The Unbanking of America

Starred review from October 17, 2016
The failure of banks to meet the needs of the 99%—and the cottage industries filling the gap—are thoughtfully explored in this startling and absorbing exposé from Servon, a professor of city and regional planning at the University of Pennsylvania. As she describes, commercial banks now cater largely to the wealthy, and more Americans are turning to alternative financial services, including check cashers, payday lenders, and a variety of informal arrangements. To better understand the options available, Servon took jobs at RiteCheck, a check-cashing establishment in the South Bronx, and Check Center, a payday lender in Oakland, Calif. Surprisingly, she concludes that the seemingly predatory “shadow” banking system may simply be a reasonable (if inconsistently regulated) approach to customer demand. In layperson-accessible language, Servon explains the effects of banking regulations—both recent and historical—and of technological innovations in consumer financial services. Most notable is the breadth of people she finds who have removed themselves, or been removed, from the world of conventional banking, including those with chronically low income, students, and entrepreneurs. Required reading for fans of muckraking authors like Barbara Ehrenreich, this fascinating look at the future of money management insists that the ever-growing number of the “unbanked” are a sector deserving of respect and solid options. Agent: Adam Eaglin, Cheney Literary.

December 1, 2016
Banks seldom have much green money these days--and not many customers, either.As Servon (City and Regional Planning/Univ. of Pennsylvania; Bridging the Digital Divide: Technology, Community, and Public Policy, 2002, etc.) writes, banks have changed since their heyday half a century ago; in becoming too big to fail, they devote almost no attention to small-scale customers, who used to comprise the bulk of their constituency. Now, banks cater to corporate customers, and where they deal with private clients at all, it is often to soak them for overdraft charges while steadily lowering lines of credit. "People who were approved for credit cards in 2011 were offered only half the amount offered to those approved in 2005," writes the author. In one case that Servon offers almost offhandedly, a young single mother who had steadily worked her way out of a credit trough overdrew a checking account by $10 and was hit by $300 in various penalties and fees. It's no way to run an equitable railroad, but the banks are in the business of cash equity only. Enter informal and alternative systems of banking such as check-cashing services, some more or less ethical, some nakedly predatory, and private associations such as the Latino tanda, whose members pool funds. All "substitute for or complement relationships with formal institutions." Servon provides firsthand knowledge of how they work, having taken time out from academia to work as a teller and loan collector. Her conclusions reinforce the developing thesis that people move into banking and informal systems situationally, "depending on what they needed and the resources available to them." This is not earthshaking news, but the author delivers valuable evidence on the fragility of the personal economies of most Americans these days, with fully half living paycheck to paycheck. Servon's approachable if somewhat academic study is an indictment of a financial structure bent on large returns at the expense of all else, but it also offers hope for ways around that ravenous system.

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Starred review from December 1, 2016

Servon (city & regional planning, Univ. of Pennsylvania) provides insight into why many Americans, such as the working poor, immigrant and minority groups, millennials, and even entrepreneurs with ample funds, have not been served properly by traditional banks. The author, a recognized expert in the field of banking alternatives, as evidenced by her education and bylines in major publications, such as the New York Times, shows how individuals have used alternative banking methods, such as lending clubs. Servon spent large amounts of time working as a teller at a South Bronx check-cashing business and an Oakland payday lender while researching this book. This book will appeal to many different readers. Servon is an engaging writer who relates stories of these new business owners, their employees, customers, and innovations with a personal touch. VERDICT This well-written book offers a fascinating read. [See Prepub Alert, 7/11/16.]--Caroline Geck, Somerset, NJ

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