Fifteen years ago a young activist named Pat Quinn began a crusade against currency exchanges. At the time he had no political base, and few people paid any attention. Quinn’s still waging that campaign, only now he’s the state treasurer and people all over Illinois are taking notice. His latest effort, a proposal to cut the fees currency exchanges charge to cash government benefit checks, has created intense turmoil and debate.
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At issue is how much currency-exchange operators charge to cash checks. Currently they are allowed to charge 1.2 percent of the face value of a check, plus a 90-cent handling fee. According to Quinn, the fee for cashing a monthly general-assistance check of $154 amounts to $2.74, or $32.88 a year. A woman raising a family on a monthly $333.10 Aid to Families with Dependent Children check pays a check-cashing fee of $4.89, or 58.68 a year.
“It’s not only people on public assistance who are affected by these high rates, but retired people on Social Security or people receiving unemployment compensation or assistance to the aged, blind, and disabled,” says Quinn. “They’re paying excessive amounts of their income each month–money they need for food, clothing, and shelter–just to cash their checks.”
In addition to cutting the currency-exchange rates, Quinn wants banks to cash benefit checks for no more than $1. “We want to create competition to the currency exchanges in the market of cashing riskless checks,” says Quinn. “The exchanges are a cartel, a monopoly. They take money from their customers and they don’t give any of it back to the community. They don’t make loans. They don’t invest in housing. They don’t create new economies. I’d like to set up direct-deposit programs, where the state deposits those checks directly into a bank and recipients then draw checks from that account. The key is to introduce banks to a new market of consumers, and that’s what we are trying to do. We want banks to look at markets they have overlooked, and we want poor people to learn about checking accounts, competitive interest rates. We want them to enter the financial mainstream.”
“The banks have priced poor people out of their services and it’s gotten worse since the deregulation of the early 80s,” says Jerome Gagerman. “And don’t forget how much banks will charge you if you overdraw your account. You bounce a check and it can cost you $15. What’s that going to do to a poor family’s budget? And yet we’re the bad guys, right?”
