Banks haven’t always been the giant, impersonal corporations Americans today are familiar with. For much of the twentieth century, they were more commonly small, community institutions that helped local residents manage their money and provided quick, small loans in times of financial upheaval. Banking in those days was rooted in personal relationships. That might sound idyllic, but it fostered a variety of problems, including widespread discrimination, says Lisa Servon a professor of urban policy at the New School in New York City. But the system that has arisen in its place, in which banking is faceless and algorithmic presents different problems, ones that poor and middle class Americans bear the brunt of.
In her new book, The Unbanking of America, Servon explains how changes to both the banking system and the economy inhibited many Americans from accessing basic necessities and building strong financial foundations.
At the same time that the banking industry has reneged on its responsibilities to ordinary consumers, the larger economic context in which we make financial decisions has changed in ways that make the American Dream an unattainable fantasy for far too many people.
To make her argument, Servon immersed herself in the world of so-called alternative financial products, getting jobs working at a RightCheck, a check-cashing operation in the Bronx, and at Check Center, a payday lender in Oakland, in the process learning about the services rendered and the people who use them. On top of the academic research that forms the foundation of her case, it is these personal, first-person accounts of those trying to cobble together some form of financial security that provide the texture of a story about what the American economy looks like in practice.