When most of us withdraw money from an ATM, we aren’t charged fees. Yet, welfare recipients in California are routinely charged to make withdrawals. Banks are making nearly $1.5 million a month in fees for the same service they give regular customers for free. Plus, this is essentially risk-free for them. The state transfers the money in, the bank makes a profit on that money by making overnight loans on it (this is quite normal), then doles out the money when a welfare recipient makes a withdrawal at an ATM. So why the extra charge on those least able to pay it?
A welfare mother of two gets a maximum of $694 a month. Paying $20-25 a month in fees is 3-4% of her total income. This is from many of the same banks that were bailed out by the federal government! Even worse, the fees are increasing, and have in fact doubled since 2008. Many of the recipients are too poor to open a free checking account. But again, this is a completely riskless transaction for the banks, and they make a profit on the money while it is on deposit.
Charging steep fees to those least able to pay (or fight back) is deplorable.
“So why the extra charge on those least able to pay it?” Because they can and it is taxpayers money. We should never be surprised at this sort of thing, to the corporate world taxpayers money is seen as easy money, it will be milked fast and furiously as long as they can get away with it. These people are the least likely to be able to fight back and have nowhere else to go. That’s the system siphon the money upwards and taxpayers money is easy game.