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Friday, June 01, 2012
No Slack: The Financial Lives of Low-Income Americans
Author: Michael S. Barr
About This Book
The financial crisis lay bare how the financial system failed the nation but left hidden the many ways in which that system still fails the most vulnerable Americans. In this volume, Michael S. Barr, Michael S. Barr, a former assistant Treasury secretary for financial institutions and professor at the University of Michigan Law School, explores how low- and moderate-income households cope with financial stress, use financial services to make ends meet and often come up short.
Reporting on the results of an in-depth survey of 1,000 households in metropolitan Detroit, Barr finds that high-cost financial services, barriers to saving, lack of insurance, and credit constraints contribute to poverty and other socioeconomic problems. He describes how households attempt to overcome these barriers, juggle expenses and borrowing every month, and find ways to save. The author shows, for example, how tax refunds for working families can be an important avenue for saving but are often diverted in no small part to pay for expensive refund anticipation loans or check cashing services.
No Slack describes the use of banks as well as alternative financial services providers, such as check cashers, payday lenders, pawnshops, etc. Barr looks at how technological innovation, particularly payment cards, could help overcome barriers to financial services for these households and explores how insights from behavioral economics can contribute to private sector and governmental initiatives to improve financial services for households and lead to better financial services regulation. He concludes with a set of policy recommendations to improve consumer protection and financial access as we rebuild our financial system in the years ahead.