There have been a lot of reports lately on the growing numbers of people without bank accounts, and on those who have accounts but continue to use alternative financial services such as payday loans. All this has convinced policy makers and many consumer advocates that low- and moderate-income people are victims of “financial exclusion.” They have therefore concentrated on moving these people to banks.
The numbers of “unbanked” and “underbanked” people are indeed growing. Seventeen million people nationwide are unbanked, up from ten million in 2002; forty-three million are underbanked. In very low-income areas like the South Bronx, where I worked, more than half of the residents have no bank account.