May 4, 2010
United States Senate
Washington, D.C. 20510
RE: OPPOSE the Vitter-DeMint amendment (S. 3739), which proposes to strike Title XII Improving Access to Mainstream Financial Institutions, from the Restoring American Financial Stability Act of 2010 (S. 3217).
Dear United States Senators:
We, the undersigned civil rights, labor, public interest, and consumer advocacy organizations, write to express our strong support for Title XII Improving Access to Mainstream Financial Institutions of the Restoring American Financial Stability Act of 2010 (S. 3217). We also strongly oppose any amendments that seek to weaken or eliminate this important provision. This title will expand access to safe and affordable bank accounts, credit, and financial information for low-income, minority, and other underserved families critical goals in a time of economic recovery.
As families across the country continue to struggle with bouts of unemployment lasting several months, mounting household debt, declines in property values, and increasing foreclosures, the need for affordable credit, basic bank accounts, and objective financial advice has never been more apparent. In 2009, 30 million U.S. households were unbanked or underbanked, and millions of families were forced to turn to subprime credit cards, car title loans, check cashers, or payday loans with triple digit annual percentage rates (APRs) to make ends meet. Among communities of color, this problem is especially acute. Approximately 19.3% of Latinos and 21.7% of Blacks are unbanked, compared to only 3.3% of Whites. A study of payday lenders in California revealed that they were heavily concentrated in Black and Hispanic neighborhoods, even after controlling for other explanatory variables, such as median income. Consumers that do not maintain a basic bank or savings account point to hidden or costly fees as a primary reason for not keeping an account. In an economic environment where every dollar counts, families need banking tools that will help them save and improve their financial savvy rather than high-cost products that will keep them in an upward spiral of debt.
- Title XII includes three important provisions that would address the challenges facing low- and moderate-income families, including:
- Authorizing a program to help low- and moderate-income individuals open lowcost checking or savings accounts at banks or credit unions
- Increasing access to objective advice through nonprofits and other organizations to aid in the opening of bank and savings accounts
- Creating a pool of capital to enable Community Development Financial Institutions (CDFIs) to establish and maintain small-dollar loan programs, creating an alternative to costly payday or car title loans in local communities
Thank you for your consideration. Should you have any questions, please contact Graciela Aponte, Wealth-Building Legislative Analyst, at (202) 776-1578 or gaponte@nclr.org.
Sincerely,
Americans for Financial Reform