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Today Congressman David Scott (GA-13) introduced legislation to better address the needs of “under-banked, un-banked, and underserved” communities in America. The Improving Access to Traditional Banking Act of 2019 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.

“Far too often, both in the 13th District of Georgia and across America, people are using financial services from outside the traditional banking system,” said Congressman Scott. “This means that those who already have lower incomes often pay more in fees and penalties, even for simple services like cashing a check. This simply is not workable, especially for the African-American families who are disproportionately affected.”          

Scott added, “This bill, the Improving Access to Traditional Banking Act, moves us toward greater economic inclusion. The CFPB, as the agency devoted to helping consumers safely use the financial system, is the perfect place for this new office. Their research will help ensure everyone can access our banking system and get the services they need.”

“Fully-banked,” as defined by the Federal Deposit Insurance Corporation (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.

Based on a 2017 survey conducted by the FDIC, African American communities continue to be the least “banked” in the country. Data from the FDIC found that only 45.8% 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.

The Improving Access to Traditional Banking Act would require the CFPB to establish an “Office for Under-Banked, Un-Banked, and Underserved 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;

·               Develop strategies to improve financial education for underserved consumers; and

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