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Why the Working Poor and Banks Are a Bad Match
January 13, 2014

The Consumer Financial Protection Bureau is expected to draft rules governing payday lending this year. But the conventional wisdom that will likely guide it is based on false perceptions about the working poor and the best way to serve them.

So argues Lisa Servon, a professor at The New School in New York, who spent four months as a teller at a check-cashing business in the South Bronx and three at a payday lender in Oakland, Calif. Servon's conclusion is that many low-income consumers fulfill their financial needs outside the regulated banking system by choice and in many cases are better off for doing so. The professor of management an urban policy explains why she believes bankers and policymakers are wrong in many of the conclusions they've drawn about underbanked and the types of financial services that would best cater to them.

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