Remarks by
Martin J. Gruenberg, Chairman,
Federal Deposit Insurance Corporation
at the
National Community Reinvestment Coalition
2013 Annual Conference;
Washington, D.C.
March 22, 2013
Good afternoon. Before I begin, I would like to thank you for the invitation to offer
remarks and recognize the work of John Taylor and the National Community
Reinvestment Coalition. The challenge you are discussing—how to best aid the
continuing economic recovery efforts in some of our nation's hardest hit communities—
is a critical one. I hope that you will agree that as part of these efforts, we should work
to ensure that consumers have access to basic mainstream financial services.
Participation in mainstream financial markets improves a consumer's ability to build
assets and create wealth, protects them from theft and discriminatory or predatory
lending practices, and provides a financial safety net against unforeseen circumstances.
Mainstream banking also provides consumers with advantages that are unavailable in
the alternative financial services marketplace such as FDIC deposit insurance and
explicit protections including those ensuring consumers can reasonably dispute charges
to their account.
The FDIC has long been committed to expanding economic inclusion in the financial
mainstream by improving households' access to safe, secure and affordable banking
services. In doing so, we recognize that financial institutions that affirmatively seek to
serve underserved populations can enhance their reputations and deepen their market
penetration while delivering important value to consumers and their communities.
Today I would like to share some of what we are learning about opportunities to include
the broadest possible set of consumers in the financial mainstream. I will summarize
findings from recent research conducted by FDIC staff and comment briefly on the role
of community and minority-owned banks in facilitating access to banking services and
credit and provide you with an update on the efforts of prudential regulators to review
and update Community Reinvestment Act guidance.
Unbanked Surveys
In order to have better data to help guide effective economic inclusion strategies, and in
response to a statutory mandate, the FDIC periodically conducts two complementary
national studies that explore households' financial behavior and banks' provision of
services to underserved consumers.
Household Survey
Martin J. Gruenberg, Chairman,
Federal Deposit Insurance Corporation
at the
National Community Reinvestment Coalition
2013 Annual Conference;
Washington, D.C.
March 22, 2013
Good afternoon. Before I begin, I would like to thank you for the invitation to offer
remarks and recognize the work of John Taylor and the National Community
Reinvestment Coalition. The challenge you are discussing—how to best aid the
continuing economic recovery efforts in some of our nation's hardest hit communities—
is a critical one. I hope that you will agree that as part of these efforts, we should work
to ensure that consumers have access to basic mainstream financial services.
Participation in mainstream financial markets improves a consumer's ability to build
assets and create wealth, protects them from theft and discriminatory or predatory
lending practices, and provides a financial safety net against unforeseen circumstances.
Mainstream banking also provides consumers with advantages that are unavailable in
the alternative financial services marketplace such as FDIC deposit insurance and
explicit protections including those ensuring consumers can reasonably dispute charges
to their account.
The FDIC has long been committed to expanding economic inclusion in the financial
mainstream by improving households' access to safe, secure and affordable banking
services. In doing so, we recognize that financial institutions that affirmatively seek to
serve underserved populations can enhance their reputations and deepen their market
penetration while delivering important value to consumers and their communities.
Today I would like to share some of what we are learning about opportunities to include
the broadest possible set of consumers in the financial mainstream. I will summarize
findings from recent research conducted by FDIC staff and comment briefly on the role
of community and minority-owned banks in facilitating access to banking services and
credit and provide you with an update on the efforts of prudential regulators to review
and update Community Reinvestment Act guidance.
Unbanked Surveys
In order to have better data to help guide effective economic inclusion strategies, and in
response to a statutory mandate, the FDIC periodically conducts two complementary
national studies that explore households' financial behavior and banks' provision of
services to underserved consumers.
Household Survey
The FDIC National Survey of Unbanked and Underbanked Households is a survey
conducted in partnership with the Census Bureau to estimate the proportion of
unbanked and underbanked households, their demographic characteristics, and to gain
insight into why some consumers utilize alternative financial services.
The FDIC released the 2011 household survey in September and the results show that
a substantial portion of the population remains unbanked or underbanked. Specifically,
8.2 percent of US households are unbanked. In fact, while 10 percent do not have a
checking account, an even greater proportion—nearly 30 percent of households—lack
access to a savings account.
Just over 20 percent of U.S. households are underbanked, meaning that they have a
bank account but have used alternative financial services, such as nonbank check
cashing or payday loans, in the past year.
Results for Demographic Groups
The national level statistics do not provide a complete picture of the banking
engagement of specific segments of the population. According to the report, unbanked
and underbanked rates are particularly high among lower income, less educated,
younger and unemployed households, non-Asian minorities, and unmarried families
with dependents, like single mothers.
For instance, among Black households, more than one in five (21.4 percent) are
unbanked and a third (33.9 percent) are underbanked. Similarly, we find that 20 percent
of Hispanic households are unbanked and almost 30 percent (28.6 percent)
underbanked. For lower income households (i.e., those with annual income below
$30,000), unbanked rates are also about 20 percent (19.4 percent), while almost one in
four (23.7 percent) are underbanked.
As you can see, for many of these groups unbanked rates are around 20 percent and
underbanked rates come close to or even exceed 30 percent. However, even among
these groups with high proportions of underserved households, almost half are fully
banked, demonstrating that it is not only possible to bank low income households, for
example, but that it happens successfully in many cases.
Differences in experiences with and motivation to join the financial mainstream
The Survey's results also show that the unbanked are not monolithic in their banking
experiences or in their motivation to open an account.
Among unbanked households, slightly more than half have never had a bank account.
This group represents about 4 percent of households, leaving an additional 4 percent
that are presently unbanked but have had an account in the past. However, for certain
demographic groups, such as Hispanics, the proportion of never-banked households is
dramatically higher. The survey shows that almost 15 percent of Hispanic households
have never had an account in an insured institution.
conducted in partnership with the Census Bureau to estimate the proportion of
unbanked and underbanked households, their demographic characteristics, and to gain
insight into why some consumers utilize alternative financial services.
The FDIC released the 2011 household survey in September and the results show that
a substantial portion of the population remains unbanked or underbanked. Specifically,
8.2 percent of US households are unbanked. In fact, while 10 percent do not have a
checking account, an even greater proportion—nearly 30 percent of households—lack
access to a savings account.
Just over 20 percent of U.S. households are underbanked, meaning that they have a
bank account but have used alternative financial services, such as nonbank check
cashing or payday loans, in the past year.
Results for Demographic Groups
The national level statistics do not provide a complete picture of the banking
engagement of specific segments of the population. According to the report, unbanked
and underbanked rates are particularly high among lower income, less educated,
younger and unemployed households, non-Asian minorities, and unmarried families
with dependents, like single mothers.
For instance, among Black households, more than one in five (21.4 percent) are
unbanked and a third (33.9 percent) are underbanked. Similarly, we find that 20 percent
of Hispanic households are unbanked and almost 30 percent (28.6 percent)
underbanked. For lower income households (i.e., those with annual income below
$30,000), unbanked rates are also about 20 percent (19.4 percent), while almost one in
four (23.7 percent) are underbanked.
As you can see, for many of these groups unbanked rates are around 20 percent and
underbanked rates come close to or even exceed 30 percent. However, even among
these groups with high proportions of underserved households, almost half are fully
banked, demonstrating that it is not only possible to bank low income households, for
example, but that it happens successfully in many cases.
Differences in experiences with and motivation to join the financial mainstream
The Survey's results also show that the unbanked are not monolithic in their banking
experiences or in their motivation to open an account.
Among unbanked households, slightly more than half have never had a bank account.
This group represents about 4 percent of households, leaving an additional 4 percent
that are presently unbanked but have had an account in the past. However, for certain
demographic groups, such as Hispanics, the proportion of never-banked households is
dramatically higher. The survey shows that almost 15 percent of Hispanic households
have never had an account in an insured institution.