I will echo the praise of the prior contributors: this is a really well-written book, packed full with insightful and accessible anecdotes, thoughtful analysis, and a strong message.  Like Christine, I was particularly interested in the middle chapters, as I worked on bank lending and Community Reinvestment Act issues with the Woodstock Institute prior to law school.  My former boss at Woodstock went on to work with South Shore Bank/ShoreBank, and I remember the real enthusiasm and optimism surrounding that bank and its mission.  But as the book points out, ShoreBank became insolvent in 2010 after being refused TARP funding.  The story of that bank's failure could be one of liberal cronyism and ideology run amok, or simply the collapse of an undiversified regional bank in the midst of an international financial breakdown.

The narrative is important and therefore contested because blame is important in this space.  The facts, marshaled clearly and thoroughly by the book, are undeniable: approximately 70 million Americans do not have a bank account or access to traditional financial services.  The services provided to the unbanked or underbanked are generally much more expensive and filled with costly penalties and fees.  At the other end of the spectrum, banks provide services to the well-off for reasonable prices and in turn are backed by a myriad of federal and quasi-federal protections.  The book makes a convincing case that our banking system is not a free market, but rather a highly-regulated market that is supported by the government.  And, due to a series of changes in the law over the last century -- ones that accelerated after the 1980s -- average Americans are much more likely to be left out of traditional banking services.

So who is to blame for all this?  The book essentially paints a picture of greedy banks shunning the poorer and less profitable consumers in flagrant disregard for their original, public purpose.  It is Jeffersonian in its approach: smaller is better, more local is better, community is better.  It is not wholeheartedly in this camp -- it acknowledges that large banks are more efficient, less vulnerable to regional conditions, perhaps better (and even cheaper) at providing certain services to certain clients.  And it also recognizes that banking services for the poor may not be that profitable (not profitable?) when conducted along the same terms as applied to richer folks.  But the central theme of the book, at least on my reading, is that banks have become unmoored from their public trust and are exploiting their special relationship with the government to capture the upsides of capitalism without the downsides.

So it is somewhat surprising that the book lets banks off the hook at the end by promoting a public option for banking, specifically postal banking.  The idea has a lot to recommend it, beyond even the problem of underbanking.  But it also raises a lot of questions.  Can the post office do what community banks couldn't?  Do we think post offices will do a better job of moving beyond the credit score to asses the "real" credit risks presented by each loan applicant?  Does the public really trust the post office?

But my more theoretical question is this: why should we let the big banks off the hook?  If the book had presented the problem of underbanking as a natural and understandable market failure, based on the inability of the poor to make traditional banking profitable for banks, then a public option would make a lot of sense.  But if banks are pulling a fast one here by shirking their public responsibilities , shouldn't we make them accountable?  The book's discussion of the CRA does a nice job of briefly outlining the history of the act, as well as the views of its supporters and critics.  But it left me wondering whether the CRA was doomed to failure, or whether it just hadn't been implemented with the appropriate teeth.  And I think this strikes at 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.  

Perhaps, in the end, we'd rather solve the problem of underbanking than exact a just recompense from powerful economic and political actors.  Or perhaps we can square the circle by requiring banks to fund the public option with a special bank tax or fee -- something similar to the FDIC.  But I think a whole lot more people will be asking these questions thanks to Mehrsa's thoughtful, engaging, and provocative book.  Congrats to her on this terrific accomplishment.

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