

Big banks help payday lenders offer quick cash at steep prices - goodweeds
http://sfpublicpress.org/news/2011-12/big-banks-help-payday-lenders-offer-quick-cash-at-steep-prices

======
goodweeds
This is a pretty interesting business model on the part of the banks. Banks
have realized that poor people don't have enough money for their deposits to
cover the risk of overdraft or customer service. Their solution to this is to
list poor people with a credit reporting agency for checking accounts named
Chexsystems. Once you're listed in chexsystems a bank can close out your
account, and you are effectively blacklisted from the banking system in the
united states. You can still cash checks under a certain amount at the issuing
bank, but they put up a ton of roadblocks to make it difficult, adding so much
friction that people end up going to these check cashing establishments where
the banks get to keep 3-5% of their income. The best part of this is that the
poor have no recourse because they're poor. It's a brilliant, if unethical,
business model.

