Minorities possible unfairly disqualified from opening bank accounts
My friend Frank Pasquale sent me this article over twitter, about New York State attorney general Eric T. Schneiderman’s investigation into possibly unfair practices by big banks using opaque and sometimes erroneous databases to disqualify people from opening accounts.
Not much hard information is given in the article but we know that negative reports stemming from the databases have effectively banished more than a million lower-income Americans from the financial system, and we know that the number of “underbanked” people in this country has grown by 10% since 2009. Underbanked people are people who are shut out of the normal banking system and have to rely on the underbelly system including check cashing stores and payday lenders.
I can already hear the argument of my libertarian friends: if I’m a bank, and I have reason to suspect you have messed up with your finances in the past, I don’t offer you services. Done and done. Oh, and if I’m a smart bank that figures out some of these so-called “past mistakes” are actually erroneously reported, then I make extra money by serving those customers that are actually good when they look bad. And the free market works.
Two responses to this. First, at this point big banks are really not private companies, being on the taxpayer dole. In response they should reasonably be expected to provide banking services to all of not most people as part of a service. Of course this is a temporary argument, since nobody actually likes the fact that the banks aren’t truly private companies.
The second, more interesting point – at least to me – is this. We care about and defend ourselves from our constitutional rights being taken away but we have much less energy to defend ourselves against good things not happening to us.
In other words, it’s not written into the constitution that we all deserve a good checking account, nor a good college education, nor good terms on a mortgage, and so on. Even so, in a large society such as ours, such things are basic ingredients for a comfortable existence. Yet these services are rare if not nonexistent for a huge and swelling part of our society, resulting in a degradation of opportunity for the poor.
The overall effect is heinous, and at some point does seem to rise to the level of a constitutional right to opportunity, but I’m no lawyer.
In other words, instead of only worrying about the truly bad things that might happen to our vulnerable citizens, I personally spend just as much time worrying about the good things that might not happen to our vulnerable citizens, because from my perspective lots of good things not happening add up to bad things happening: they all narrow future options.