Reminiscent of a tag-team duo from World Wrestling Entertainment (NYSE: WWE), California Gov. Arnold Schwarzenegger and former President Clinton recently engaged in a body slam of the payday-lending industry. They co-wrote "Beyond Payday Lenders," a Wall Street Journal op-ed piece condemning the payday industry, pawnbrokers, and check-cashing outfits for their high fees and for what the authors consider predatory practices amongst the poor, unbanked, and financially illiterate.

Naturally, their solution was to use the government's muscle to cajole banks and financial institutions into offering so-called starter accounts. Although the article was short on facts as to how the government would actually accomplish something the banks are already free to do, it also ignored that payday lenders such as First Cash Financial (Nasdaq: FCFS), Advance America (NYSE: AEA), and EZCORP (Nasdaq: EZPW) have been successful because they have already been meeting the needs of the unbanked.

Although a payday loan typically requires a customer to have an existing bank account -- the borrower gives the lender a personal check for the amount of the loan plus the service fee and gets it back when the loan is repaid -- check-cashing services, pawnshops, and buy here/pay here used-car dealerships generally do not.

Not requiring a bank account is a real help to people who have no permanent address, choose not to keep high minimum balances just to get "free" checking, or don't want to wait days -- even a week or more -- for their checks to clear after depositing them. And where else but at a payday lender can a borrower get a microloan for $100 or $200, particularly if their FICO score tends to the low end -- assuming they even have a FICO score?

As it is, the payday lenders have already seen -- and met -- the needs of the unbanked without any congressional arm-twisting required.

Clinton and Schwarzenegger also want private industry to step up and offer affordable banking options, but they ignore the beatdown Wal-Mart (NYSE: WMT) got for having the audacity to propose a so-called Bank of Wal-Mart.

The debate was so raucous, and the enmity against Wal-Mart so deep, that the FDIC imposed an 18-month moratorium on the creation of industrial loan corporations (ILCs) that would have allowed retailers like Wal-Mart and Target (NYSE: TGT) to establish these low-cost financial-services arms.

Wal-Mart ended up abandoning the idea, and Home Depot (NYSE: HD) just announced that it's no longer pursuing the acquisition of EnerBank, an existing ILC that specializes in home-improvement loans, even though it says the decision is unrelated to the debate swirling over ILCs.

The FDIC just extended the ILC moratorium for another 12 months, and Congress is once again considering legislation to make permanent the prohibition of commercial businesses from owning or acquiring an ILC. Yet despite the bad press, Wal-Mart still provides a healthy diet of low-cost financial solutions: credit cards with no annual fee and no interest if the balance is paid in a year, $3 check-cashing services, and a partnership with ShareBuilder to offer low-cost investment services.

The reality is that private industry doesn't need a steel-cage death-match extravaganza to meet the needs of the unbanked. It already is meeting their needs. However, these types of services would proliferate a lot more if Congress would simply refrain from delivering a Shawn Michaels elbow drop to Wal-Mart and others who really want to move beyond payday lenders.