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Today Congressman David Scott (GA-13) introduced legislation to better address the needs of “under-banked” and “un-banked” communities in America. The Improving Access to Traditional Banking Act of 2018 will direct the Consumer Financial Protection Bureau (CFPB) to thoroughly investigate and report to Congress recommendations on how to lessen Americans’ reliance on non-traditional banking products like payday loans.

“Families in the 13^th District of Georgia and all across America, especially African-American families, are relying more and more on financial products that fall outside the purview of traditional banks,” said Congressman Scott. “This, in turn, usually means costlier products with more fees and penalties. This simply is not fair.”                     

Scott added, “With the Improving Access to Traditional Banking Act, we are taking a step towards better understanding the problem and finding a solution. And most importantly, there is no better place for this type of work and research to be done than at the CFPB – the federal agency solely dedicated to being an advocate for consumers.”

Based on a 2015 survey conducted by the Federal Deposit Insurance Corporation (FDIC), African American communities continue to be the least “banked” in the country. Data from the FDIC found that only 45.5% of African American families are “fully-banked.”  Of all the groups in this FDIC survey – African Americans, Hispanics, Whites, and Asians – African Americans ranked last.

“Fully-banked,” as defined by the FDIC, means an individual has both a traditional banking account, like a checking account, and has not relied on “alternative financial services” within the past 12 months. “Alternative financial services” include payday loans, pawn shop loans, and auto title loans, among others.

The Improving Access to Traditional Banking Act would require the CFPB to establish an “Office for Under-Banked and Un-Banked Consumers.” This office would be tasked with:

• Conducting research identifying hurdles under- and un-banked consumers face when maintaining a sustainable relationship with depository institutions;

• Identifying best practices depository institutions should follow to increase participation of under- and un-banked consumers; and

• Submitting a report to Congress within two years, and annually thereafter, highlighting legislative and regulatory recommendations to promote participation in the traditional banking system.