The Unbanking of America: How the New Middle Class Survives
by Lisa Servon
Houghton Mifflin Harcourt, 272 pp.
On November 8, South Dakota approved a ballot measure that prohibits payday lenders and other small-dollar loan makers from charging an annual interest rate of more than 36 percent. It was a rare moment of bipartisanship in an otherwise ugly election season. Democrats, Republicans, and faith leaders from across the state came together to support the regulation, which passed with about 75 percent of the vote. The result marked the fourth time in eight years that a state chose to rein in usurious lending practices through the ballot box.
Servon, a professor of city and regional planning at the University of Pennsylvania, contends that decades of consolidation within the banking industry have led to a system that is sclerotic and unresponsive to the needs of millions of Americans. Gone are the days when parents would take their children to the local community savings and loan to start putting their allowance away for a rainy day. Four commercial banks--Chase, Wells Fargo, Bank of America, and Citi--together hold about $7 trillion in assets, or 44 percent of the industry's total. Despite the efforts of the CFPB, these organizations have faced no real consequences for their worst abuses, according to Servon. "It's become easier...