No Slack: The Financial Lives of Low-Income Americans

by Michael S. Barr

" The financial crisis exposed the potentially unsavory results of the interaction between low- and moderate income households and alternative and mainstream financial institutions. Many households were overleveraged or paid high costs for financial services, while others lacked access to useful financial products that can cushion against economic instability. The financial services system is not well designed to serve low- and moderate-income households, leaving them without financial they did not have adequate breathing room for making the financial adjustments that would permit them to better meet their own needs. No Slack shows us why these families were the least prepared to handle the shock of the deep recession. This pivotal analysis focuses on the Detroit metropolitan area's low- and moderate-income neighborhoods, which are similar to those of other Rust Belt communities. The Detroit Area Household Financial Services study—conducted at the height of the subprime lending boom—examines these households' decisionmaking processes, behaviors, and attitudes toward a full range of financial transactions. No Slack reveals widespread problems in home mortgage lending, the common threads among people who file for bankruptcy, the reasons so many households are unbanked, and how behaviorally informed financial regulation can make the market work better. Drawing on his deep policy experience, Michael Barr advocates helping families seek financial stability in three primary enhancing individuals' financial capability, using technology to promote access to financial products and services that meet their needs, and establishing strong protections for consumers. "

Genres: Poverty

294 pages, Hardcover

First published March 20, 2012

Reviews

[Ellen · Rating 4 out of 5]

Very well researched book, but much more analytic than I expected. I got lost in some of the equations and tables. If you're looking for that kind of book, it's great. If you want something more with stories and anecdotes - this isn't the book for you.

[DW Rowlands · Rating 3 out of 5]

Interesting, but honestly a bit too technical for my reading level on economics.

[Bryan Ricketts · Rating 5 out of 5]

Good reference book for a variety of financial inclusion questions

[Bruce · Rating 4 out of 5]

I must admit I only skimmed this book and picked a few places to read more thoroughly, however, I read enough to realize that if politicians were out to help the low and moderate income (LMI) person they would look at how they 'live.' With the financial system essentially stacked against them and in favor of the wealthy, the LMI class has to turn to alternative financial services. Many are unbanked (i.e. have not bank accounts) because of minimum deposit requirements and high overdraft fees. It is difficult for them to get credit and when they do they are charged higher fees. Many of the protections banked individuals have regarding their finances the LMI class does not. Many live from pay check to pay check and cannot afford to save for a rainy day. Another issue is proximity to banking services and the hours banks are open. Though the basis of the study is the LMI class in Detroit, Michigan, the conclusions are applicable to the LMI class throughout the US.