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Today, the Financial Services Committee voted 55-0 to advance H.R. 4067, the Financial Inclusion in Banking Act, out of Committee for consideration by the full House of Representatives.  Earlier this year, Congressman David Scott (D-GA) and Congressman Sean Duffy (R-WI) introduced this bill to promote greater inclusion in our nation’s financial system. H.R. 4067 would empower the Consumer Financial Protection Bureau’s Office of Community Affairs to lead coordination within the Bureau, and also work with other federal departments and agencies, trade associations, and civil rights groups in investigating strategies to improve participation in the traditional banking system.  

“When families and consumers are excluded from traditional avenues for accessing financial services, the impacts are far-reaching,” said Congressman Scott. “Low-income consumers frequently pay more in fees and penalties, even for simple services like cashing a check.  This simply is not workable. This bipartisan bill shines a light on the importance of financial inclusion, and I look forward to working with my colleagues in the House of Representatives to ensure that all Americans have access to safe and affordable banking services.”

“Un-banked,” as defined by the Federal Deposit Insurance Corporation (FDIC), means that an individual does not have a checking or savings account.  “Under-banked” means an individual has both a traditional banking account, like a checking account, but has also 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, 25.2% of American households are either unbanked or underbanked.  However, minority communities tend to face higher rates of financial exclusion.  African American communities continue to be the least “banked” in the country; only 45.8% of African American families are considered “fully-banked,” compared against 77% of white households. 

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 to increase participation of under- and un-banked consumers in the traditional banking sector;

·         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.