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House Passes Bipartisan Legislation Led by Congressman David Scott to Address Banking Access Disparities in Underinvested Communities

Today, the U.S. House of Representatives passed H.R. 1711, the Financial Inclusion in Banking Act, a bipartisan bill led by Congressman David Scott (GA-13) to help address long-standing disparities in access to traditional banking resources and economic opportunities. The legislation will empower the Office of Community Affairs within the Consumer Financial Protection Bureau to lead coordination with other agencies to research obstacles to accessible banking resources and identify best practices to increase consumer participation in underinvested communities.

More than five percent of Americans, or 7.1 million households, are unbanked according to the FDIC’s latest data, meaning they have no checking or savings account. Nearly 50 million more are underbanked, having at least one bank account but are still forced to rely on expensive alternative financial services outside the banking system like payday loans, pawn shops and check cashing services that profit primarily by exploiting the impoverished.

“For too long the federal government has turned a blind eye to the hardships faced by unbanked consumers, many of whom have been systemically locked out of participation in our banking system,” said Congressman David Scott. “From exorbitant fees charged to cash each paycheck to the false choices offered by predatory lenders, unbanked consumers are routinely left to depend on exploitative services that tend to take money away from the people who can least afford it. The Financial Inclusion in Banking Act will begin the work to identify and advance solutions needed to close the longstanding gaps in banking access for underinvested groups and ensure every American has a fair shot at the opportunity, capacity and resources needed to build wealth and achieve financial stability.”

While the lack of access to traditional banking resources impacts every community and geography, the effects are felt more profoundly by low-income communities and communities of color. Eighty-three percent of unbanked households earn less than $25,000 a year, and the FDIC reports that in 2019, 14 percent of African American households and 12 percent of Hispanic households had no bank account whatsoever, compared to only 3 percent of white households. 

The Financial Inclusion in Banking Act would direct the CFPB’s Office of Community Affairs to:

  • Conduct research identifying hurdles under- and un-banked consumers face when maintaining a sustainable relationship with depository institutions;
  • Lead coordination within the CFPB, with trade associations, consumer groups, civil rights groups, and with other federal agencies and departments in assessing factors impeding financial inclusion;
  • Identify strategies to increase financial education; and
  • Submit a report to Congress every two years highlighting legislative and regulatory recommendations to promote participation in the traditional banking system.

Read more about the Financial Inclusion in Banking Act here.

Watch Congressman David Scott's floor remarks here.

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