Green Dot is really a closely held business with a couple of major shareholders which have associates for the slim world for the prepaid debit card market. Green Dot has filed a credit card applicatoin to purchase Bonneville Bank, a little one-branch bank that is state-chartered Utah. The Federal Reserve is reviewing that application. There is some conversation concerning the part of Wal-Mart in this deal. Will this allow Wal-Mart to own a bank effectively? That is a legitimate concern, but in my opinion that there’s another pressing problem which should be remedied.
I believe that this transaction could provide brand new vigor towards the lending industry that is payday. The rights to an unsullied bank charter, the Fed could empower high-cost subprime lenders to dramatically increase the scope of their business by giving the owners of Green Dot. This deal involves a little buck bank, however it holds the possibility to influence an incredible number of households.
The unbanked and market that is underbanked vast. Some estimates place the size for this team at since big as 110 million, based upon exactly just just just how it’s defined. Several households are unbanked simply because they have not honored their commitments. But, other people are underbanked since they don’t possess a credit history that is substantial. Slim file and no-file customers have time that is hard a bank-account, aside from a charge card, despite the fact that they usually have never defaulted on that loan. It’s regrettable that
retail banking institutions are abandoning these customers. Yesterday, Bank of America announced they are placing a finish to your training of free checking records. Struggling to extract overdraft fees, these are typically just moving away from serving people who are not happy to spend a higher month-to-month charge or that may bring them numerous “relationships.”