: Yep.

  DAVIES: ...I mean, that sounds like a benefit. Is it?

  SERVON: Well, it's not. And, you know, what the thing is, is that I think a lot of these kinds of things that consumers have been, quote, unquote, "offered" as part of their bank accounts in the last 20 years or so, maybe even initially, they seemed like a good idea. But they were kind of twisted in a way that resulted in banks essentially tricking people. And I had lots of people who I talked to in D.C., where I did a lot of research, say, yeah, banking became about tricking people and figuring out how to manipulate and deceive them.

  And, you know, the fact is that that's what the free market is set up for. And so the changing policy, the ability to merge, the ability to grow, the ability to make money in other ways opened doors for banks to make a lot more money in other ways and not care about their customers as much as they used to.

  DAVIES: So the overdraft protection meant that if you wrote a check you couldn't cover to your electric company, they would pay the electric company.

  SERVON: That's right.

  DAVIES: They would pay the overdraft, but they would hit you with a fee.

  SERVON: That's right.

  DAVIES: How much of - how big were the fees?

  SERVON: Well, at this point, it's more than $30 for most banks - $27 to $35. And those fees have been growing. And the amount that banks make off of them - they're very dependent on those fees, now. And they make most of them, also, from lower-income customers who can't afford to keep a minimum balance in their account. So it's the overdraft fees, it's also monthly service fees.

  DAVIES: Right, so they're giving you service charges that didn't used to exist...

  SERVON: That's right.

  DAVIES: ...Big penalties if you have an overdraft...

  SERVON: Right.

  DAVIES: And then you talk about something called debt resequencing. Do I have that right?

  SERVON: Debit resequencing.

  DAVIES: Yeah, explain that.

  SERVON: Yeah. Yeah, so this is a really amazing practice. What banks will do - and I think - and many, many of them still do this even though the light's been shined on it and shown to be a rather unethical practice - is that if you have, say, $100 in your account and you have a few checks that you've written - one for $75 and one for $125 and one for $25, the bank will look at those three charges that are going to hit your account, and it will order them in a way to maximize the overdraft fees.

  DAVIES: So the checks are coming in on the same day, and they...

  SERVON: The checks - yeah. So if they put the 25 one first, that would clear. And then you'd be paying two overdraft fees, right? Because the other two checks would put you over the limit. But if they want to maximize their overdraft fees, they'll put that 125 one first. And then they'll get three overdraft fees instead. So the computer programs that run the account, the analytics, are set up in order to get the most money from you as possible. That doesn't seem, to me, like serving your customers, your loyal customers, very well.

  DAVIES: I've always thought of banking as being a heavily regulated industry. Is it?

  SERVON: You know, it's really - it's very heavily regulated in some ways. There were four federal agencies regulating the banking industry until the Consumer Financial Protection Bureau was created in 2009. So now there are five. Most of those agencies don't really know what each other is doing.

  DAVIES: Have the regulations, since the crash, made things better for customers?

  SERVON: I think the Dodd-Frank definitely has and in particular the CFPB, the Consumer Financial Protections Bureau. It is the only one of those five agencies that's sole purpose is to protect consumers. And it is the only one of those agencies that can regulate the entire spectrum of financial services institutions from check cashers and payday lenders to banks.

  So the Wells Fargo scandal that we saw just a few months ago, where Wells Fargo was opening accounts without customers' permission, the CFPB is on top of that. They've saved billions of dollars for consumers. And I'm - frankly, I'm concerned, with the change in administration that's coming, that the CFPB will be rendered ineffective. And that would be a real loss.

  DAVIES: So there - some of these outright deceptive practices have been attacked.

  SERVON: They've been curtailed, yeah.

  DAVIES: But still high fees? Still managing...

  SERVON: Yep.

  DAVIES: ...The transactions to maximize revenue for the bank?

  SERVON: Yes.

  DAVIES: Lisa Servon's book is "The Unbanking Of America." After a break, we'll hear about her experiences working at a payday lending center in Oakland, and we'll remember writer Nat Hentoff, who died last Saturday.

  I'm Dave Davies, and this is FRESH AIR.

  (SOUNDBITE OF MUSIC)

  DAVIES: This is FRESH AIR. I'm Dave Davies in for Terry Gross, who's off this week. We're speaking with University of Pennsylvania Professor Lisa Servon who writes about financial services and says, growing numbers of Americans are giving up on having bank accounts and relying instead on alternative services such as prepaid debit cards, check-cashing centers and payday lenders. Her new book is "The Unbanking Of America."

  Well, another part of the alternative financial services world that people go to, who don't have traditional banking, is payday loans, payday lending. Explain how that works.

  SERVON: Payday loans are very short term, usually two weeks to a month, small meaning $75 to $300 usually. High-cost loans - the APR, the annual percentage rate ranges from three to 600 percent. So the way it works - the reason it's called a payday loan is that if you want one, you have to have a job or a regular source of income - it could be a social security check - and you have to have a bank account. So you show up at the lender, you show them that - proof of those - the two things and your repayment of that loan is due on your next - the date of your next paycheck or government check. And so it's a - it's basically an advance of your pay day, your payroll.

  DAVIES: And the pay day - you have to sign something which gives the payday lender access to your account.

  SERVON: Exactly.

  DAVIES: I mean, it's not - you have no discretion...

  SERVON: That's right.

  DAVIES: It pops out of your account.

  SERVON: That's right.

  DAVIES: The day of your pay day...

  SERVON: Yes.

  DAVIES: ...That's the payday loan, right?

  SERVON: Exactly, exactly.

  DAVIES: And then you pay what's called a fee...

  SERVON: Yes.

  DAVIES: ...Which could be 25 or 50 dollars, but on an annual percentage rate basis it could be 500 percent.

  SERVON: That's right.

  DAVIES: You got a job at a payday lender.

  SERVON: I did (laughter). I did. You know, this whole book was...

  DAVIES: You have a way of doing this (laughter).

  SERVON: It was a - it was like a quest, you know? I would sort of go and do one thing and then I thought like, wow, if I really want to understand this, then I have to do this, too. And payday loans are probably the hottest topic in this world. Most people know in this kind of alternative financial services world - most people know something about them and assume that they're horrible. And once again, I felt like, well, first of all, I thought I can't write about this unless I understand the way that industry works. And, again, why are people doing it? Why would people take out such an expensive loan if it's harmful? Which is what the received wisdom is - these are harmful loans.

  DAVIES: So a payday lender knowing that they are widely condemned by consumer groups allowed you, this professor, to come in and work behind the counter.

  SERVON: Yeah. It's funny because I think in the case of both businesses, they have been beaten up so badly that they had nothing to lose. Right? So I thought nobody's ever going to let me come and work there, but they thought, sure, come on in. You can't say anything worse than what's been said already, so yeah.

  DAVIES: So your second turn behind the Plexiglas window (laughter).

  SERVON: Yes, yes in Oakland, Calif.

  DAVIES: Tell us what it was like.

  SERVON: It was, again, super interesting. I saw the relationship between the people behind the counter and the customers. And, in fact, just yesterday, I talked to a teller that I write about in the book, Arianne (ph), and she said, yeah, you'd recognize all the customers. They're all still here, you know, three years later. You know, I would say a slightly - somewhat better off group of people. These are people who have to have a job and a bank account already. But, similarly, were oftentimes in a moment of crisis. They really needed a small amount of money right away for an urgent need.

  DAVIES: All right, so you're in a jam.

  SERVON: Yeah.

  DAVIES: This is a way to get it. The problem is what if you can't really afford to pay it back quickly?

  SERVON: Right, and that is a problem. So what happens for many people - and this is where most people, including myself, have a problem with the industry - is that if that two weeks comes up and you can't pay, you end up doing something called a rollover. You end up maybe paying back the loan, but getting a new loan out right away and paying a new set of fees. So if you paid $15 per hundred to borrow the money in the first place, now you're paying another $15 really for the same hundred dollars. And that often happens. People are often in a situation where it's not a short-term need. Right? It was an immediate need, but it wasn't a short-term need, and they can't pay it off.

  DAVIES: Right. You write of someone who had two different jobs. She had kids. Her car broke down.

  SERVON: Yeah.

  DAVIES: She had to have that car to keep the two jobs.

  SERVON: That's right. So many people are in that situation where it's an impossible choice. Do I fix my car so I can keep my job or do I take out this loan and take out a loan that I know I can't afford? Or do I lose my job? Do I take out a payday loan to feed my kids or do I not feed them? Right? So these are choices that I think many of the people that judge these lenders and the people who use them don't have to face. I've never faced a choice like that.

  You know, even if I hit rock bottom, I'd have family and friends who would loan me a couple hundred dollars. But more than half the people in this country could not come up with $2,000 in the event of an emergency. And that's not just from their own pockets or assets. It's from their extended network. So this is a big problem, and it's not just affecting low-income people.

  DAVIES: And the criticism of it is that payday lenders present themselves as people who help people out who are in a temporary jam. They provide something that no bank or anybody else will provide...

  SERVON: Right.

  DAVIES: ...But that the real business model is to keep them on the hook...

  SERVON: Yeah.

  DAVIES: ...So that those fees pile up week after week, month after month and then you really are paying three or four or 500 percent interest.

  SERVON: That's right. And I think that's the crux of the issue is that people are not necessarily using the loans the way that they're sold. Right? If it's sold as a two-week loan, but you're keeping it out for three months or four months, then there's a difference between, you know, what the product is being sold to do and how people are using it. And that's obviously a problem. The real question is if you don't have any other options or choices, is it better to take out that loan even at the high cost that it is or not take it out at all? And so many of the people that I talked to and interviewed said I'm glad that that money was there for me.

  DAVIES: Do you have any advice for someone who, you know, doesn't have a lot of money and is going to be, you know, living close to the edge a lot of the time - if they want to get a bank, what should they look for?

  SERVON: Yeah. Well, for one thing, credit unions are a great option for people if you have access to one. Credit unions are cooperatives. Their first goal is not about maximizing profit for shareholders because as an account holder, you are an owner of the cooperative. So there are sites where you can check and see if there's a credit union that you could belong to. And on average, people who have credit union accounts pay a lot less in fees than people who have mainstream bank accounts.

  I actually have a button on my website that says - it's called called how to leave your bank, so people can go to that. And there are a few really good resources where you can say, you know, if what you need is a no-cost checking account, it'll help you compare options so that you can figure out who's offering the product that you want, who's most transparent, who has the best ratings among customers.

  And so I think oftentimes it's a local bank, a community bank or a credit union that's your best bet. And contrary to popular belief, you don't need to go to the bank that has the most ATMs. A lot of these smaller banks are now reimbursing people if you have to pay an out-of-network fee to use another ATM, they'll put that money right back in your account.

  DAVIES: And can you look at the terms and conditions that they give you and make sense of them? I mean, does it make sense to really do your own research?

  SERVON: It does. Some of the sites I'm talking about - one is called NerdWallet, for example - is a great site that does that work for you. Right? So they're looking at those 44-page disclosure agreements that you get with their - your checking account and figuring out how to make those terms more transparent to people who want to compare options and putting them in a table so that you don't have to do that work yourself.

  DAVIES: Are there things that the government can and should do to help us get financial services that are more responsible?

  SERVON: I think so. I mean, just to follow up on that transparency point, you know, government could mandate that banks become more transparent. And I think banks' answer to that push for transparency has sometimes been to issue these disclosure agreements that can be 40 pages, 50, 200 pages that nobody can read.

  In the book, I actually advocate for a financial facts box that would be on the side of every consumer financial product the same way there's a nutrition facts box on your orange juice and your pasta and your - on your cereal that says - that allows you to compare this checking account to that checking account, this payday loan to that one, this debit card to that one so that people can really look side by side and say like, oh, this one is not going to cost me as much or given my particular situation. I also think that government could rate every financial services provider. You know, in some cities - I live in New York - there are big, blue letters in the window of every restaurant. If you get an A, it means your kitchen...

  DAVIES: From the Health Department.

  SERVON: ...From the Health Department - your kitchen passed inspection with flying colors. I don't order Thai food from the restaurants that have B's and C's in my neighborhood because I don't know what's going on in those kitchens, and I don't have to check the Department of Health's website anymore. That letter grade is right in the window. Why don't we have letters like that or gold stars or something in the window of every check casher and bank? I think those are two great things.

  The other thing I think is that in terms of regulation, the government banking relationship has shifted way too far to the side of favoring banks as opposed to favoring the public interest. You know, the fact is that good, safe, affordable financial services are really essential to everyone to operate fully in the economy and in civil society. And banks are in the business of maximizing profit. They're not in the business of financial health.

  DAVIES: Lisa Servon, thanks so much for speaking with us.

  SERVON: Thank you. It's been a pleasure.

  DAVIES: Lisa Servon is a professor of city planning at the University of Pennsylvania. Her new book is "The Unbanking Of America: How The New Middle Class Survives." Coming up, we remember jazz critic and First Amendment advocate Nat Hentoff who died on Saturday. This is FRESH AIR.

• Penn Wharton - https://publicpolicy.wharton.upenn.edu/live/profiles/582-lisa-servon

  LISA SERVON
  Prior to her appointment as Professor of City and Regional Planning at Penn Design, Professor Servon was Professor of Management and Urban Policy at The New School, where she also served as Dean at the Milano School of International Affairs, Management, and Urban Policy. Professor Servon conducts research in the areas of urban poverty, community development, economic development, and issues of gender and race. Specific areas of expertise include economic insecurity, consumer financial services, and financial justice. She holds a BA in Political Science from Bryn Mawr College, an MA in History of Art from the University of Pennsylvania, and a PhD in Urban Planning from UC Berkeley. Her work has been funded by the Open Society Institute, the Aspen Institute, the Ford Foundation, the Fannie Mae Foundation and others. Professor Servon spent 2015-2016 as a scholar at the Russell Sage Foundation, and 2004-2005 as Senior Research Fellow at the New America Foundation in Washington, DC. Professor Servon is the author or editor of numerous journal articles and five books: The Unbanking of America: How the New Middle Class Survives; Bridging the Digital Divide: Technology, Community, and Public Policy; Bootstrap Capital: Microenterprises and the American Poor; Gender and Planning: A Reader, and Otra Vida es Posible; Practicas Economicas Alternativas Durante la Crisis.

  EDUCATION
  BA in Political Science from Bryn Mawr College, 1986; MA in History of Art from the University of Pennsylvania; and a PhD in Urban Planning from the University of California, Berkeley, 1995.

  TITLE(S)
  Professor of City and Regional Planning

  SCHOOL(S)
  Penn Design

  DEPARTMENT(S)
  City and Regional Planning

  TWITTER HANDLE
  @LisaServon

  RESEARCH INTERESTS
  Urban Planning
  Economic Development
  Consumer Finance
  PUBLICATIONS
  Lisa Servon (2017, January). The Unbanking of America: How the New Middle Class Survives, Houghton Mifflin Harcourt.

  Lisa Servon (2014, October). Are Banks Too Expensive to Use?, The New York Times.

  Lisa Servon (2014, February). The Post Office as Payday Lender? Return to Sender, The Wall Street Journal.

  Lisa Servon (2014, February). What Good Are Payday Loans?, The New Yorker.

  Lisa Servon (2013, October). The High Cost, For the Poor, of Using a Bank, The New Yorker.

  Lisa Servon (2013, September). The Real Reason the Poor Go Without Bank Accounts, The Atlantic Cities.

  Lisa Servon (2013, July). Ritecheck 12, Public Books.

  Sarah Pink, Lisa Servon (2013). Sensory global towns: an experiential approach to the growth of the Slow City movement, Environment and Planning, volume 45, pages 451 – 466.

  Joana Conic, Manuel Castells, Amalia Cardenas, Lisa Servon (2012). Beyond the Crisis: The Emergence of Alternative Economic Practices, Aftermath: The Cultures of the Economic Crisis, Ed. Manuel Castells, Ed. Joao Caraca, Ed. Gustavo Cardoso, Oxford, Oxford University Press, 210-248.

  Timothy Bates, Magnus Lofstrom, and Lisa Servon (2011). Why Have Lending Programs Targeting Disadvantaged Small Business Borrowers Achieved So Little Success in the United States?, Economic Development Quarterly, volume 25, issue 3, pages 255 - 266.

  Lisa Servon, M.Anne Visser, and Robert W. Fairlie (2011). Estimating the Capital Gap for Small Businesses in New York City, Journal of Public Budgeting, Accounting, and Financial Management, volume 23, issue 4, pages 451 - 477.

  Lisa Servon, M. Anne Visser, Robert W. Fairlie (2010). The Continuum of Capital for Small and Micro Enterprises, Journal of Developmental Entrepreneurship, volume 15, issue 3, 301.

  James Carr and Lisa Servon (2009). Vernacular Culture and Urban Economic Development, Journal of the American Planning Association, volume 75, no. 1, winter, pages 28 - 40.

  Lisa Servon and Robert Kaestner (2008). Consumer Financial Literacy and the Impact of Online Banking on the Financial Behavior of Lower-Income Bank Customers, Journal of Consumer Affairs, volume 4, no. 2, Summer, pages 271 - 305.

  Lisa Servon (2006). Microenterprise Development in the United States: Current Challenges and New Directions, Economic Development Quarterly, volume 20, pages 351 - 367.

  Edwin Melendez and Lisa Servon (2007). Reassessing the Role of Housing in Community-Based Urban Development, Housing Policy Debate, volume 18, issue 4, pages 751 - 783.

  Michael Frisch and Lisa Servon (2006). CDC’s and the Changing Context for Urban Community Development: A Review of the Field and the Environment, Community Development: Journal of the Community Development Society, volume 37, number 4, Winter, pages 88 - 108.

  Susan S. Feinstein and Lisa Servon (Eds.) (2005). Gender and Planning, A Reader. New Brunswick, New Jersey: Rutgers University Press.

  Lisa Servon (2002). Bridging the Digital Divide: Technology, Community, and Public Policy, Malden, MA: Blackwell Publishing.

  Lisa Servon (2002). Four Myths about the Digital Divide, Planning Theory and Practice, volume 3, number 2, pages 221 - 244.

  Lisa Servon and Marla Nelson (2011). Community Technology Centers: Narrowing the Digital Divide in Low-Income, Urban Communities, Journal of Urban Affairs, volume 23, number 3-4, pages 279 - 290.

  Lisa Servon and Jeffrey Doshna (2000). Microenterprise and the Economic Development Toolkit: A Small Part of the Big Picture, Journal of Developmental Entrepreneurship, volume 5, number 3, pages 183 - 208.

  Lisa Servon, (1999). Bootstrap Capital: Microenterprises and the American Poor, Washington, D.C., Brookings Institution Press.

• The Guardian - https://www.theguardian.com/money/2013/nov/03/poor-people-arent-making-ends-meet-inside-payday-lending

  Quoted in Sidelights: “If your day is: go to the housing authority and the welfare office and a crappy minimum-wage job, you don’t actually get treated like a full human being very much,” “So if these businesses can do that, I think they got it. Some of them understand that it’s a competitive advantage.”
  Given that situation, it’s remarkable such companies get repaid as often as they do,”

  'Poor people aren't making ends meet': inside payday lending
  New School professor Lisa Servon worked at a check-cashing store and a payday lender, and was surprised by what she found
  Check-cashing
  New School professor Lisa Servon worked at Rite-Check, in the Bronx, and came away surprised by what she found. Photograph: Jana Kasperkevic/The Guardian
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  Jana Kasperkevic
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  Sunday 3 November 2013 08.46 EST First published on Sunday 3 November 2013 08.46 EST
  Lisa Servon is a professor of urban policy at the New School in New York who studies low-income communities. In 2012, she decided to take her research a little deeper.

  "I have worked in poor communities for so long,” she says, “I thought, 'I know poor people are pretty smart about their money actually, because they don't have very much of it.’ And it just led me to want to really understand what was at the bottom of it all.”

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  So Servon took jobs that would challenge everything she knew about poverty: working at a check-cashing place in the Bronx and at a payday lender in California, gaining an inside view of the underbelly of the financial system.

  "I had the same presumptions about [such businesses] that most people have, that they are abusive, that they charge really high prices, that they take advantage of poor people," Servon says.

  In the Bronx, Servon became one of the three cashiers working day shifts at one of Rite Check's 12 locations in the borough. What she saw surprised her: she started to gain new insight into why wealth inequality in America causes people to skirt the banking system, with its hidden fees and long check-clearing times. People with no bank accounts, low incomes or unreliable cash flow – a growing percentage of Americans – often choose an alternative that the middle class might consider desperate.

  In this edited transcript of our conversation, Servon describes a part of society and the financial system that much of the middle class rarely sees.

  Guardian: Has this experience changed the way you see things?

  Servon: I did not expect to find this. I don't necessarily think that check cashers are the answer, but I do think that right now, given the way that banks operate, check cashers are doing a better job of servicing a lot of people.

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  I actually think that all these [proposed] taxes on businesses are kind of misguided. I think the focus should be more on the fact that you have so many people who are actually working really hard and not making enough to have a bank account. You know, real wages have been declining since 1972. If you make minimum wage, you are making about one-third of the average hourly wage. That's the problem in my mind. So [if] you shut down the check cashers you are still going to have all these poor people that aren't making ends meet. It's not going to solve the problem.

  You mentioned people having preconceptions when it comes to check-cashing places. Can you talk a little bit about the fees involved and how they compare with banks?

  One of the key things that hass happened [since the 2008 financial crisis] is that you have more and more people who are living paycheck to paycheck. So for example, in the Bronx 75% of the people have no discretionary income. There is zero slack in their budget.

  So one of the things that becomes incredibly important to them is being able to get their money fast and to have liquidity. If you go to the bank, they want to hold on to your check until it clears. It's less risk for them. Whereas at the check casher, they charge you a little bit of money – in New York State, it's 1.95% of the face value, which is about the lowest. In California, it's more. People are really aware that they are paying that. They are paying that price for liquidity.

  The other thing is that if you were to map the increase in the check-cashing industry over the last 10 years there would be another line that would look very similar on the graph. That would be the increases in bank fees. If you compare it to 10 years ago, ATM fees have gone up, monthly service fees have gone up. Last year overdraft fees were at an all-time high – I think it was $38bn. So there is that piece of the situation: the straight-up cost of banking.

  The other piece of the situation is transparency. In a sense, check-cashers have their signs right there. You walk into a bank, it might look nice, but there is no signage anywhere. I sometimes think: what if I were an immigrant and someone said, 'You should open up a bank account,' and I don't speak English. I walk in and there's nothing there that tells me what's going on in this place.

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  One of the ways this all plays out is when an individual has to know his or her minimum balance fee, and what day the monthly service fee is coming out. I spoke to an audience of 300 the other week and I said: 'How many of you know what day of the month your monthly service fee comes out?'

  I don't.

  If it was $5 or $10, these people live so close to the edge that it matters. It's not always the same day and [with] overdraft fees you could be charged, I think, even up to $140 a day in overdraft fees.

  People who live so close to the edge feel like they can manage check-cashing better, because they go to the window, they cash their check, they have this pile of cash in their hand and they have these three bills and they see that it's all happening right now with this cash. There is not going to be anything hidden.

  You mentioned that there is trust between the people who work at check cashers and people who use them. Did you see camaraderie between the workers and the customers?

  Definitely, it's one of the things that really impressed me at Rite Check when I started working there. Somebody comes in and you know, “Oh, this person is going to want to see last night's lottery numbers.” You just print them out so they are ready. You get to know your customers, what they do. You see them with their kids or grandkids, and the next time they come you say, “How are your kids?”

  We were actually told when we went through training that we were supposed to use customer's names three times during a transaction. So I would say: “Hey Jana, how are you doing today? What can I do for you? You have a check for me to cash?” And, you know, then I'm doing it, and I would be saying: “On your way to work, Jana? What's going on? What are you doing the rest of the day? Thank you so much. We really appreciate your business.”

  My hypothesis is that people who are lower-income don't get as much of that kind of respect in their lives. I get it at work. In other places, even at higher-end stores and things, you get more of that kind of respect. But if your day is: go to the housing authority and the welfare office and a crappy minimum-wage job, you don't actually get treated like a full human being very much. So if these businesses can do that, I think they got it. Some of them understand that it's a competitive advantage.

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  Tell me more about payday lending.

  It's certainly a big part of this alternate financial services industry and I wanted to understand it. It's more controversial than check-cashing, for sure. I was thinking about how I would get the access, since I live in New York and it's not legal [here]. So last spring, I went to Virginia. There is a place called Virginia Poverty Law Center and they run a hotline for people who are having trouble paying back their loans or feel like they have been treated illegally. And I went down and I got trained on the hotline. I actually kept the hotline phone for about the month, and I brought it back here, but I was the person answering all the calls. So I really heard people's stories and was able to counsel them and tell them what their rights were and what they could do. There's a lot that people can do that they don't realize. You know, you can get people to stop calling you at work – or calling you at all.

  What we did in California was that we got people's work phone. You didn't call their work phone right away, but if they didn't respond, you kind of escalate. And that's OK, but if someone tells you you can't call their work, you have to listen to that. There is the whole Fair Debt Collections Practices Act, but obviously it's abused a lot. It was not abused by the place I worked at in California.

  Once again I think the real issue is people need these really small amounts of credit. And from what I could tell, both from working on the hotline and then working at the store, I think most people – and other studies like the first Pew Study from 2012 substantiate this – most people are paying for basic living expenses or kind of small emergencies that come up.

  If you go back to that notion of people living paycheck to paycheck and not having any slack in their budget, they are going to have experiences like we all do where something comes up that costs more money than we thought we needed. Because they don't have that buffer.

  You know, the financial experts would say you should have six months of bills [saved up]. [She laughs] That's a great idea, right?

  If you were to ask 40 of my friends, maybe four of them have saved enough maybe for two months. I think it's a stigma to say that only low-income people don't have a safety net. A lot of middle-class people don't have a safety net.

  That's right. So, what happens is they are going along, making it paycheck to paycheck and then their car breaks down. This happened to a woman I worked with at the payday lender. She was a single mom, she had to drop her daughter at daycare and get to work. She tried doing it on the bus for a while and she just couldn't make it work and be everywhere she needed to be. So she took a payday loan to get her car fixed. But what happens is there is never that kind of commensurate bump in the income to catch you up to the [increase] in the expenses. So, the loan comes due – usually they are anywhere from eight days to 30 days, depending on your paycheck – and you have to say, “OK, I can pay this one back but I need another one right away.” And so you end up paying a lot more in interest.

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  Is it a vicious cycle?

  It's hard to get out. The woman I talked to, she ended up working out a payment plan where she would just pay back $5 a week or something. And frankly, [the loan companies] aren't taking collateral and they aren't reporting to the credit bureaus so they don't have much leverage at all. The only leverage they have is you won't be able to come back. But frankly, if you wanted to go from payday lender to payday lender and get $300 and default, you could. And it doesn't show up on your credit score, because they don't report. And they can't take you to the court, even, they have to – anything they would do would be an arbitration and they don't really do that.

  I don't know if people really realize that. Given that situation, it's remarkable such companies get repaid as often as they do.

  When you came in contact with the people at the check cashers or payday lenders, did you see customers become embarrassed about their situations?

  In lower-income neighborhoods, there is not much a of a stigma. I couldn't really tell whether people who were taking out the payday loans felt a stigma. Sometimes, there were people who kind of offered up a reason. Almost as if they had to explain: “I work at Restoration Hardware and the store had a fire last week and we are supposed to get paid but we weren't.” There's tons of stuff like that. I was in the San Francisco Bay area and there was a strike of the transportation system.

  Right, the Bart strike.

  I was in the Berkeley store and this guy comes in and he needs a loan to pay his rent because he couldn't physically get to his paycheck. If you look at the individual situations, it's hard to imagine you wouldn't do the same thing. It's not like: “How are these people thinking or operating?” It's kind of like, if I needed to pay my rent and my paycheck was on the other side of the bay and I couldn't get there – that makes sense.

• Business Insider - http://www.businessinsider.com/check-cashing-stores-good-deal-upenn-professor-2017-2

  Quoted in Sidelights:“I knew that the people I had worked with closely who don’t have very much money know where every penny goesl. “They budget things. They know where to get the best deals on things. And so it struck me that if they were using check cashers, there must be a good reason for that.”

  “It felt like the only way I could answer this question: If alternative financial service providers are so bad — if they’re so predatory and so sleazy and so much in the business of taking advantage of people — why are people using them in growing numbers?”

  An Ivy League professor who spent 4 months working in a South Bronx check-cashing store says we're getting it all wrong
  Alex Morrell

  Feb. 12, 2017, 11:00 AM 209,182
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  lisa servon
  Sometimes using a check casher is smarter than using a bank, says Lisa Servon.Courtesy Lisa Servon

  • University of Pennsylvania professor Lisa Servon went to work as a teller at a check-cashing store to find out why customers use the service.

  • Prevailing wisdom holds that customers would be better served by using a bank. But Servon found that check cashers were frequently cheaper and served customers' needs better than banks.

  • Three common reasons customers cited for using a check casher over a bank were cost, transparency, and service.

  Lisa Servon couldn't kick the nagging feeling that the financial elite had it all wrong.

  The prevailing wisdom from bankers and policy makers went like this: People who used alternative financial services — like check cashers and payday lenders — were making expensive and unwise decisions. If we could just educate the "unbanked" and "underbanked" and usher them into the modern financial system with a bank account, their fortunes would surely improve.

  But Servon, a professor of city and regional planning at the University of Pennsylvania and a former dean at the New School, spent 20 years studying low-income communities, and to her, that picture didn't add up. Most of the unbanked (the roughly 7% of US households without checking or savings accounts) and the underbanked (the nearly 20% that had such accounts but still used alternative financial services) that she encountered were neither naive nor irresponsible about money.

  "The implication of that" — the biennial surveys of the "unbanked and underbanked" by the Federal Deposit Insurance Corporation — "was these people were making poor decisions," Servon recently told Business Insider. "I knew that the people I had worked with closely who don't have very much money know where every penny goes. They budget things. They know where to get the best deals on things. And so it struck me that if they were using check cashers, there must be a good reason for that."

  Already steeped in academia and research, Servon didn't think she'd gain any new insight from behind the desk. So in late 2012, she decided to embed in these communities to get a firsthand look, landing a job as a teller for four months at a check-cashing store in the South Bronx. (She would later also work as a teller and loan collector at a payday loan store in Oakland.)

  She didn't go undercover, but rather was hired on the up-and-up thanks to some help from Joe Coleman, the president of a small chain of New York City check cashers called RiteCheck Cashing, who had guest lectured for one of her classes years before.

  "It felt like the only way I could answer this question: If alternative financial service providers are so bad — if they're so predatory and so sleazy and so much in the business of taking advantage of people — why are people using them in growing numbers?" Servon said.

  Servon recounts her journey in her new book, "The Unbanking of America: How the New Middle Class Survives," which came out in January. The book seeks to untangle the reasons millions of Americans are fleeing the "broken banking system" and opting instead for alternative financial services in ever increasing numbers, providing many first-person accounts from people Servon encountered while working in the field.

  Early in the book, she focuses on her experiences at RiteCheck, which is part of an industry that reached $58 billion in 2010, up from $45 billion two decades earlier. If check cashing was shady, why were more people flocking to it?

  Servon was surprised by what people told her. Over and over, Servon heard and observed that check cashers often met customers' needs better than banks did.

  She discovered there were three main reasons people used these services instead of banks: cost, transparency, and service.

  check cashing store
  Mike Segar/Reuters

  Cost
  "People told me they were saving money by going to the check casher instead of the bank," Servon told Business Insider.

  The RiteCheck she worked at charged $1.50 to pay a bill, $0.89 to buy a money order, and roughly 1.95% — as regulated by state law — of the face value of a check to cash it. These small fees add up, but they often paled in comparison to the unexpected charges, maintenance fees, and overdraft fees customers had experienced at banks. The rate for money orders is cheaper than at most banks, which commonly charge $5 to $10.

  "RiteCheck customers told me clearly that bank fees were an important factor in their decision to patronize check cashers," Servon wrote in her book.

  In the book, she provides the example of Carlos, a local contractor who came in on a Thursday to cash $5,000 for his small business, paying a $97.50 fee (and a $10 tip to Servon) in the process. That's $100 he'll never see again — how could he be coming out ahead compared with using a bank? Servon explains:

  "If Carlos is like many small contractors operating in New York City, he relies at least in part on undocumented workers, who are unlikely to have bank accounts. If Carlos deposited his check in a bank, it would take a few days to clear — too late to deliver cash on payday. Or maybe the check was a deposit for a job he had just been contracted to do, and he needed supplies to get started. If he couldn't start right away, he risked losing the job to another contractor."

  Paying $100 isn't much compared with the cost of losing good laborers that need to be replaced or forfeiting new business.

  "It feels expensive — it is expensive — but it made good sense," Servon said. "And there are many, many stories like that."

  Transparency
  Outsiders may think the signage at a check casher — resembling that of a fast-food menu — is gauche compared with simple, polished interiors of their local bank branch. But that's a feature, not a bug.

  Customers "felt like they knew exactly what they were paying when they went to the check casher. And if you go into a check casher, you will see there are signs that span the teller window that list every product that's for sale and how much it costs," Servon said. "The transparency is really critical."

  On the contrary, customers couldn't predict when banks would charge them a fee or what that amount would be — a deal-breaker when you're operating on a tight budget.

  "Walk into your bank branch and you'll see there's no literature like that that makes it obvious what's on offer," Servon said.

  RiteCheck Cashing store
  The inside of a RiteCheck store.RiteCheck Cashing/Facebook

  Moreover, Servon writes, checking accounts were the antithesis of transparent. The terms and conditions were long, technical, and laden with jargon. Many people can't afford to wonder when their deposit will clear, and they prefer paying a small fee for the clarity and speed offered by check cashers.

  Service
  The third thing Servon heard repeatedly was that "people felt like they were being better served" at a check casher than at a bank.

  "The customer-teller relationship at RiteCheck creates remarkable loyalty," she wrote in her book. She said the dynamic resembled the banking she grew up with in the late 1960s and early '70s that was based on relationships and that has largely faded from traditional banking.

  Check-cashing companies charge small fees and thus rely on a high volume of business to turn a profit. That means inspiring loyalty is crucial to the business model, so tellers go out of their way to be friendly and flexible, and customers reward them by returning week after week, year after year.

  "Banks want one customer with a million dollars. Check cashers like us want a million customers with one dollar," Coleman, the RiteCheck president, said in Servon's book.

  In practice, this means providing customers with payment plans when times get tight or helping non-native speakers read letters they've received in the mail and providing advice — not to mention offering rapid access to their money that banks frequently can't match.

  "One of the things that cost people a lot of money is actually waiting for their money," Servon said, alluding to the example of Carlos, the contractor.

  Not all check cashers are the same, but the perception of the industry as seedy doesn't jibe with Servon's experience. And contrary to the views of the financial elite, customers' use of check cashers typically didn't seem naive or poorly thought out, but rather the smartest decision they could make given their circumstances, according to Servon.

  "It showed me that those decisions are often rational, logical decisions, even if they're expensive," Servon said.

• The Atlantic - https://www.theatlantic.com/business/archive/2017/01/underbanked-servon/513542/

  Why Poor People Make Expensive Financial Decisions
  Often, the banking options available for low-income Americans are all fundamentally flawed.

  Enrique Marcarian / Reuters

  GILLIAN B. WHITE JAN 18, 2017 BUSINESS
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  Banks haven’t always been the giant, impersonal corporations Americans today are familiar with. For much of the twentieth century, they were more commonly small, community institutions that helped local residents manage their money and provided quick, small loans in times of financial upheaval. Banking in those days was rooted in personal relationships. That might sound idyllic, but it fostered a variety of problems, including widespread discrimination, says Lisa Servon a professor of urban policy at the New School in New York City. But the system that has arisen in its place, in which banking is faceless and algorithmic presents different problems, ones that poor and middle class Americans bear the brunt of.

  In her new book, The Unbanking of America, Servon explains how changes to both the banking system and the economy inhibited many Americans from accessing basic necessities and building strong financial foundations.

  She writes:

  At the same time that the banking industry has reneged on its responsibilities to ordinary consumers, the larger economic context in which we make financial decisions has changed in ways that make the American Dream an unattainable fantasy for far too many people.
  To make her argument, Servon immersed herself in the world of so-called alternative financial products, getting jobs working at a RightCheck, a check-cashing operation in the Bronx, and at Check Center, a payday lender in Oakland, in the process learning about the services rendered and the people who use them. On top of the academic research that forms the foundation of her case, it is these personal, first-person accounts of those trying to cobble together some form of financial security that provide the texture of a story about what the American economy looks like in practice.

  In recounting her work as a check casher, Servon notes that she was initially confused by some of her customers’ choices. In one example, Carlos (Servon identified him only by his first name), a construction worker who stopped by RightCheck frequently to have his checks cashed, handed over a check for $5,000 for cashing, which required a 1.95 percent fee—$97.50. Servon questions why Carlos would willingly pay such a large fee—plus the $10 tip he leaves Servon—instead of just depositing the money into a bank account and retrieving the entire sum later for free. Her coworkers at RiteCheck explain why that might not be an option: Carlos has workers to pay, some of whom might require cash for a variety of reasons, including lack of documentation. If Carlos doesn’t get his check until Thursday, a bank likely wouldn’t have the entire thing processed and available by Friday’s payday—24 hours later. In another example, a RightCheck regular comes by to get cash in small denominations and pays a hefty fee for it—despite the fact that there are ATMs in the neighborhood that would charge less, or nothing at all. When Servon, again asks why, she’s reminded that ATMs often only dispense denominations of $20, and check cashing customers often have an immediate need for less than the ATM would allow them to withdraw—and no more. “They pay the two dollars to get the eight dollars now because they can’t wait until their account builds up to twenty dollars,” Servon writes. “This is logical, albeit expensive, behavior.”

  In examples like these, Servon helps to dispel an all-too popular misconception: that poor people and people who use expensive, alternative financial services don’t have enough financially savvy to understand how expensive the services are, or that they don’t handle their finances well enough to have access to cheaper, traditional banking options. In fact, Servon finds, most people who use alternative lenders are all too aware of how finances work and are desperately trying to use a system bent against them. “Framing the problem as ‘banked versus unbanked’ has helped spotlight problems of financial exclusion, but it has also placed a value judgement on some people’s financial decisions,” she writes. “What if, instead of focusing narrowly on people’s ‘poor choices’ ... we worked harder to understand the options available to people and the context in which they make those choices?”

  With payday loans, for instance, Servon notes that many people who rely on this pricey, short-term option actually have credit cards with lower interest rates that they haven’t yet maxed out. They choose payday loans over credit cards not because they don’t understand how interest works, she says, but because they’re smart enough to know that payday delinquency won’t be reported to a credit bureau in the same way late credit card payments are, thus preserving their credit score which can help them obtain a variety of other necessities including more credit.

  Many consumer advocates say that alternative loan products, such as payday loans and auto loans, are unequivocally harmful to the finances of those Americans who can least afford high interest rates and staggering fees. But even as regulators have cracked down on some of the worst instances of financial gouging, few mainstream replacements have emerged to help those in need of quick, small-dollar loans. “The question that remains is whether expensive credit is better than no credit at all,” Servon writes.

  Servon is careful to provide a balanced view of the difficult tasks that regulators and financial innovators face. More than changing regulations or increasing financial services from major banks, Servon suggests that the thing that might most help those who remain without access to necessary financial products is simply better wages and greater wage protections. To that end, she advocates a universal basic income that could better help families of all income levels, but especially low-income families, weather the financial shocks that so often leave them reliant on high-priced, dangerous loans and credit.

  Servon has no delusions about these stopgap measures—but notes that the decisions many Americans face are a choice between bad options and worse ones. Even in cases of promising, local-loan alternatives—of which she highlights several—the challenge of scaling such programs up to meet the need would be herculean.

• University of Pennsylvania School of Design - https://www.design.upenn.edu/city-regional-planning/graduate/people/lisa-servon

  Lisa Servon
  Professor and Department Chair
  Contact
  servon@upenn.edu
  Lisa Servon was previously Professor of Management and Urban Policy at The New School, where she also served as Dean at the Milano School of International Affairs, Management, and Urban Policy. She conducts research in the areas of urban poverty, community development, economic development, and issues of gender and race. Specific areas of expertise include economic insecurity, consumer financial services, and financial justice. Servon holds a BA in Political Science from Bryn Mawr College, an MA in History of Art from the University of Pennsylvania, and a PhD in Urban Planning from UC Berkeley.

Quoted in Sidelights: “delivers valuable evidence on the fragility of the personal economies of most Americans these days, with fully half living paycheck to paycheck.”
Servon, Lisa: THE UNBANKING OF AMERICA
Kirkus Reviews.
(Dec. 1, 2016):
COPYRIGHT 2016 Kirkus Media LLC
http://www.kirkusreviews.com/
Full Text: 
Servon, Lisa THE UNBANKING OF AMERICA Houghton Mifflin Harcourt (Adult Nonfiction) $27.00 1, 10 ISBN: 978-0-544-60231-1
Banks seldom have much green money these days--and not many customers, either.As Servon (City and Regional Planning/Univ. of
Pennsylvania; Bridging the Digital Divide: Technology, Community, and Public Policy, 2002, etc.) writes, banks have changed since their heyday
half a century ago; in becoming too big to fail, they devote almost no attention to small-scale customers, who used to comprise the bulk of their
constituency. Now, banks cater to corporate customers, and where they deal with private clients at all, it is often to soak them for overdraft
charges while steadily lowering lines of credit. "People who were approved for credit cards in 2011 were offered only half the amount offered to
those approved in 2005," writes the author. In one case that Servon offers almost offhandedly, a young single mother who had steadily worked her
way out of a credit trough overdrew a checking account by $10 and was hit by $300 in various penalties and fees. It's no way to run an equitable
railroad, but the banks are in the business of cash equity only. Enter informal and alternative systems of banking such as check-cashing services,
some more or less ethical, some nakedly predatory, and private associations such as the Latino tanda, whose members pool funds. All "substitute
for or complement relationships with formal institutions." Servon provides firsthand knowledge of how they work, having taken time out from
academia to work as a teller and loan collector. Her conclusions reinforce the developing thesis that people move into banking and informal
systems situationally, "depending on what they needed and the resources available to them." This is not earthshaking news, but the author delivers
valuable evidence on the fragility of the personal economies of most Americans these days, with fully half living paycheck to paycheck. Servon's
approachable if somewhat academic study is an indictment of a financial structure bent on large returns at the expense of all else, but it also offers
hope for ways around that ravenous system.
Source Citation   (MLA 8th
Edition)
"Servon, Lisa: THE UNBANKING OF AMERICA." Kirkus Reviews, 1 Dec. 2016. General OneFile, go.galegroup.com/ps/i.do?
p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA471901857&it=r&asid=9ddd0c6554ee00b23c5499862341e47a. Accessed 9 July
2017.
7/9/2017 General OneFile - Saved Articles
http://go.galegroup.com/ps/marklist.do?actionCmd=GET_MARK_LIST&userGroupName=schlager&inPS=true&prodId=ITOF&ts=1499633995765 2/2
Gale Document Number: GALE|A471901857

"Servon, Lisa: THE UNBANKING OF AMERICA." Kirkus Reviews, 1 Dec. 2016. General OneFile, go.galegroup.com/ps/i.do? p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA471901857&it=r. Accessed 9 July 2017.

• American Prospect
  http://prospect.org/article/banks-are-even-worse
  Word count: 1606

  Quoted in Sidelights: “the exceptional piece of academic research that not only masters the statistics and the implications of an important social problem, but informs that cool account with frontline observations in the great tradition of Barbara Ehrenreich.”
  The Banks Are Even Worse

  RENA STEINZOR MARCH 6, 2017
  Storefront payday lenders and check-cashers are all that tens of millions of Americans have.

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  AP Photo/Nati Harnik
  EZ Money Check Cashing in Omaha, Nebraska.

  The Unbanking of America: How the New Middle Class Survives
  By Lisa Servon
  Houghton Mifflin Harcourt

  This article appears in the Winter 2017 issue of The American Prospect magazine. Subscribe here.

  Unbanked. The term has an ominous undercurrent if you assume, as most of us do, that being “banked” is essential to quality of life. An unbanked person does not have a checking or savings account and lacks access to mainstream credit cards or loans. In 2015, according to the Federal Deposit Insurance Corporation (FDIC), 7 percent of U.S. households, or about 15.6 million adults and 7.6 million children, qualified for this label. Another 19.9 percent, or about 51.1 million adults and 16.3 million children, were “underbanked,” meaning that they had an account at an insured financial institution but also used “services and products outside of the banking system.” What’s available out in the cold? Payday loans that must be repaid by the next salary check, check-cashing storefronts that charge substantial fees for instant funds, and installment debt available at off-market and sky-high interest rates.

  The mainstream media outlets that have focused on this phenomenon—most notably The New York Times, The Atlantic, The New Yorker, NPR, and The Wall Street Journal—consider it a sad predicament at best and an egregious rip-off at worst. Few have delved into the economic circumstances that make payday lenders and check-cashing storefronts essential for the growing number of people living paycheck to paycheck, one unexpected medical bill away from financial meltdown. Commentators pity the un- and underbanked, despise these predatory, subprime businesses, and rarely mention the unpleasant fact that the mega-banks serving the rest of us have no interest in assuming the burden of serving 29 percent of the population.

  Professor Lisa Servon’s new book, The Unbanking of America, is the exceptional piece of academic research that not only masters the statistics and the implications of an important social problem, but informs that cool account with frontline observations in the great tradition of Barbara Ehrenreich. A professor of city and regional planning at the University of Pennsylvania, Servon spent four months as a check casher in the South Bronx, two weeks as a teller and collections agent at a subprime lender in California, and one month staffing the Predatory Loan Help Hotline at the Virginia Poverty Law Center.

  Unlike Ehrenreich, Servon was not fully underground during these assignments. Her co-workers knew who she was and what she was doing, although her customers did not. In the tradition of Nickel and Dimed, she fully internalized the texture and the weight of the tough times that drove people through the door at enterprises that charged them too much for immediate access to money. Also in the Ehrenreich tradition, Servon firmly dismisses the undercurrent of noblesse oblige and righteous outrage that plagues other reporting.

  A large proportion of this middle-class group is unbanked. ADVERTISEMENT

  The realization that an unexpected expenditure of only a few hundred dollars would push almost half of American households into emergency borrowing or selling a possession is slowly but surely dawning on those among us who are more fortunate, accelerated by post-election soul-searching. A large proportion of this middle-class group is unbanked. When an unexpected car repair or medical bill becomes urgent, they avoid banks because they do not have an account, can’t qualify for credit, or harbor profound distrust of those institutions.

  Take, for example, the true and ironic story of a 22-year-old single mother named Ariane (her name was changed in the book) who worked with Servon as a check casher in Oakland. One inauspicious day, the car she needs to bring her daughter to daycare and herself to work broke down. With no savings, no credit card, no bank account, and no family members who could give or lend her money, Ariane took out payday loans from five different lenders, paying an interest rate of 15 percent per $100. Ariane lives in the state that not only encompasses the sixth-largest economy in the world but has adopted the aggressive approach of prohibiting payday lenders from rolling over, or refinancing, their loans. She understood at the outset that she would not be able to pay the loans back by the next payday because her income just barely covered rent, food, daycare, and other necessities. So she repeated the process, opening a second round of loans and paying the fees all over again. At some point in the process, she closed her bank account because of the high overdraft fees she was charged when creditors tried to access the small amounts in her account. Ariane found herself in a debt cycle that seemed never-ending, owing much more than she borrowed. A second job at night helped her get a small distance ahead of the curve, but real relief came only when she managed to find a higher-paying job. Servon explains that some experts would prescribe “financial literacy” courses for people like Ariane, but that this remedy is as patronizing as it would prove ineffective because the source of her financial crisis was lack of money, as opposed to lack of common sense. Ariane fully comprehended all of the ramifications of stepping on the payday-loan treadmill.

  Servon persuasively challenges the premise that members of the lower and middle classes patronize payday lenders out of ignorance. She demonstrates that they are acting rationally, given limited resources and alternatives. She freely acknowledges that payday lenders and check-cashing businesses charge exorbitant rates. In fact, according to the federal Consumer Financial Protection Bureau (CFPB), payday loans typically have an annual percentage rate (APR) as high as 390 percent. Yet Servon doesn’t buy the politically expedient answer that focusing exclusively on punishing this admittedly predatory industry will bring any real relief to their victims. People who have little or no money simply do not have anywhere else to go.

  Two other unexpected conclusions of Servon’s work are revelatory. First, as Ariane’s story indicates, storefronts are staffed with people from the community, as opposed to functionaries at the other end of a computer connection. At the “unbank,” customers are greeted by name and received with empathy, whether or not they conform to the corporate creditor’s demand for a new payment. Tellers do not humiliate customers for their indebtedness.

  Second, unlike too many other commentators, Servon does not let mainstream banks off the hook in her rigorous analysis of the dynamics of lower- and middle-class debt. The financial industry is highly concentrated, with just four banks—Chase, Bank of America, Wells Fargo, and Citigroup—holding about half of U.S. banking assets and 6,395 far smaller banks dividing the rest. The giants take full advantage of their position by charging large overdraft fees, requiring minimum checking account balances, and engaging in the hidden practice of “debit resequencing” to drive up negative charges and slow down crediting of deposits. These abuses and endless hassles make payday lenders the more rational choice for millions of low-income Americans.

  According to the Economic Policy Institute, working-class wages have “barely budged” over the past 35 years. Men in the private sector who do not belong to a union and lack a college degree earn substantially less than they brought home in 1970. The National Employment Law Project reports that the largest hits were visited on the lowest earners: restaurant workers, janitors, home health aides, retail salespersons, and maids have all experienced deeper wage cuts than average, with some dropping as much as 8 percent as of 2014. Teaching this group that FDIC-insured banks are better bets than storefront lenders would be meaningless anywhere, but especially in areas of “financial exclusion” where banks have abandoned the population physically as well as theoretically. In the South Bronx, for example, one bank is available for every 20,000 people; in Manhattan, the ratio is one bank for every 3,000 people.

  Instead, to protect people without cutting off their access to desperately needed money, the CFPB proposed rules in June that would require payday and other small loan lenders to inquire into whether applicants have the ability to repay and to cap installment loans at 36 percent APR. Of course, following our nightmarish election, these rules, and perhaps the institution that generated them, may be eliminated. Regardless, like all the other deeply seated problems that plague economically vulnerable people, unbanking will proceed apace.

  The bottom line is that Servon has written a readable, informative, thorough, and even gut-wrenching account of an under-reported problem that causes much misery. Viewed as a piece of muckraking journalism, her book is a significant contribution to the progressive narrative regarding the biggest problems we confront. The one flaw, common to many other good books about the plight of low-income people, is the thinness of her solutions. The fact that big banks refuse to do much for the un- and underbanked leads in a straight line to the need for government intervention. Servon chooses federal subsidies and additional CFPB-like regulation. Given the timing of the book’s release, these solutions seem sadly out of reach.

• Christian Science Monitor
  https://www.csmonitor.com/Books/Book-Reviews/2017/0112/The-Unbanking-of-America-asks-why-banks-no-longer-serve-the-middle-class
  Word count: 974

  Quoted in Sidelights: Servon’s compassion and intelligence light up every page of this valuable book. “’Unbanking’ exposes core reasons why many Americans aren’t gaining financial traction as she skewers huge banks for maneuvers and manipulations that have little to do with providing service.”
  Many will disagree with some of Servon’s assertions. But there is no arguing with her central premise that many lower- and even middle-class people are poorly served by major financial institutions, and are suffering as a result.”
  BOOKS BOOK REVIEWS
  'The Unbanking of America' asks why banks no longer serve the middle class
  Journalist Lisa Servon has written an intelligent plea for financial justice.
  By David Hugh Smith JANUARY 12, 2017
  View CaptionAbout video adsView Caption
  Years ago I opened an account at a moderate-sized city bank. I was happy with them. But soon, they were swallowed by a much larger bank, which in turn was gobbled up by really big bank. Finally, this really big bank was devoured by a gigantic multinational bank.

  Services suffered, fees increased, and account details kept getting more complex. Whenever I visit a bank branch and there are tasty pastries and other special goodies set out on little tables, I panic out of concern there’s been another acquisition.

  It’s this phenomenon – banks getting much bigger, but much less helpful, especially for people of modest means – that Lisa Servon discusses in her excellent book The Unbanking of America: How the New Middle Class Survives. Ms. Servon points out that many people today don’t use banks; instead, they rely on check casher services, payday lenders, and other less-than-ideal alternatives.

  Recommended: Would you pass Lit 101? Try our quiz!
  “[M]any Americans have had it with banks. And the banks don’t seem to care,” says Servon.“Over the past four decades, most particularly since the financial crises of 2008, banking ... has morphed into a system that no longer serves the needs of far too many Americans.”

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  Commendably, Servon dives deep for her information. She goes to work for a check-cashing company, then later for a payday lender, to understand firsthand why people use businesses many consider dodgy and exploitive.

  She provides a vibrant description of the thoroughly edgy, often dangerous, South Bronx, where she serves as a cashier. She befriends her primarily Latino customers and co-workers, and learns about their lives. She comments that “Almost three-quarters of Bronx residents have no money left over after paying the bills....”

  So how, conceivably, can these money businesses suitably replace full-service banks? The answer is, they can’t. Servon convincingly argues that “In our modern capitalist system, no one can be financially healthy without reliable financial services that enable a person to save, spend, borrow, and plan.”

  One big issue is fees, particularly overdraft fees, which many banks use to bulk up profits. Some banks engage in nasty practices such as “debit resequencing.” They use software to maximize overdraft fees by taking out larger withdrawals first, and not smaller withdrawals for which initially there would be sufficient funds.

  By contrast, check-casher fees and interest charges by payday lenders are high – but straightforward. And for individuals who can’t wait several days for a check to clear, it is far better to pay a $10 fee then to allow the kids to go hungry. Meanwhile, many people in poorer neighborhoods don’t have easy access to a bank branch – or there are insurmountable obstacles to opening an account because of their low income and weak credit score. So there is no alternative to paying high interest to borrow money.

  Servon’s compassion and intelligence light up every page of this valuable book. “Unbanking” exposes core reasons why many Americans aren’t gaining financial traction as she skewers huge banks for maneuvers and manipulations that have little to do with providing service.

  But there are answers. At length, Servon profiles low-tech ROSCAs – rotating savings and credit associations also known as tandas. These informal “under the radar” operations – often managed by trusted community members – provide services to the “unbanked.”

  Meanwhile, for tech-savvy millennials, and others who have no allegiance to traditional banks, mobile banks – banking services designed for use with smartphones, in partnership with pre-existing ATM systems – work well.

  One promising advancement is Ripple – a firm dedicated to developing a system where “money and property can be transferred globally, in real time, for free.” Gone, for example, would be long waits for checks to clear.

  “There is no shortage of promising ideas,” Servon says, before making her own thoughtful suggestions.These include “renew[ing] government involvement in the consumer financial-services sector,” providing access to clearer information about financial services, and creating a services rating system for financial institutions.

  Nonetheless, she laments that even if these were implemented, “financial health will still be out of reach for [many] Americans [because they] do not have enough money.” They don’t earn enough for their labor, they don’t have access to “stable housing and affordable health care,” and they suffer “decades of indebtedness [resulting from investing] in their own education....”

  She concludes her book by declaring “We need to demand financial justice.”

  Many will disagree with some of Servon’s assertions. But there is no arguing with her central premise that many lower- and even middle-class people are poorly served by major financial institutions, and are suffering as a result.

• Publishers Weekly
  https://www.publishersweekly.com/978-0-544-60231-1
  Word count: 285

  Quoted in Sidelights: “startling and absorbing exposé” “fascinating look at the future of money management,”
  The Unbanking of America: How the New Middle Class Survives

  Lisa Servon. Houghton Mifflin Harcourt, $27 (272p) ISBN 978-0-544-60231-1

  The failure of banks to meet the needs of the 99%—and the cottage industries filling the gap—are thoughtfully explored in this startling and absorbing exposé from Servon, a professor of city and regional planning at the University of Pennsylvania. As she describes, commercial banks now cater largely to the wealthy, and more Americans are turning to alternative financial services, including check cashers, payday lenders, and a variety of informal arrangements. To better understand the options available, Servon took jobs at RiteCheck, a check-cashing establishment in the South Bronx, and Check Center, a payday lender in Oakland, Calif. Surprisingly, she concludes that the seemingly predatory “shadow” banking system may simply be a reasonable (if inconsistently regulated) approach to customer demand. In layperson-accessible language, Servon explains the effects of banking regulations—both recent and historical—and of technological innovations in consumer financial services. Most notable is the breadth of people she finds who have removed themselves, or been removed, from the world of conventional banking, including those with chronically low income, students, and entrepreneurs. Required reading for fans of muckraking authors like Barbara Ehrenreich, this fascinating look at the future of money management insists that the ever-growing number of the “unbanked” are a sector deserving of respect and solid options. Agent: Adam Eaglin, Cheney Literary. (Jan.)
  DETAILS
  Reviewed on: 10/17/2016
  Release date: 01/10/2017
  Open Ebook - 288 pages - 978-0-544-61118-4
  Paperback - 272 pages - 978-1-328-74570-5

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