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We now live in the 21st century, a digital age, and it’s time to recognize access to fairly priced banking service as a human right.
A decent life, after all, is all but impossible without a bank account. Access to banking services has rightly been called a passport to the modern economy.
Social activists recognize the first steps to getting our most vulnerable citizens off the streets and into a productive and healthy life include helping them to open a bank account.
So while the Alberta NDP government’s legislative crackdown on the predatory payday loan industry is a useful step in the right direction, it only really tackles a small part of much bigger problem when it imposes caps on borrowing fees and requires exploitive lenders to provide customers with an honest accounting of the true cost of their usurious loans.
Bill 15, An Act to End Predatory Lending, introduced by Service Alberta Minister Stephanie McLean and given first reading on May 12, also includes some modest measures through an Alberta credit union to provide lower-cost alternatives to extortionate payday loans.
It would appear, by the way, this policy is popular with almost everybody in Alberta except the payday loan industry and its allies in the media and the ideological right. Only 17 per cent of the respondents to a recent public opinion survey thought payday loan companies should be permitted to continue operating as they do now, although the industry itself and its touts in mainstream media have whined about their activities being characterized as predatory in the title of the bill.
As an aside, I think we can safely predict that the parties of the right will be cautious about revealing too much about the promises they are doubtless making to the predatory loan industry regarding future legislation. If those changes are ever made, you can count on it they will be promoted under the cover of “choice,” or even “freedom.”
But Bill 15 hardly solves the problem of a banking industry that is not particularly interested in providing services to low-income customers — and, indeed, may discreetly have its fingers in exploitive-loan and “alternative financial services” operations, the better to squeeze customers who don’t have economic clout or substantial assets.
Last year, U.S. consumer and social activist Ralph Nader wrote that such fringe banks bring in about $40 billion a year in high-interest loans in the United States.
Where, he wondered, are the conventional banks? “They are increasingly closing up shop in low-income areas,” Nader said, quoting the Bloomberg financial news service. “From 2008 to 2013: ‘Banks have shut 1,826 branches…. and 93 per cent of closings were in postal codes where the household income is below the national median.’ If you are living in a low-income neighborhood, just finding a bank is difficult.”
Don’t imagine for an instant that these trends are not the same in Canada.
The result in the United States, according to Nader, is that “the unbanked now pay up to 10 per cent of their income just to use the money they have already earned.”
The impact in Canada, says the Canadian Union of Postal Workers, is that “Canadian banks have raked in enormous profits while cutting service, closing branches and charging some of the highest banking and ATM fees in the world. We deserve better.”
Both the well-known American activist and Canada’s postal workers advocate the same sensible solution: the creation of a national postal banking system to serve all citizens, but especially those the commercial banking sector either rejects outright or directs into exploitive and predatory alternative-banking rackets.
The United States Postal Service, wrote Mr. Nader, “could expand to include paycheque cashing, pre-paid debit cards, bill payments, ATMs, savings accounts and small dollar loans. The introduction of these services would offer millions of Americans a local, reliable and affordable alternative to managing their finances. With over 30,000 locations, Post Office branches are everywhere in America.”
CUPW makes similar points about Canada, where we had a national postal banking system from 1868 until 1969, when the commercial banking lobby managed to get it shut down. “Nearly two million Canadians in urban and rural areas desperately need an alternative to predatory payday lenders,” CUPW says.
Where they exist — for example, in France, Switzerland, Italy and New Zealand — postal banks are highly profitable while filling a fundamental social need that “the market” is only prepared to address in an exploitive and anti-social manner.
As in the case of stronger regulation of payday loan sharks, the idea of a postal bank is popular with Canadians … if you ask them. “Almost two out of every three respondents (63 per cent) to a 2013 Stratcom poll supported Canada Post expanding revenue-generating services, including financial services like bill payments, insurance and banking,” CUPW notes.
Moreover, the union says, Canada Post conducted a four-year study on postal banking that indicated a postal bank “would be a win-win strategy” for the Crown corporation and the country. A copy of the was study was obtained though an Access to Information request, CUPW said, but 701 of its 811 pages were censored. “CUPW has asked Canada Post’s president to release the full report, but he has refused.” Why doesn’t this come as a surprise?
We can create a postal bank if we wish: Social Credit Premier William Aberhart tried something like it in Alberta in 1938 when his Social Credit government created Alberta Treasury Branches. However, through years of conservative governments under Ernest Manning, still labeled Social Credit, and then six Progressive Conservative premiers, it has been transformed for all intents and purposes into just another commercial financial institution, rebranded ATB Financial to shroud its radical beginnings.
Still, this needs to be done at the federal level.
All we need to do is recognize two things:
- That our rights to life, liberty and security of the person and to equal treatment under the law, and equal protection and benefit of the law without discrimination guaranteed to all Canadians by our Charter of Rights and Freedoms include full access to fairly priced banking services.
- That “the market” will never do this job in a way that doesn’t attempt to exploit society’s most vulnerable citizens.
It’s time for a postal bank, in Canada and the United States. As the Posties say, we deserve better.
This post also appears on David Climenhaga’s blog, AlbertaPolitics.ca.
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