Reality Strikes Again

14 Feb 2007|spalacios

Yesterday’s Wall Street Journal front page story that details Bank of America’s decision to issue credit cards to customers without social security numbers or credit histories (i.e. undocumented immigrant, mostly Hispanic) is the continuation of an Alice in Wonderland-like “reality” of immigration in the U.S. today. What is fascinating to me is how convoluted the issues have become, extending the old adage “politics make strange bedfellows” to “politics, economics and global forces make surreal bedfellows.” What do I mean? On the one hand political interests from the left have aligned unintentionally with economic forces on the right and forces like technology and globalization to create a strange combination of outrage, denial and progress all at once. The same can be observed from political forces on the right, aligning with labor interests and isolationist oriented interests. It’s quite a sight to behold, and all the while market reality marches on.

That market reality results in a steady stream of market innovations aimed at serving the needs of a large (estimated over 10 million people, or roughly the entire population of Guatemala), economically viable (remittances to Mexico exceed $20B annually, albeit not all from undocumented immigrants) and semi-resident population living within the political borders of the U.S. As the WSJ article partially points out, financial services institutions have gotten past regulatory and administrative hurdles by offering ITIN loans, cross border mortgages, free remittance with checking accounts, cross border health insurance policies based on Mexican I.D. cards, and a raft of other new payment models and distribution channels to serve the commercial needs of this consumer population.

Why has this innovation taken place? Because the reality is that you cannot have 10 million or more consumers existing in a market economy left unserved.

Some large metropolises, like San Diego, have explicitly acknowledged through governmental entities that their economic reality is one of a cross border economic trade zone with Mexican sister cities like Tijuana. Estimates indicate the population of many border cities will double in 30 years. The population along the Texas border region is increasing at twice the rate of Texas as a whole. (Source: US Census). Two of the ten fastest-growing metropolitan areas in the United States, Laredo and McAllen, are located on the Texas-Mexico border. As this reality plays out, businesses will find ways to meet consumer’s needs.

While I will not use this blog to try and address the various legitimate issues that surround the immigration debate, I will point out that as each year passes, new innovations that serve this consumer population are created. Bank of America, the second largest US bank, has taken a leading role in this effort. In doing so, my belief is the reality on the ground is affected, which in turn creates a new context. The political conversation on immigration necessarily becomes a reaction to that new context.

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