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Congressman David Scott (D-GA) and Congressman Sean Duffy (R-WI) recently introduced legislation to promote greater inclusion in our nation’s financial system. H.R. 4067, the Financial Inclusion in Banking Act, would empower the Consumer Financial Protection Bureau’s Office of Community Affairs to play the lead coordination role in investigating factors preventing financial inclusion.  Under this legislation, the Office of Community Affairs will work with other internal CFPB offices, as well as other government agencies and departments to conduct collaborative research on barriers impeding consumers from maintaining sustainable relationships with financial institutions. 

“Far too frequently, consumers in the 13^th District of Georgia and across America are forced to turn to alternative financial services products and predatory lenders to cover basic expenses,” said Congressman Scott.  “We must ensure that our financial system prioritizes the most underserved consumers in our nation, and that’s why this research is so important.  Understanding the systemic barriers standing in the way of greater financial inclusion is the first step toward improving access and affordability for underserved consumers.” 

“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 Financial Inclusion in Banking Act would require the CFPB’s Office of Community Affairs to lead coordination with internal CFPB departments, as well as other agencies in:

·         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.