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Financial Services Law Insights and Observations


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  • Hsu discusses progress on reducing unbanked

    On May 23, acting Comptroller of the Currency Michael J. Hsu discussed the agency’s commitment to promote a fair and inclusive financial system. During remarks presented at the Bank On National Conference, Hsu observed that while progress has been made to reduce the number of unbanked households in recent years and broadly improve account access, 5.9 million U.S. households remain outside the banking system. Higher unbanked rates are found among consumers with lower incomes and less education, as well as consumers who are young, Black or Hispanic, have disabilities, or are single mothers, Hsu added. He commented that to continue expanding financial access, innovations and adjustments should be made to banks’ screening processes, such as allowing for more forms of identification, streamlining remote account opening, partnering with benefits providers and employers, and training frontline staff to consistently offer Bank On accounts to new customers. “One of the ‘strongly recommended’ features of Bank On certified accounts is the acceptance of alternative forms of identification such as consular identification cards and municipal IDs,” Hsu said. “Bank On also ‘strongly recommends’ that accounts only be denied for customers with past incidences of actual fraud.” Hsu further recommended that banks pay particular attention to how they measure and manage financial crime risks specifically associated with Bank On accounts as account opening processes evolve “so that those who lack traditional forms of identification or fixed addresses and those who cannot physically visit a branch can still open an account.” Hsu warned banks to continue considering risks associated with overdraft protection programs and encouraged banks to explore other measures such as low-cost accounts and lower-cost alternatives for covering overdrafts.

    Bank Regulatory Federal Issues OCC Consumer Finance Unbanked Financial Inclusion Financial Crimes

  • FDIC’s Gruenberg discusses CRA rulemaking

    On November 2, FDIC acting Chairman Martin J. Gruenberg delivered remarks before the National Association of Affordable Housing Lenders to address ongoing Community Reinvestment Act (CRA) rulemaking, the results of the FDIC’s most recent National Survey of Unbanked and Underbanked Households, and challenges from nonbank payment services. In his remarks, Gruenberg referenced the pending notice of proposed rulemaking (NPR) on the CRA issued in May by the FDIC, OCC, and the Federal Reserve Board (collectively, “agencies”). As previously covered by InfoBytes, the NPR would update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. Gruenberg stated that the agencies are committed to strengthening the law’s impact and “increasing transparency and predictability in its application,” and said the FDIC is currently reviewing approximately 1,000 unique comments received in response to the NPR. Gruenberg also discussed the results of the FDIC’s most recent National Survey of Unbanked and Underbanked Households. According to the biennial survey, an estimated 4.5 percent of U.S. households (representing 5.9 million households) lack a bank or credit union account, the lowest national unbanked rate since the FDIC survey began in 2009 (covered by InfoBytes here). Gruenberg noted that the survey found that the rate of unbanked households decreased consistently over the past decade, from 8.2 percent in 2011 to 4.5 percent in 2021. He also said that the survey indicated that 14.1 percent of households were underbanked, although demand for several nonbank products and services decreased. Gruenberg further commented that the survey revealed regulatory challenges in light of the array of options available to consumers, specifically nonbank online payment services. He explained that though “banked households were significantly more likely to use nonbank online payments services than unbanked households, the most common use cases were quite different between the two groups. Banked households most commonly reported that they used these services primarily to send or receive money from family or friends and to make online purchases, as a complement to a bank account. In contrast, the most common use cases among unbanked households revealed that they were using these services as they might otherwise have used bank accounts: paying bills, receiving income and as a vehicle to save or keep money safe.”

    Bank Regulatory Federal Issues FDIC CRA Unbanked Consumer Finance Nonbank

  • FDIC finds 96% of U.S. households are banked

    On October 25, the FDIC announced that approximately 96 percent of U.S. households had a depository institution account in 2021, according to the FDIC’s 2021 National Survey of Unbanked and Underbanked Households. According to the biennial survey, an estimated 4.5 percent of U.S. households (representing 5.9 million households) lacked a bank or credit union account, the lowest national unbanked rate since the FDIC survey began in 2009. The survey also found that approximately 1.2 million more households were banked since 2019. Nearly half of newly banked households that received government payments said these payments contributed to their decision to open an insured bank or credit union account. The survey also found that while unbanked rates were higher among some racial and ethnic minority groups, the gaps had shrunk since 2019, with the unbanked rate falling by 2.5 percentage points for Black households, 2.9 points for Hispanic households and 9.4 points for Native American and Alaska Native households, compared with a 0.4 point decrease for white households. According to the FDIC, other key findings include that: (i) 4.5 percent of U.S. households were “unbanked” in 2021; (ii) 2.1 percent of White households were unbanked, compared with 11.3 percent of Black households and 9.3 percent of Hispanic households; (iii) mobile banking use increased sharply among banked households between 2017 (15.1 percent) and 2021 (43.5 percent); (iv) 21.7 percent of unbanked households cited “don’t have enough money to meet minimum balance” as the main reason for not having an account; and (v) the use of some nonbank financial transaction services, such as check cashing, and nonbank credit products, including payday or pawn shop loans, continue to decrease. The FDIC noted that its #GetBanked (covered by InfoBytes here) was a way to inform consumers about how to open a bank account online and to facilitate the safe and timely distribution of Economic Impact Payments through direct deposit. The FDIC requested that community groups and government agencies “join the movement and help bring more people into the banking system.”

    Bank Regulatory Federal Issues FDIC Unbanked Consumer Finance

  • New York enacts new consumer protection measures

    State Issues

    Recently, the New York governor signed legislation regarding consumer protections and student transcripts. The first piece of legislation, S.1684/A.8293 directs NYDFS to conduct a study of underbanked communities and households in the state and to make recommendations on improving access to financial services. The bill, among other things, updates the data on households that are unbanked and underbanked and analyzes the data to develop an assessment for NYDFS. Additionally, S.4894/A.1693 prohibits banking institutions from issuing unsolicited mail-loan checks, defined by NYDFS as “an unsolicited loan offer that is sent by mail and once cashed or deposited binds the recipient to the loan terms, which may include high interest rates for multiple years.”

    The New York governor also signed legislation that prohibits colleges and universities from withholding transcripts from individuals who owe the schools money. This legislation, S.5924/A.6938 establishes, among other things, that no institution, under certain circumstances, can “condition the provision of a transcript on a student's payment of a debt to such institution or school.”

    State Issues State Legislation New York Student Lending NYDFS Unbanked Consumer Finance

  • FDIC expands #GetBanked campaign

    On February 2, the FDIC announced the expansion of its #GetBanked public awareness campaign into the Los Angeles, Dallas, and Detroit metropolitan areas in continuation of the agency’s efforts to increase financial inclusion to the unbanked population. The FDIC stated that the campaign “is focused on areas where research finds that a significant number of Black and Hispanic households are unbanked,” with the goal of “encourag[ing] unbanked consumers to consider opening a checking account.” With a series of English- and Spanish-language digital, audio, and video advertisements, the FDIC intends to reach unbanked consumers, specifically during the tax filing season. The campaign also includes resources to help consumers choose the best account to meet their needs and identify low-cost bank accounts.

    Bank Regulatory Federal Issues FDIC Consumer Finance Unbanked

  • FDiTech launches tech sprint to help unbanked


    On June 16, the FDIC’s technology lab, FDiTech, announced a tech sprint, which challenges participants to “explore new technologies and techniques that would help expand the capabilities of banks to meet the needs of unbanked individuals and households.” The tech sprint, Breaking Down Barriers: Reaching the Last Mile of Unbanked U.S. Households, invites banks, non-profit organizations, academic institutions, private sector companies, and others to identify data, tools, and other resources that may assist community banks meet the needs of the underbanked in a cost-effective manner. According to the FDIC, a recently published survey found that more than seven million U.S. households were unbanked with Black, Hispanic, American Indian or Alaska Native households having a higher likelihood of being unbanked. Registration will be required for stakeholders to participate, and additional information on how to participate is expected on the FDiTech website in early July.

    Fintech FDIC FDiTech Unbanked Consumer Finance Bank Regulatory

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