The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Bailing out the Banks on the Backs of the Unemployed

Feb 23, 2009

The latest scam involves debit cards by the states for people who apply for unemployment benefits. The result is that the unemployed must pay bank fees to access their benefits!

Thirty states have struck deals with banks including Citigroup, Bank of America, JPMorgan Chase and US Bancorp to provide unemployment compensation through debit cards. In several states the unemployed have no choice but to use these debit cards.

With more than a million workers losing their jobs in two months time there is a growing market for these bank-issued unemployment cards.

The banks make money off the interest earned after the state deposits the money and before it’s spent. They also get between 1 to 3% off the top for each transaction someone makes with the cards. Not to mention all the fees – fees for withdrawing money, fees for call customer service, fees for checking the balance, fees for using out-of-network banks, overdraft fees and so on.

Not surprisingly, the banks and credit card companies do not say how much money they make off the program.

But occasionally we can get a glimpse. In Missouri, for example, almost 95,000 people got their unemployment benefits through debit cards from Central Bank. If each cardholder used the card normally, the bank would collect nearly $521,000 from these 95,000 people each month. That would come to 6.3 million dollars a year. That’s just for one small bank.

The culprits who brought us this economic crisis – like the banks – are getting another bailout from people who have lost their jobs due to the crisis.