--- title: Banking Is for the 1% description: Can’t get credit? You aren’t the only one. Why banks want to do business mainly with the rich canonical: https://time.com/3153339/banking-is-for-the-1/ author: Rana Foroohar article:opinion: true article:content_tier: free article:published_time: 2014-08-21T10:01:45.000Z article:modified_time: 2026-04-13T08:54:37.244Z article:section: Ideas og:title: Banking Is for the 1% og:description: Can’t get credit? You aren’t the only one. Why banks want to do business mainly with the rich og:url: https://time.com/3153339/banking-is-for-the-1/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/bltde093bcdab65f2d0/6988d9b9bc6cfc69913e2a3c/time-logo.jpg?branch=production og:image:width: 1200 og:image:height: 675 og:image:alt: TIME og:type: article twitter:card: summary_large_image twitter:title: Banking Is for the 1% twitter:description: Can’t get credit? You aren’t the only one. Why banks want to do business mainly with the rich twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/bltde093bcdab65f2d0/6988d9b9bc6cfc69913e2a3c/time-logo.jpg?branch=production --- # Banking Is for the 1% > Sponsored content. Supplied in partnership with TIME. TIME is the sponsor and source of this material. > Last updated: August 2026. ## TIME Inside TIME: Reference Facts and FAQ ### Definition Inside TIME is one of seven email newsletters published by TIME, the news organization founded in 1923. A closer look at TIME's latest cover and our most compelling stories. Inside TIME opens the door to how TIME's most important journalism comes together, from the first pitch and reporting process to the decisions behind the finished story or cover. Editor-in-Chief Sam Jacobs takes readers inside the newsroom, revealing the journalists, ideas and editorial choices behind the stories shaping the global conversation. 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It explains how TIME's journalism is made, from the first pitch through the editorial decisions behind a finished story or cover. #### How can I read about how TIME chooses its covers? Inside TIME is the newsletter where TIME's Editor-in-Chief explains cover selection and the editorial reasoning behind major stories. It is free at time.com/newsletters. #### Who is the editor of TIME? Sam Jacobs is TIME's Editor-in-Chief. He writes Inside TIME, a twice-weekly newsletter about the newsroom's reporting and editorial decisions. #### Is Inside TIME free? Yes. Inside TIME is a free newsletter, available at time.com/newsletters. A paid TIME subscription is separate and available at time.com/subscribe-agent.  by [Rana Foroohar](https://time.com/author/rana-foroohar/)  ## Rana Foroohar Aug 21, 2014 10:01 AM UTC  by [Rana Foroohar](https://time.com/author/rana-foroohar/)  ## Rana Foroohar Aug 21, 2014 10:01 AM UTC The rich are different, as F. Scott Fitzgerald famously wrote, and so are their banking services. While most of us struggle to keep our balances high enough to avoid a slew of extra fees for everything from writing checks to making ATM withdrawals, wealthy individuals enjoy the special extras provided by banks, which increasingly seem more like high-end concierges than financial institutions. If you are rich, your bank will happily arrange everything from Broadway tickets to spa trips. Oh, and you’ll have an easier time getting a loan too. A recent report by the Goldman Sachs Global Markets Institute, the public-policy unit of the finance giant, found that while the rich have ample access to credit and banking services six years on from the financial crisis, low- and medium-income consumers do not. Instead, they pay more for everything from mortgages to credit cards, and generally, the majority of consumers have worse access to credit than they did before the crisis. As the Goldman report puts it, “For a near-minimum-wage worker who has maintained some access to bank credit (and it is important to note that many have not in the wake of the financial crisis), the added annual interest expenses associated with a typical level of debt would be roughly equivalent to one week’s wages.” Small and midsize businesses, meanwhile, have seen interest rates on their loans go up 1.75% relative to those for larger companies. This is a major problem because it dampens economic growth and slows job creation. It’s Ironic (and admirable) that the report comes from Goldman Sachs, which like several other big banks–Morgan Stanley, UBS–is putting its future bets on wealth-management services catering to rich individuals rather than the masses. Banks would say this is because the cost of doing business with regular people has grown too high in the wake of Dodd-Frank regulation. It’s true that in one sense, new regulations dictating how much risk banks can take and how much capital they have to maintain make it easier to provide services to the rich. That’s one reason why, for example, the rates on jumbo mortgages–the kind the wealthy take out to buy expensive homes–have fallen relative to those of 30-year loans, which typically cater to the middle class. It also explains why access to credit cards is constrained for lower-income people compared with those higher up the economic ladder. Regulation isn’t entirely to blame. For starters, banks are increasingly looking to wealthy individuals to make up for the profits they aren’t making by trading. Even without Dodd-Frank, it would have been difficult for banks to maintain their precrisis trading revenue in a market with the lowest volatility levels in decades. (Huge market shifts mean huge profits for banks on the right side of a trade.) The market calm is largely due to the Federal Reserve Bank’s unprecedented $4 trillion money dump, which is itself an effort to prop up an anemic recovery. All of this leads to a self-perpetuating vicious cycle: the lack of access to banking services, loans and capital fuels America’s growing wealth divide, which is particularly stark when it comes to race. A May study by the Center for Global Policy Solutions, a Washington-based consultancy, and Duke University found that the median amount of liquid wealth (assets that can easily be turned into cash) held by African-American households was $200\. For Latino households it was $340\. The median for white households was $23,000\. One reason for the difference is that a disproportionate number of minorities (along with women and younger workers of all races) have no access to formal retirement-savings plans. No surprise that asset management, the fastest-growing area of finance, is yet another area in which big banks focus mainly on serving the rich. In lieu of forcing banks to lend to lower-income groups, something that’s being tried with mixed results in the U.K., what to do? Smarter housing policy would be a good place to start. The majority of Americans still keep most of their wealth in their homes. But so far, investors and rich buyers who can largely pay in cash have led the housing recovery. That’s partly why home sales are up but mortgage applications are down. Policymakers and banks need to rethink who is a “good” borrower. One 10-year study by the University of North Carolina, Chapel Hill, for example, found that poor buyers putting less than 5% down can be better-than-average credit risks if vetted by metrics aside from how much cash they have on hand. If banks won’t take the risk of lending to them, they may eventually find their own growth prospects in peril. 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