WASHINGTON — A reporter and research fellow at the New America Foundation said both credit unions and banks have a lot to learn from check cashers and payday lenders about reaching out to lower income and underbanked communities.

Douglas McGray is an Irvine fellow at the foundation and the author of Check Cashers, Redeemed, an article which ran in the Nov. 7 New York Times which looked at why some people use check cashers and payday lenders and how they operate. McGray also participated in the Foundation's roll out of its Community Banking Trust proposal on Nov. 20.

Speaking at the briefing on the proposal, McGray recounted how his research into why people use check cashers and payday lenders indicated that those consumers behaved in a economically rational manner when they chose the payday lending option, opting for an approach that, while it had high fees, was also better about disclosing those fees up front and not surprising them later with unexpected expenses.