Comments on Treasury’s Financial Access Activities

On Monday, the New America Foundation Asset Building Program submitted comments to the U. S. Treasury’s Office of Financial Education and Financial Access (OFEFA) on its financial access activities. The request for comments wanted ideas on how to design, implement, and administer activities that facilitated access to mainstream banks and credit unions.

OFEFA is a relatively small, but important office within the federal government for scaling financial inclusion and community asset building efforts. They are in charge of improving the financial capability of Americans, which means developing programs that improve knowledge of personal financial management and access to financial tools (e. g. accounts). One of the programs under development is Bank On USA, which is supposed to build upon and expand the current network of community Bank On coalitions. Though the initiative is moving forward with limited resources for now, OFEFA has already started the work to identify what needs to be done to improve and coordinate the current programs. They supported the improvement of the JoinBankOn.org resource portal for local Bank On programs and released a report assessing the current state of Bank On programs.   

By seeking programs and activities to further improve access to mainstream banks and credit unions, OFEFA has a tremendous opportunity to ensure that safe and low-cost financial service options are available to lower-income households, particularly those that are currently unbanked. They play a complementary role to financial services regulators like the Consumer Financial Protection Bureau (CFPB) and the FDIC. The regulators are able to make determinations of what terms and practices are considered abusive and thus legally unacceptable in the marketplace. OFEFA, on the other hand, can take actions to move the marketplace to do better than the bare minimum by using its programs and activities to set standards of voluntary practices that match the basic financial needs and preferences of currently underserved communities and provide support to see those inclusive practices come to fruition.     

With this perspective, our comments to OFEFA recommended that the office continue development of Bank On with an eye towards learning from the experience of establishing the original wave of Bank On coalitions. In particular, the Bank On platform should be scaled by OFEFA with uniform program, product, and evaluation standards across all localities; better matched entry products for the targeted consumers (e. g. savings and prepaid products); and technical and management support for partners either through OFEFA or grants to non-profits with expertise in serving lower-income communities. Additionally, innovation and new methods of financial access, counseling, and education should be encouraged, but never without establishing the relevance of the innovation to the targeted consumer.  For the full comments, you can check out our letter here.