Banking for the People: Lessons from California on the Failures of the Banking Status Quo

The current banking system in the United States—and its fine- and fee-heavy profit model—is a barrier to economic entry and financial security for millions of individuals and families, especially those who are Black, brown, and/or low-income. In addition to being grossly unfair, our status quo banking system creates a damaging, multitiered economy that locks out everyone who can’t afford to participate in it. At the same time, millions of prospective customers face obstacles to banking in person, which can be a crucial prerequisite to economic independence and security.

In “Banking for the People: Lessons from California on the Failures of the Banking Status Quo,” Emily DiVito presents findings from a new and original field survey of California bank branches in order to underscore the shortcomings of the current banking industry.

The survey focused on access barriers to in-person banking, and in particular found:

1. Race and language disparities in access to information and equal treatment while at bank branches;
2. A prevalence of overdraft-fee-based accounts and a reticence on the part of bank staff to disclose cheaper alternatives when those options exist; and
3. A near-total lack of no-fee, no-minimum balance account options at surveyed banks.

DiVito outlines the policy options available to fix these problems in our banking system, including a comprehensive public banking option at the federal level, operated via FedAccounts and postal banking, and a state- or city-backed program of no-cost bank accounts. Only through inclusive, fair, and accessible banking opportunities—that meet the needs of those who have most often been sidelined—can the US reach its full economic and social potential.