First, it’s impossible for me to be objective about HTOHB. I remember 2 years ago at Ted’s Most Best (yes, it's good local pizza with a kid-friendly sandpit, yes that's its name) telling Mehrsa to submit an editorial to the NYT about postal banking. I remember sharing her elation at the editorial’s publication, and of her book contract. I’ve been on the sideline cheering this book for a long time, and I’ve watched its reception with pride and pleasure. Funnily enough, however, I never actually read it in draft form, although we’ve spoken about aspects of it over the past two years, so I've been eager for an excuse to take it up.

My overall first impression was: This isn’t your typical academic book. This is an unabashed cri de coeur, with a tone of barely concealed anger and urgency. It’s a book with a message much broader than advocating for postal banking although, that being the culminating chapter, that is where the reviews have focused. HTOHB is describes and diagnoses the current banking problem facing poor and middle-income Americans, contextualizes that problem historically, and proposes a solution.  The funny thing--and it may well be a calculated move--is that the solution addresses so little of the problem.

First, on the descriptive: Even though I consider myself a fairly educated banking reader, I learned a lot. Like that there are more payday lender storefronts than Starbucks and McDonald’s combined. Wow.  Like my co-bloggers I found her description of the role of regulation in banking compelling. She skillfully rebuts the arguments of those who would blame the financial crisis on the CRA or on greedy and improvident subprime borrowers. 

Second, the book leaves me feeling sorry for the big banks. Given the world that they live in—and yes, they created via lobbying and campaign contributions—they’re stuck. They just can’t afford to let the poor bank with them. Let’s take overdraft fees. They’re close to my heart, because once upon a time, in a moment of youth, inattention and temporary low bank balance, I swiped my bank card instead of my credit card and wound up overdrawing my account. I fumed at the overdraft fee, but knew it was my mistake.

Overdraft fees look a lot worse these days. Mehrsa describes one customer who received a notice of 5 transactions ranging from $4.35-$39.46 for which there was not enough money in the account. Bank of America reordered the withdrawals so that the highest withdrawal was taken out first—without that manipulation, there would have been 2 overdraft fees, instead of 5. At $35 a pop, these added up to $175, or an interest rate of 3,335%. And fresh fees are assessed each day you’re overdrawn. And now apparently banks pool their data in a ChexSystems database and banks will decline account applications because of them—97.5% of the denials are from this kind of “account mishandling,” and just one overdraft can cut you off from conventional banking for years.

What this story makes clear is that, although the banks are imposing punitive fees on these borrowers, they're not trying to make a business of it--they're trying to drive them away.  Although the percentage profits are high, these absolute dollar numbers are just too small to be worth it for the big banks. 

Do you remember back in 2010 when Bank of America tried to institute a $5 debit card swipe fee? It sparked a social uprising, including a “Bank Transfer Day” where people were urged to take their money out of big banks and put them in small banks and credit unions. President Obama weighed in against the outrageous fee.  But I remember feeling sorry for BoA at the time—it was responding to regulation in Dodd-Frank and imposing an upfront fee, just like it was supposed to. Political firestorm followed.  What was the lesson big banks learned?  Keep the fees on the downlow, and no one gets hurt.  And if the fees aren't enough to make the business profitable, the only alternative is to get out of the business.

So ultimately I guess I'm with Matt, who said this much better: that there's "an ambivalence that underlies a lot of the book.  Yes, banks are making beaucoup bucks while safely within the arms of their government protectors. At the same time, however, they are just being what they were designed to be: profit-making businesses operating within a market." Mehrsa tacitly accepts the status quo and works within it to argue for postal banking.  But her larger argument, particularly the larger historical narrative, seems to support a much more radical rethinking of government's support for banking.  Mehrsa starts off with a shrewd move, nodding to history by pointing out that debate about banking’s identity and core function dates back to the founders, with the Hamilton central banking model at odds with Jefferson’s localism and suspicion of concentrated banking power. She makes clear in that chapter that the tension between consolidated and local banking is an age old one in our republic. She asserts in the first line of Chapter 1 that "One of the most important sand oft-forgotten truths about any banking system is that it simply cannot exist without the government."  Her overall narrative sets the stage for a larger rethinking of what we as a society expect of the banks our government enables to exist.  Well-written and engaging, this is a big and important book, with big implications--for postal banking, and for banking as an industry.

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