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How Big Banks And States Scheme Against The Unemployed

  • by
  • November 16, 2011
  • 11:00 am
How Big Banks And States Scheme Against The Unemployed

There are a lot of reasons why people are angry at big banks, leading more than a million people to withdraw their funds last week on Bank Transfer Day. Well, now big banks have given everyone yet another reason to hate them — charging exorbitant fees to people receiving unemployment benefits with the help of state governments.

Janell Ross of the Huffington Post explains that in “41 states major banks and financial firms have secured contracts to provide access to public benefits via prepaid debit cards. And banks are increasingly extracting hefty cuts of these funds†through an assortment of small fees.”†When she says that banks “secured contracts,” what that means is that they were given quasi-monopoly control of people receiving unemployment benefits — if someone wants to claim their benefits, they have to go through one of the big banks. Often, direct deposit or paper checks aren’t even an option, so the unemployed have to use pre-paid debit cards, which are associated with all kinds of crazy fees — for too many withdrawals, for going to see a teller, for pretty much anything.

That’s not even the worst part, though. In California, the state government is receiving $8 million dollars in kickbacks from Bank of America for providing the bank with this cash cow. So let’s get this straight — big banks are paying the state of California for the ability to levy huge fees on the unemployed. These kinds of fees are catastrophic, especially for those who have lost their jobs and most of their income. As finance blogger Felix Salmon notes, “people on unemployment benefits live very stretched, high-stress lives where pennies count. And they simply canít afford the fees that banks like BofA and US Bank are levying with abandon on some of Americaís poorest and neediest. The fact that the states are going along with the banks on this is just gruesome.” He goes on to rightfully call it “evil.”

Salmon is 100% correct: the point of unemployment benefits is to allow people who have lost their jobs to land on their feet, not to try to funnel their money to huge conglomerates making billion dollar profits. The fact that this kind of abuse originates in state regulatory bodies is especially disheartening — government regulators should focus on helping out those who have lost their livelihoods before trying to enrich banks even more. This scandal underscores the importance of the Occupy Wall Street movement — clearly, government is putting big banks above its constituents. It’s time for us to change that kind of cozy and corrupt relationship.

Related Stories:

Banker Bonuses Fall Thanks To Government Regulation

How To Move Your Money Out Of The Big Banks [Video]

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Photo credit: bytemark's Flickr stream.

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45 comments

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5:48PM PST on Dec 1, 2011

Yup..the poor guy gets it again!

10:52AM PST on Dec 1, 2011

These state officials should demand that if these unemployment checks have to go to a certain bank because it is easier then they should make use of one of the credit unions in the state and demand that no fees be put on this money and the people need to be out there at their state representative demanding this.
This is the first time I've seen US Bank in all of this. I've been taking out my money from US Bank and keeping a smaller amount in their; but all my bills are paid though this bank and it's hard to change this when you are my age. I've been keeping less in their because I get certain benefits for having an account their, but I'm sending most of it to my credit union when I have enough to send their so I still have money to pay my bills.
After reading this I'm just keeping the smallest amount in US Bank now, It will cost them more to keep me on this way and if they start charging me more for things then I guess I will try to get everything switched over to a credit union close to me and it will bother me because they are so nice to me, I will miss them but everyone needs to learn that the people come first.
Wow this was a surprise to me but I should of seen it coming.
I'm so sick of these banks I could scream and the state governments should be ashamed of themselves.

5:20AM PST on Dec 1, 2011

@Rose L. Your news is biased, probably Fox, Checkout the top 10 Videos of OWS and you will see innocent people being assaulted. One is of an 84 yr old women who was walking by as a spectator not in the mob another is a war vet. It's a shame that citzens don't find more then one source for info.

7:39AM PST on Nov 28, 2011

Susan T. I think this article shows us that government and big money are holding hands. So who is the biggest criminal? Kind of like the question of what came first the chicken or the egg.

7:12AM PST on Nov 28, 2011

Can't put anything pass these big banks! Everyone seems to lose expect the banks and states (California gets kickbacks)

12:13AM PST on Nov 20, 2011

Thanks for the article.

11:51AM PST on Nov 19, 2011

Cristiana T - may I remind you that we are talking here about the banks, NOT the government (although we effectively have the banks in charge of the government). The banksters are the biggest criminals

11:47AM PST on Nov 19, 2011

All governments are criminals

7:15AM PST on Nov 18, 2011

Spread the protest.

Corporations have over-powered our government which now believes that out-sourcing and off-shoring of U.S. jobs is inevitable and necessary with expectations that the middle class should fall on their swords. It is the underlying cause of the financial collapse and borders on national security with the loss of our middle class tax base. Yet, this nation does nothing, not even demand it be restricted by whatever method. International businesses are doing the UN-AMERICAN activity of destroying U.S. salaries, U.S. businesses that hire in the U.S., and as an end result, destroying the U.S. marketplace while still demanding BUSINESS ENTITLEMENTS and protections for themselves.

Infrastructure spending and tax breaks will not replace enough jobs to keep up with the hemorrhaging loss of U.S. jobs from out-sourcing over seas. Neither party will do anything about it unless we begin grass roots efforts to protest out-sourcing and off-shoring of U.S. jobs. If nothing is done we will deserve what we get and it will get a lot worse before it gets better.

4:42AM PST on Nov 18, 2011

"So you think you live in a free country!" - Marg W. -

I wonder when they'll realize they don't? (fellow Canadian here!) I can't wrap my mind around the idea that people on unemployment are not allowed to choose which bank or credit union they want to deal with - that's insane!

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