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30 W. New Eng. L. Rev. 119 (2007-2008)
Why the Check Cashers Win: Regulatory Barriers to Banking the Unbanked

handle is hein.journals/wnelr30 and id is 127 raw text is: WHY THE CHECK CASHERS WIN:
REGULATORY BARRIERS TO BANKING
THE UNBANKED
PEGGY DELINOIs HAMILTON*
INTRODUCTION
Across the United States, stories of the unbanked and efforts
to address their financial needs abound. The unbanked refers
loosely to those people who currently do not have a formal rela-
tionship with an insured depository institution or bank.' Another
term, the underbanked, refers to those people who have a formal
relationship with a bank but who nonetheless substantially rely on
alternative financial service providers for basic financial transac-
tions like cashing checks or obtaining loans. For the working class,
cashing a check, particularly one associated with ongoing employ-
ment, is an essential function necessary to meeting everyday finan-
cial needs, such as paying rent and purchasing food. The unbanked
and the underbanked rely on check-cashing operations to cash their
payroll checks at a cost that banks, government authorities, and
nonprofit organizations have all tried to ameliorate.
Cashing a check for an unbanked working person is an uncom-
plicated but costly transaction. A consumer presents her check, in-
dorses it, and presents one or two pieces of identification to verify
her identity. The check casher, after deducting a fee of approxi-
mately two percent of the face value of the check, gives the con-
sumer the remaining cash.2 For a consumer making $20,000 per
* Former Selma M. Levine Lecturer in Clinical Law at Yale Law School. The
author wishes to thank Kimberly Hayden Yerino for her valuable research assistance
and Charles R. Wilcox, Founder and President of CheckSpring Community Corpora-
tion for his insight and support.
1. Note that the word bank in this Essay refers only to a depository institution
insured by the Federal Deposit Insurance Corporation and chartered and examined by
either a federal or state bank regulatory agency.
2. James H. Carr & Jenny Schuetz, Financial Services in Distressed Communities:
Framing the Issue, Finding Solutions, in FANNIE MAE FOUND., FINANCIAL SERVICES IN
DISTRESSED COMMUNITIES: ISSUES AND ANSWERS 8 (2001), available at http://
www.fanniemaefoundation.org/programs/financial.PDF.

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