October 7, 2020

Abbye Atkinson, Berkeley Law

To the extent that “banking [is] the business model of money creation,”[1] it is difficult to conceive of it in truly humanistic terms, i.e. as an institution that could meaningfully prioritize equality and fairness.[2] Indeed, banking, as we know it today, remains steeped in the same capitalism that once fully sanctioned the racialization, commodification, and fungibility of human beings,[3] and that currently finds economic justification in the turning out of people from their homes on the basis of their ability to pay a sum of money.[4] Consequently, it is a profoundly difficult problem to decide how best to incorporate the most socio-economically vulnerable people into a system that itself continuously deems them as consumable and disposable.[5]

The various public-sector initiatives that form the basis of this roundtable represent short-term approaches to this problem insofar as they aim to address an immediate issue: facilitating better and more efficient access to financial services for marginalized people, be it through FedAccounts, postal banking, digital currencies, or otherwise. The value of this approach is, perhaps, most obvious against the backdrop of the current pandemic. In the context of the CARES Act’s Covid-19 relief, access to money promised by the legislation has been vital to those whose economic lives have been disrupted by the crisis. Yet, the proposed longer-term widening of the banking system engendered by the various public-sector proposals goes beyond the exigencies of the immediate moment. These proporsals invite marginalized groups to participate in a broader economic system that remains embedded in the social pathologies of capitalism, including racialized dehumanization, infinite fungibility, and the erosion of communitarian bonds.[6]

For example, one immediate problem that comes to mind is that all bank accounts are not the same. Certainly, this is obvious in a technical sense if one considers characteristics like fees charged or minimum daily balances required, etc. But more than in relation to these surface differences, bank accounts are different in a social sense, insofar as they bear varied social values that impart status (for better and for worse) on their users.[7] In a social sense, then, what would it mean to relegate an already-marginalized community to public interventions like a FedAccount or a postal account? What would be extracted from the un- and underbanked in exchange for some form of state-sanctioned banking? For example, in the context of state-subsidized prenatal care, Professor Khiara Bridges has observed the loss of privacy for “marginalized, indigent women who must turn to the state for assistance.”[8] She further argues that this “invasion of poor, pregnant women’s privacy facilitates the enduring surveillance and regulation of poor families by the state.”[9] Would a public-sector initiative expose the marginalized to similar consequences? Could it begin to address the more deeply-rooted origins of marginalization that persist regardless of banking status?[10]

In my view, these are among the difficult yet crucial inquiries that must accompany the discussion of any public-sector initiative in money and banking. Nevertheless, in the short-term, we should consider meaningfully the various options on the table and more.[11] But, in so doing, policymakers should keep in sight the ways in which the current banking system, even with any newly-democratized publicly-sourced access to financial services and currency, functions within and together with the broader system of oppression and exclusion.

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[1] Morgan Ricks, The Money Problem: Rethinking Financial Regulation 79 (2016); see also Mehrsa Baradaran, How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy 13 (2015) (noting that “banks are financial intermediaries that allow individuals to readily exchange money for goods” and that “[b]y lending, banks actually create money and multiply the money supply in the economy through leverage”).

[2] See Matthew 6:24 (“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”)

[3] See Edward Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism 245 (2014) (observing that “[e]nslavers benefited from bank-induced stability and steady credit expansion” and that by the 1830s “owned…2 million [en]slave[d] worth over $1 billion”); E. Franklin Frazier, Black Bourgeoisie 131-132 (1957) (describing enslaved African-Americans as “as much an article of commerce as the sugar and molasses which he produced” and as “an article of commerce or an inanimate tool”) (internal citations omitted).

[4] See generally, e.g., Matthew Desmond, Evicted (2016) (describing the phenomenon of evictions among low-income Milwaukee residents); K-Sue Park, Money, Mortgages, and the Conquest of America, 41 Law & Soc. Inquiry 1006 (2016) (describing the “new American mortgage” as it developed in colonial period as means to alienate native populations from their homelands).

[5] See Sarah D. Wire, George Floyd’s Brother Tells Congress: “He didn’t deserve to die over $20.”, L.A. Times, Jun. 10, 2020.

[6] See, e.g., Miranda Joseph, Debt to Society: Accounting for Life Under Capitalism 5-9 (2014) (building on anthropologist David Graeber’s account that “state-driven commercial economies destroy human economies” and positing that the credit/debt relationship, among other market-based exchanges, plays an important role in both “abstract[ing] and particular[izing]” social relationships in ways that are harmful);

Mark Granovetter, Economic Action and Social Structure: The Problem of Embeddedness, 91 Am. J. of Sociol. 481 (1985) (describing the embeddedness of market transactions within social networks).

[7] See, e.g., Viviana Zelizer, The Social Meaning of Money 18-21 (1999) (describing the “earmarking” of money).

[8] Khiara M. Bridges, Privacy Rights and Public Families, 34 Harv. J. L. & Gender 113, 122 (2011).

[9] Id. at 132.

[10] See, e.g., Faith Karimi, A 911 Call, a Racial Slur, a Refusal To Cash A Check. This Is What It’s Like For Some Black Bank Customers, Phil. Trib., Jul. 2 2020 (describing the “common” indignities attendant to “[b]anking while black).

[11] E.g., Prasad Krishnamurthy, The Indian Path to Universal Bank Access in America, The Startup, Jun. 29, 2020 (suggesting “Liberty accounts,” based on an Indian innovation called “Jan Dhan Yojana (Scheme for People’s Wealth)” in which “all federally-insured banks would be required to offer … a free, no-minimum-balance account with no overdrafts and no fee for bouncing a check…[and] a debit card and unlimited free withdrawals on a large, locally-defined ATM network). Krisnamurthy argues that “[t]hese features [would] eliminate most of the direct cost concerns that keep unbanked consumers away from banks.” Id.