'Inconvenient Truth' Director Trains Lens on Americans Locked Out of Traditional Banking

PHOTO: Tiffany Richardson with her daughter.
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What's it like to live paycheck to paycheck and be unable to gain entry to the financial world that most people take for granted, like checking accounts?

Yesterday at the South By Southwest (SXSW) music, film and interactive conference in Austin, Texas, filmmaker Davis Guggenheim tackled the subject, previewing his latest documentary, "Spent: Looking for Change."

Guggenheim is known for addressing social causes through his works, with notable films like "Waiting for Superman" and "An Inconvenient Truth." With "Spent" he has trained his lens on the unbanked and underbanked population in America.

Consumers classified as unbanked or underbanked are those who do not rely on traditional banking services, and typically forgo a checking or savings account, opting instead for alternative financial services like check cashing and payday lending as their primary methods for accessing personal funds. In 2011, the FDIC and US Census Bureau surveyed 45,000 households and found that 20.1 percent, or 1 in 5 households, were underbanked, while 8.2 percent, or 1 in 12 households, were unbanked. For most of us, it is hard to imagine how one could not have a basic checking account to manage our daily transactions, but the reality is that despite the availability of banks, the arrangement is simply not financially feasible for some consumers.

Tiffany Richardson knows what it's like. In 2008, she was in good shape financially. She earned a steady income working as a nurse in Houston and contributed regularly to her company-sponsored 401(k). She enjoyed dining out, shopping and traveling. But everything changed when Richardson's mother was diagnosed with multiple myeloma.

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As the cancer advanced, Richardson was forced to take increasing time away from work to tend to her mother, and the multiple absences eventually led to a mutual parting of ways with her company. Richardson decided she could afford to take time off to care for her mother full-time and return to job-searching afterwards. "I had a nice nest egg saved for a rainy day, and I think this was kind of a rainy day that turned into a tsunami," Richardson said.

After depleting her savings to cover the cost of cancer treatments, drugs and hospital bills, she began searching in vain for work in 2009, just as the financial crisis was underway. With no full-time positions in sight, she picked up temporary jobs where she could but it wasn't enough. Eventually, she lost her home, moved to a rental apartment and filed for unemployment. With bills mounting, payment became a game of haphazard selection. "You're spinning the bottle: what to pay next, what to pay when," Richardson said. Despite a relationship with her bank stretching back to 1990, her checking account was closed for being overdrawn past 30 days.

Unbanked and underbanked consumers find that maintaining a free, basic checking account at traditional banks often involves conditions they cannot meet. Banks typically require customers to maintain a minimum balance or set up a direct deposit of weekly paychecks to avoid fees. Unfortunately, for customers like Richardson, who need access to the entire portion of their funds and whose temporary gigs don't guarantee regularly scheduled paychecks, these mandates translate to yet another financial liability.

Recent data on unbanked and underbanked Americans shows that Richardson is far from alone. Last year, the Brookings Papers on Economic Activity (published by the Brookings Institution) found that almost half of all U.S. households could not come up with $2,000 in the event of an emergency. According to a 2011 FDIC survey of unbanked and underbanked households, nearly 70 million Americans are financially underserved by traditional financial services.

"Not having a bank account makes it incredibly difficult to manage your day to day finances, it often means you can't establish credit, and therefore you can't buy a home, finance a car, or take out a student loan," Guggenheim stated in a press release. "Multiply that by tens of millions of people and you can start to see how it's possible that entire communities in the U.S. are systemically excluded from economic freedom that most of us take for granted."

"Spent" will premiere this summer and is sponsored by American Express. The company currently offers two alternative financial products for the financially underserved, in their "Serve" and "Bluebird" prepaid debit cards. To coincide with the film's release, the Amex "Ventures" division has launched an initiative to finance and spur early-stage tech startups in creating solutions for these consumers. Said Guggenheim, "My hope is this film will shed light on this important issue . . . at a time when new technologies are opening up new possibilities to help fix this issue."

For Richardson, who currently owes thousands on loans she took to make ends meet, the experience has been sobering but the lessons have not been lost on her. "All of this has been real gloomy, but it was lessons that I have learned . . . I usually like to get my lessons for free, but these I had to pay for."

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