ARI SHAPIRO, HOST:
When President-elect Joe Biden takes office, there's a good chance Democrats will not control the Senate, which got Kenny Malone and Jacob Goldstein from our Planet Money podcast wondering, what economic things can a Biden administration do without support from Congress? One idea they found - banks could be required to offer low-cost, no-overdraft bank accounts.
JACOB GOLDSTEIN, BYLINE: Can Biden make banks do that?
AARON KLEIN: Yes.
KENNY MALONE, BYLINE: This declarative statement comes from Aaron Klein. He used to work at the Senate Banking Committee and at the Treasury Department. Now he is at the Brookings Institution.
GOLDSTEIN: And he says there is this problem in America. Millions of people don't have bank accounts. This is inconvenient. It's hard to pay bills. It's dangerous.
MALONE: So why, then, don't more people have bank accounts?
KLEIN: Bank accounts are expensive if you don't have much money.
GOLDSTEIN: If you can't meet some minimum balance in a bank account, often, you have to pay high fees just to keep the account open.
MALONE: And then there are more fees if you overdraw your account, so as a result, lots of people go without bank accounts altogether.
GOLDSTEIN: Describe for me this bank account that you think every bank should offer.
KLEIN: Right. So that - first of all, that account does not have overdraft. If you run out of money, your transaction is declined. You have a $3 monthly maintenance fee. Checks can be deposited at the bank for free.
GOLDSTEIN: Online bill pay, I assume?
KLEIN: Correct; online bill pay, electronic checking, full ATM access. You don't get paper checks. But otherwise, it would feel like a regular bank account in every other sense.
MALONE: So that is what the account would look like. But the next question is, how can Biden do this? And the simple answer is because as president, he will appoint the people who regulate the banks.
GOLDSTEIN: There's also a slightly less simple answer that I find super-interesting. And that is this. So in other industries, regulators do not get to order companies to sell certain products. But banks aren't really like any other business at all. Banks are really special. You know, they're kind of at the center of the economy. They hold federally insured deposits. They keep our money safe. And so in order to be a bank, you actually have to get a special charter from the government, and that charter gives the government power over banks.
KLEIN: Banks have a duty to serve their community.
GOLDSTEIN: Like, a legal duty?
KLEIN: Correct.
GOLDSTEIN: OK.
MALONE: So this is why bank regulators, who are appointed by the president, can force banks to offer everybody cheap, no-overdraft accounts.
GOLDSTEIN: Now, still, it might not happen. Banks are politically powerful and influential in Washington, et cetera, et cetera. Also, Biden himself has not been pushing this idea. I got it from Klein not from Biden. But there is one last thing Klein mentioned that makes it seem like this might actually happen.
MALONE: And that is that last month, the head of the American Bankers Association - like, the big, national trade group for banks - publicly suggested that every bank in the country offer accounts similar to the ones Aaron Klein is describing.
GOLDSTEIN: And it's unclear, frankly, exactly why this happened now, but a couple of things do seem relevant. One is some politicians have been calling for the government to offer cheap bank accounts, like, say, at the post office. And also, the other thing is tech companies are starting to compete with banks by offering bank-like services. Think of Venmo. So you have politics and profits starting to point in the same direction. And, you know, maybe both of those things are pushing the banks to change.
MALONE: Kenny Malone.
GOLDSTEIN: Jacob Goldstein.
MALONE: NPR News. Transcript provided by NPR, Copyright NPR.
