The House Financial Services Committee (FSC) held a hearing earlier this week entitled, “Banking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System,” to discuss trends in unbanked and underbanked households and proposals to expand the availability of safe and affordable banking and financial services. The FSC specifically examined the following three legislative proposals:
Public Banking Act of 2021: Creates a public banking incubator program that provides funds to new public banks. It would also allow public banks to be members of the Federal Reserve and have access to its payment systems and FDIC deposit insurance. This legislation has limited support and we do not expect it to advance, at least in its current form.
Access to No-Fee Accounts Act: Requires the Federal Reserve to establish no-fee digital transaction accounts available to individuals and small businesses at Federal Reserve member banks and other participating banks and credit unions, as well as U.S. Postal Service (USPS) branches.
Expanding Financial Access for Underserved Communities Act: Allows federal credit unions to apply for expanded membership to include underserved communities and exempts loans made by credit unions to businesses in underserved area from the credit union member business lending cap.
In advance of the hearing, AFSA submitted a letter to the Subcommittee’s Chairman and Ranking Member advocating for traditional installment lenders and vehicle financial companies who offer safe and affordable personals loans. These loans have proven to increase levels of financial inclusion and mobility and serve consumers from all economic backgrounds.
One legislative proposal to expand banking services (as described above), would allow the USPS the authority to offer small-dollar loans to consumers. AFSA strongly believes that the USPS is not equipped to provide consumers the high-quality financial products offered by consumer finance companies.
“Increasing participation in the financial system is critical to keeping individuals from poverty and instability,” AFSA wrote. “As the Subcommittee on Consumer Protection and Financial Institutions discusses several banking related proposals, AFSA and our members are proud to highlight how its members have supported customers’ access to the financial system for over 100 years.”
AFSA will continue to keep our members informed on the latest developments as legislation is considered in Congress.
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