All this is very interesting to me. The amount of securitized revolving credit in America has increased by 20x since the late 80s, and yet, as Yoshie points out here, there are more and more people who are left out.
At the same time, banks are securitizing higher- and higher-risk debt. It seems to make no sense. The banks have every reason to want to move to riskier debt, but there are floors below which banks are getting out of the business altogether.
I think what we're seeing here is the need for predictability. Capitalists, because they have no sense of community, can only lend to individuals and benefit vicariously, in an unackowledged way, from the community which keeps those individuals predictable as credit risks. Were they to broaden the pool, they could lend more at lower cost.
There is an organization here in Washington called "Washington CASH" which seeks to be a credit institution for the working poor. How they will fair, I have no idea. But there is a lesson for socialists in this.
Boddi
On 10/17/06, Yoshie Furuhashi <critical.montages at gmail.com> wrote:
> On 10/17/06, boddi satva <lbo.boddi at gmail.com> wrote:
> > connect poor people to the financial system
>
> In the heartland of capitalism called the USA, there are "56 million
> individuals" who have no access to a regular financial system.
>
> <blockquote>In 2002, there were almost 56 million individuals in the
> U.S. who did not have either a savings or checking account at a bank
> or other traditional financial institution.1 Additionally, over 83
> percent of families without a bank account earn under $25,000.2 These
> families often use alternative financial services, including check
> cashing, payday loans, refund anticipation loans, and others, that
> provide convenience at high cost. A 2004 report estimated that these
> alternative financial services handled 280 million transactions,
> generating $78 billion in fee revenue.3 As a result, "unbanked"
> low-income workers who can least afford to pay more for basic services
> often do. They pay to cash checks, are subject to higher interest
> rates on credit, and pay higher fees and interest rates for consumer
> loans, auto loans, and home mortgages. (David Marzahl, O.S. Owen,
> Steve Neumann, and Joshua Harriman, "First Accounts: A U.S. Treasury
> Department Program to Expand Access to Financial Institutions,"
> Profitwise News and Views, February 2006,
> <http://www.chicagofed.org/community_development/files/02_2006_first_accounts.pdf>)
>
> Given recent (still continuing?) discussion of American Populism in
> the 19th century, I should add that populists called for establishment
> of postal savings banks in the Omaha Platform: "We demand that postal
> savings banks be established by the government for the safe deposit of
> the earnings of the people and to facilitate exchange" (at
> <http://www.historymatters.gmu.edu/d/5361/>). That was an excellent
> demand, but it still remains unrealized.
> --
> Yoshie
> <http://montages.blogspot.com/>
> <http://mrzine.org>
> <http://monthlyreview.org/>
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