Too often, well-intentioned legislation backfires and hurts the people it intends to help. The case of overdraft fees provides a timely case-in-point, as Sens. Corey Booker of New Jersey and Sherrod Brown of Ohio continue their crusade to ban charges (overdraft fees) on negative balances by banks.
Their proposed Stop Overdraft Profiteering Act of 2018 would ban overdraft fees on ATMs and one-time debit transactions completely and strictly limit fees on checks and recurring payments to six times per year. To the senators, sharply curtailing overdraft fees shifts the pendulum of power from large banks to ordinary consumers hit by “surprise” charges.
A closer look at the issue, though, reveals that millions of struggling consumers rely on overdraft protection to borrow money at low rates. Before pressing their peers for support, Booker and Brown ought to consider their bill’s unintended consequence on America’s most desperate borrowers.
To some, triggering overdraft protection is a minor mistake realized days after buying a coffee or a sandwich. And, compared to the cost of a single food item, an overdraft charge seems exorbitant. Most banks have flat, fixed overdraft fees, which average $35 according to Pew Charitable Trusts. But because the fee doesn’t increase even as the amount debited increases, overdraft protection lets consumers “borrow” large amounts of money over a short period of time for a very low price.
Consider that, for paying rents, mortgages or large hospital bills, using a credit card typically requires paying a 2.5 percent to 3 percent transaction fee. Thus, for any upfront expense of $1,500 or greater, short-term borrowing via overdraft protection is actually cheaper than paying with a credit card. This back-of-the-envelope calculation doesn’t take into account consumers’ credit scores, which can of course be impacted if card debts aren’t paid off in a timely manner. Consumers borrowing with overdraft protection needn’t worry about credit scores, which only become an issue if the overdraft charges go to collections.
But for desperate consumers comparing options, credit cards are often off the table. According to a 2017 analysis by Pew, a majority of consumers using overdraft protection didn’t have access to a credit card. Unlike debit accounts, credit card applicants must pass background checks on financial history — a process that may not bode well for low-income consumers. Overdraft use, then, is an underrated lifeline for poorer Americans looking to pay large expenses in between paychecks.
That’s not to say, though, that overdraft opponents are completely misguided. According to Pew, nearly 70 percent of overdraft consumers would rather have had a declined transaction than an accepted one with a $35 fee. Around half of overdrafters don’t recall opting in to the service, underscoring the need for more transparency from banks and credit unions.
Despite these figures, many surveyed overdraft consumers believe that the service is useful to individuals in dire straits. More than 40 percent of overdrafters believed that the system mainly helps individuals similar to themselves, as opposed to exploiting them. These figures show a two-tiered system of individuals helped and hindered by these policies. Many consumers have an irksome experience, where they opt-into overdraft coverage by mistake and foot the bill for small, unwanted expenses.
But a sizable minority rely on overdraft coverage as a stopgap against financial ruin, borrowing large sums of money when other options have run out. The sensible solution, then, is greater transparency via more information supplied to consumers. This is already starting to take place, with the advent of easy-to-access information on which banks have the best and worst overdraft practices.
Consumers can easily find banks with no overdraft programs at all, or institutions with transparent overdraft practices. Pew’s (admittedly old) data show declining year-over-year overdraft payment rates, evidence that consumers harmed by the practice are successfully avoiding “protection.”
Proposed legislation banning the practice wholesale would disadvantage millions of Americans using overdraft protection as a safety net against sky-high bills. Surely lawmakers can push for more transparency without ending options for these vulnerable consumers.
ABOUT THE WRITER
Ross Marchand is the director of policy for the Taxpayers Protection Alliance. He wrote this for InsideSources.com.
Red-state politics in and out of the college classroom
August 27, 2018
Associate Professor of History, Southern Illinois University
Natasha Zaretsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
For two decades, I have taught U.S. women’s and gender history at Southern Illinois University at Carbondale, a blue town in a blue state, marooned in an ocean of red.
Bordered by Appalachia, the Mississippi Delta and the Ozarks, Southern Illinois is surrounded by the country’s poorest rural regions.
Some of my students arrive from white farming communities and are the first in their families to attend college. They grow up on church, military, patriotism and traditional family, and they come from a world different from mine. I grew up in 1970s San Francisco, and my parents were leftists.
As I prepared to teach about abortion and gay rights for the first time in 2003, I approached the classroom with trepidation. I feared that our discussions would mirror the country’s culture wars and lead to tension among students.
One joy of teaching is when students surprise you, and I soon discovered that my fears had been unwarranted.
Students surprise; teacher learns
Classroom discussions of “hot button” issues turned out to be not so hot after all.
Sure, a student might declare that marriage should be between a man and a woman, but her declaration had no fight behind it. Most students simply did not get worked up about gay rights. By the early 2000s, almost all of them had a relative who had come out.
Regardless of what they might have been told in church, they asserted, who were they to stand in the way of the happiness of an uncle or a cousin?
Three decades after gay rights pioneer Harvey Milk had urged his brothers and sisters to come out, this tactic had borne fruit everywhere, including the “heartland” where I teach.
Thus, well before gay marriage became legal, I was telling friends back home that if my students were any indication, the question was not whether, but when.
It turned out that the issue that most angered my students was the Vietnam War. This was odd, I thought at first, because the conflict had ended years before they had been born.
But in one class, an older student who was the daughter of a Vietnam veteran recounted a story that had been passed down in her family since the early 1970s: Upon his return from overseas, her father had been spat on by anti-war activists.
Others chimed in that they had heard similar stories. These stories were mythical, not because such incidents had never occurred, but rather because opponents of the anti-war movement had overstated their frequency and intensity in order to brand wartime opposition as unpatriotic. When I gently suggested this was the case, as one scholar has argued, my students swung back, insisting that the stories were true.
It quickly became clear to me that these stories felt true to my students because they resonated with their own experiences in Iraq and Afghanistan.
Those military interventions were not abstractions to them. Some were veterans themselves, a few suffered from post-traumatic stress disorder, virtually all of them knew someone in the service and many came from military families.
The Vietnam stories struck a chord because they presented a portrait that my students found painfully familiar: loyal Americans who had served their country but who felt forgotten by U.S. institutions and the broader political culture.
Developing a theory
This classroom episode surprised me, but it shouldn’t have.
My students confirmed what I had discovered through my own research on the recent history of conservatism, which revealed a deep sense of betrayal among Americans who had sacrificed their bodies on behalf of the U.S. military and felt that they had received little recognition in return.
Scholars argue that in the early 1970s the “culture wars” erupted and divided the country. And there is no question that both conservative and liberal actors mobilized around issues like abortion and gay rights.
But my research pointed to something else that fueled the nation’s rightward march: the rise of an aggrieved nationalism rooted in a sense of bodily injury.
I first detected this nationalism when I studied the families of American POWs and MIAs in Southeast Asia, many of whom believed that their sons, brothers, fathers and husbands had been left behind twice — first by a U.S. government that had failed to bring them home, and then by a libertine culture that had turned against the war.
These were patriotic families who felt let down by their country.
Years later, I encountered something similar when I researched U.S. veterans who had sustained radiation injuries during their World War II-era service and who later became ill with cancer.
By the late 1970s, these “atomic veterans” and their relatives were leveling the same charge. They were forgotten men and women who had served their country, but who had been betrayed by the government, which refused to acknowledge that it had endangered its citizens.
The 1970s gave rise to the culture wars, no question. But it also gave rise to the accusation that the most loyal Americans had suffered through sickness, injury and premature death, and had been forgotten and let down.
This claim fueled a rising hostility toward big government, which championed liberal reform on behalf of racial and sexual minorities ostensibly at the expense of white, hard-working, patriotic Americans.
Empathy in the classroom
When my students became so angry toward Vietnam era anti-war activists, I was taken aback. I had to go beneath the surface of our debate and ask why this issue had stirred them.
Yes, the debate was about history, and I appealed to historical accuracy in order to challenge their assumptions about the past. That is, after all, my job.
But swimming just beneath the surface were their own experiences as young people who come from economically struggling rural communities whose members shoulder the burdens of U.S. militarism.
Simply telling them that they had gotten the history “wrong” would not have sufficed.
Instead, I had to pair my commitment to historical truth with a no-less-powerful commitment to empathy — an attempt to make sense of their anger historically and hopefully provide them with the tools to do the same.
My friends and relatives back home sometimes thank me for being out here in the heartland, “winning hearts and minds.”
But is that even my role?
Certainly, my students have changed my worldview, but how much have I changed theirs? That question is hard to answer, because my interactions with students are brief. They spend just over 37 hours with me over the course of one semester. That is not a lot of time.
But during those hours, we break away from the gerrymandered world of social media and encounter one another face to face.
Those encounters can be difficult and frustrating. Yet they have also yielded moments when the divisions and suspicions that dominate our political landscape fall away.
I am not here to win the hearts and minds of my students, but I like to imagine that I have opened some of them. What I know for sure is that they have opened mine.
1968 protests at Columbia University called attention to ‘Gym Crow’ and got worldwide attention
August 27, 2018
Stefan M. Bradley
Chair, Department of African American Studies, Loyola Marymount University
Stefan M. Bradley does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
“If they build the first story, blow it up. If they sneak back at night and build three stories, burn it down. And if they get nine stories built, it’s yours. Take it over, and maybe we’ll let them in on the weekends.”
This is what Student Nonviolent Coordinating Committee and Black Panther Party affiliate H. Rap Brown told a crowd of Harlem residents at a community rally in February 1967.
They were there to protest Columbia University’s construction of a gymnasium in Morningside Park, the only land separating the Ivy League university from the historic black working-class neighborhood. The gym, along with the discovery that Columbia was affiliated with the Institute for Defense Analysis – a national consortium of flagship universities and research organizations that provided strategy and weapons research to the U.S. Department of Defense – stirred students to protest for more decision-making power at their elite university.
When considering the key events of 1968, such as the Tet Offensive, the assassinations of national leaders, demonstrations at the Democratic National Convention and the Olympics, as well international events concerning democracy, the Columbia uprisings merit attention.
Issues converge on campus
As I detail in my book – “Harlem vs. Columbia University: Black Student Power in the Late 1960s” – all the issues of the 1960s and New Left collided on the Morningside Heights campus of Columbia. Students contended with the war in Vietnam, institutional racism, the generational divide, sexism, environmentalism and urban renewal – all while trying to find dates and attend classes.
Everything came to a head on April 23, 1968 – just weeks after the assassination of Rev. Martin Luther King Jr. That was when members of the Columbia chapter of Students for a Democratic Society hosted a rally on campus to decry the war – and, what many considered the racist gym in Morningside Park. Members of the Students’ Afro-American Society, or SAS, and Columbia varsity athletes – known as jocks – were in attendance as well. SAS followers showed up to resume an earlier fight they had with the jocks who supported the construction of the gymnasium.
Some students had been working with Harlem community groups. They saw the gym as a symbol of the university’s “power” over a defenseless and poverty-stricken black neighborhood. They joined local politicians who opposed the gym for a myriad of reasons, including its concrete footprint in a green park and the inability of the community to have access to the entire structure once built.
The situation was, of course, complex. Columbia had long been a contentious neighbor to Harlem and Morningside Heights. The campus gym was decrepit and prevented the university from competing with its Ivy peers effectively in terms of facilities and space. Regarding the park, Columbia had constructed softball fields that initially community members could use. By 1968, however, only campus affiliates could access the fields. Then, white faculty members had been mugged in the park.
The university, seeking to expand in the postwar period, purchased US$280 million of land, mortgages and residential buildings in Harlem and Morningside Heights. That resulted in the eviction of nearly 10,000 residents in a decade, 85 percent of whom were black or Puerto Rican.
Columbia acted in coordination with Morningside Heights, Inc., a confederacy of educational and religious institutions in the neighborhood that also sought to “renew” the area to serve their mostly white patrons. David Rockefeller, grandson of oil magnate John D. Rockefeller, acted as MHI’s first president. Columbia was the lead institution.
Despite being close to a black neighborhood, the university admitted few black students and employed a handful of black instructors. For instance, as I report in my book, in the 1964-1965 school year, there were only 35 black students out of 2,500 students enrolled in Columbia’s College of Arts and Sciences, and just one tenured black professor. By spring 1968, there were more than 150 black students enrolled.
On April 23, protesting students attempted to take over the administration building but were repelled by campus security. Then, they walked to the gym construction site where they tore down fencing and physically confronted police. From the park, they returned to campus where they finally succeeded in taking over a classroom building, Hamilton Hall. In doing so, they surrounded the dean of the college, Henry Coleman, who chose to stay in his office with his staff. To “protect” Coleman, several jocks stood guard outside his door.
Clashes with police
What started as a racially integrated demonstration of students took a turn in the late night when H. Rap Brown and several community activists showed up at the invitation of the Students’ Afro-American Society. The student group, Brown and the community activists agreed that black people solely should occupy Hamilton Hall and that white activists should commandeer other buildings. The white demonstrators accommodated, leaving Hamilton and taking over four other buildings. That forced Columbia officials to contend with not just a student protest but a black action on campus at that height of Black Power Movement. Incidentally, the community activists removed and replaced the jocks as sentries of the dean’s office.
To the ire of many white university administrators of the period, Stokely Carmichael of SNCC and the Black Panthers fame showed up to explain – through the press – that the university deal either with the student activists on campus or militants coming from Harlem. This insinuated the tone of the demonstrations would change drastically. Rev. Martin Luther King Jr. had been assassinated less than three weeks before. From offices in Morningside Heights, Columbia administrators had watched Harlem burn as residents mourned and reacted to the black leader’s death. The only thing that separated the elite white institution from angry black rebels was the park in which the university was building a gymnasium against the will of many community members.
In consultation with New York Mayor John Lindsay, Columbia administrators chose to end the demonstrations by calling 1,000 New York police officers to clear the five occupied campus buildings on April 30. Chaos and brutality prevailed. As the NAACP and other Harlem community organizations stood watch, black students vacated Hamilton, which SAS had renamed Malcolm X Hall, and were arrested peacefully. In the building that national Students for a Democratic Society leader and Port Huron Statement author Tom Hayden occupied, police and demonstrators collided physically. One of the most iconic documents of the postwar period, the 1962 Port Huron Statement outlined the need for young people to be in the vanguard of the movement to eradicate racism and grind the military-industrial complex to a halt; it centered the notion of participatory democracy, which called for greater inclusion of the citizenry in decision-making. In other buildings, students found themselves on the hurt end of police batons when they resisted arrest.
In opening the door to violence, the university turned what was a local matter into an international story and radicalized moderate students and neighborhood residents. Young radicals abroad learned of “Gym Crow” and university-sponsored defense research. In solidarity, they supported the Columbia student activists’ causes and chanted “two, three, many Columbias” – a refrain that gained popularity among American student protesters.
After the demonstrations in April, ensuing violent demonstrations in May, and a six-week student strike, the university did not build the gym in the park and renounced its membership in the Institute for Defense Analysis.
In my view, elements of the 1968 Columbia rebellion are inspiring and instructional for today’s students, protesters and community residents. As gentrification threatens the homes of poor black people in urban areas today, activists should recall that 50 years earlier young people believed they could cut their university’s ties to war research and prevent a prestigious white American institution from expanding into black spaces at the same time. They succeeded.