Are you “underbanked”?

Crap. Here we go again.

Banks face pressure to reach out to underserved as FDIC survey documents gap

The survey, conducted through the Census Bureau, found that 25.6 percent of the nation’s households – representing some 60 million adults – are “unbanked” or “underbanked” and rely on expensive non-bank services such as payday loans, check-cashing services, money orders or pawn shops to conduct their financial transactions.

This reeks of the maternal state telling you how you should manage your money. “If you are not using a bank, then you are doing it wrong!”

The FDIC, operating under the mandate from a 2005 law to bring more people into the financial mainstream, is pushing for banks to offer products such as low-cost transaction accounts and small-amount short-term loans, officials told reporters in releasing the report this week

Maybe if I don’t use a bank, I don’t actually have enough money to require a bank’s services?

“Access to an account at a federally insured institution provides households with an important first step toward achieving financial security – the opportunity to conduct basic financial transactions, save for emergency and long-term security needs, and access credit on affordable terms,” FDIC chairman Sheila Bair said in a statement.

Since when did actually having cash on hand to perform basic financial transactions become a problem? OK, if I don’t have a bank account I may not qualify for credit… and? Maybe that is indicative of a problem with the credit market rather than with the people who physically manage their own money. Yes credit scores are easy to look at but they are severely distorted. I’ve never heard anyone claim that saving and paying cash was worse than buying on credit. Also, note that the push for using FDIC backed accounts to “achieve financial security” is coming from the FDIC chairman.

When was the last time we heard language like this? Oh, yeah about 10-15 years ago when there were so many “underserved” in the mortgage market. What does a bank account bubble look like?