Occupy Entrepreneurship

by Reihan Salam

Several activists associated with the Occupy movement have formed the Occupy Money Cooperative, which aims to offer an array of low-cost financial products, the first of which will be a prepaid bank card. Alissa Quart, writing in The Nation, describes the group’s goals:

The group started meeting soon after the Occupy movement emerged in September 2011, with its first meeting in October. The members of the cooperative wondered: What if they could flip the banking relationship so that clients (in their diction “users”) owned the bank, rather than the other way around? The fall of 2011 was a dark time for the millions of Americans struggling financially, as well as a moment of dawning consciousness about the realities of today’s banking system, which can seem rigged. After all, banks make big bets and ordinary citizens bail them out; clients play by the rules and then banks stick them with a seemingly endless array of hidden fees, many of which fall heaviest on the poorest Americans. As The New York Times reported recently, even mistakes as small as a bounced check or a tiny overdraft “have effectively blacklisted more than a million low-income Americans from the mainstream financial system” due to obscure private databases that are used by major banks.

As a result, millions of Americans are actively excluded from today’s banking system—a problem in a working democracy where citizens should be able to spend or access their own funds cheaply, safely and easily. In 2011, one in twelve American households was “unbanked”—that is, they did not have a bank account, according to a Federal Deposit Insurance Corporation survey. Twenty percent of households were “underbanked,” meaning that while they had a bank account, they also relied on pawnshops, payday loans and other means of off-label banking.

And so the Occupy activists are taking advantage of one of the central virtues of a free enterprise economy, which is that groups or individuals are largely free to put innovative business models into practice. The chief barrier to the Occupy Money Cooperative is the high cost of overcoming the regulatory barriers that all small financial institutions face.