The Opinionator On... Big Banks Distributing Welfare Benefits
Did anyone besides greedy bankers and lazy politicians think that Citigroup-- parent company of Citibank-- would do a humane, responsible job of distributing welfare benefits by way of ATMs and grocery store debit machines?
The idea began a few years ago, when states-- hoping to reduce fraud and improve efficiency-- began hiring private financial corporations to distribute benefits for them. Sounds like Robocop, right? Thirty-nine states have already signed over their welfare systems to these ATM card-based programs, yet the welfare recipients in those states complain that the programs aren't even working as well as the previous ones, which involved old-fashioned checks and coupons.
The complaints are major ones. The big financial corporations are deducting ATM fees from welfare recipients-- special fees that regular customers don't have to pay-- and benefit withdrawals can be limited to as few as two per month. Balance inquiries are forbidden in many of the states, and welfare recipients are not protected against card loss and theft, the way regular ATM card-holders are, with a $50 liability limit. Imagine having those problems on top of being poor in the first place.
Citigroup manages the programs of 29 states and has been cited as the worst offender-- because, in addition to charging special fees, it had been denying welfare recipients in New York City access to 63,000 conveniently-located ATMs in the MAC and NYCE networks, while being paid, according to the New York Times, "$80 million by the state over the next four years to distribute benefits..."
"New York vividly illustrates how the states, by handing off the cumbersome and politically sensitive task of providing aid for the poor, have given broad new control over welfare policy to private corporations, primarily Citigroup." said the Times.
Within Citigroup's 29 states, twelve million people now get their $640 in welfare benefits via ATM programs. Citigroup's earnings on this business have not been disclosed, but the profit margin is probably as narrow as spokespeople for the company say it is. Another company that had been distributing benefits for other states called the business "unprofitable" and is getting out of it. Citigroup tried to buy that company but was halted by the Justice Department when critics pointed out, according to the Times, that it "would raise prices and cut services if it were allowed to buy its 'only substantial competitor.'" Citigroup is currently negotiating its own, new contracts with several states.
Citigroup spokespeople, defending the corporation from criticism by the press (and even by governors of participating states!) say that poor people do have adequate access to their cash. It's exactly that kind of heartless, patriarchal, greed-inflected thinking that could turn a good, modern idea-- "Let's use electronic banking to make welfare programs run more efficiently!"-- into an archaic, hateful one: oppress the poor, ignore their pain.
The idea began a few years ago, when states-- hoping to reduce fraud and improve efficiency-- began hiring private financial corporations to distribute benefits for them. Sounds like Robocop, right? Thirty-nine states have already signed over their welfare systems to these ATM card-based programs, yet the welfare recipients in those states complain that the programs aren't even working as well as the previous ones, which involved old-fashioned checks and coupons.
The complaints are major ones. The big financial corporations are deducting ATM fees from welfare recipients-- special fees that regular customers don't have to pay-- and benefit withdrawals can be limited to as few as two per month. Balance inquiries are forbidden in many of the states, and welfare recipients are not protected against card loss and theft, the way regular ATM card-holders are, with a $50 liability limit. Imagine having those problems on top of being poor in the first place.
Citigroup manages the programs of 29 states and has been cited as the worst offender-- because, in addition to charging special fees, it had been denying welfare recipients in New York City access to 63,000 conveniently-located ATMs in the MAC and NYCE networks, while being paid, according to the New York Times, "$80 million by the state over the next four years to distribute benefits..."
"New York vividly illustrates how the states, by handing off the cumbersome and politically sensitive task of providing aid for the poor, have given broad new control over welfare policy to private corporations, primarily Citigroup." said the Times.
Within Citigroup's 29 states, twelve million people now get their $640 in welfare benefits via ATM programs. Citigroup's earnings on this business have not been disclosed, but the profit margin is probably as narrow as spokespeople for the company say it is. Another company that had been distributing benefits for other states called the business "unprofitable" and is getting out of it. Citigroup tried to buy that company but was halted by the Justice Department when critics pointed out, according to the Times, that it "would raise prices and cut services if it were allowed to buy its 'only substantial competitor.'" Citigroup is currently negotiating its own, new contracts with several states.
Citigroup spokespeople, defending the corporation from criticism by the press (and even by governors of participating states!) say that poor people do have adequate access to their cash. It's exactly that kind of heartless, patriarchal, greed-inflected thinking that could turn a good, modern idea-- "Let's use electronic banking to make welfare programs run more efficiently!"-- into an archaic, hateful one: oppress the poor, ignore their pain.
posted by Lucia Toledo at 9:35 AM
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