What would you say about a savings group where the members earn less than one percent interest on their savings, but pay 15% to borrow? What’s worse, they get none of their money back at share-out. Not one cent. Meanwhile, the group officers have passed secret rules that the members don’t understand that allow them to take money from the cashbox, and make themselves super rich. 

Would you agree that was a pretty miserable Savings Group?

But - those are the conditions that people banking in the formal sector face in the US today.

Forbes Magazine reports that the best interest rate US savers can earn today is 0.87%. (That’s for the little guy. Don’t worry: the super rich make much better returns.)

The average rate on credit cards in the US is about 15%. Poor people pay more, sometimes much more. 

Bank executives do well. Let’s take the Bank of America, where lots of people save and borrow:

• Kenneth Lewis, CEO and Chairman, had total compensation last year of $24.8 million - Kenn is like, you know, the group chairperson.
• Joe L. Price, the Chief Financial Officer, took home $6.5 million - consider Joe the record keeper.
• Amy Woods Brinkley, the Global Risk Executive, got $9.3 million. Let’s call Amy the box keeper.

And, the only share-out at the end of the year is the annual bonuses of the executives.

Looks to me like Bank of America is a terrible savings group, probably worse than any I have seen. So, remind me again of why some people are in a rush to steer poor people into the formal financial sector?

Note: this was originally published in November, 2013. Many of the details have changed since then. For instance, Ken Lewis has stepped down as CEO and Chairman of Bank of America, reportedly because of large credit losses and because he was considered a “novice” in investment banking. Don’t worry about him, however: his golden parachute was worth fifty three million dollars. No point in updating this stuff - even if the names and the amounts have changed, it’s still just oligarchs getting richer.