Leading Democratic Senators in Banking Policy Lobby the Federal Deposit Insurance Corp. on the exclusion of the term “under-banked” from an agency report, a decision which they say makes it difficult for a group of financially vulnerable people to understand, and may have been motivated by “political considerations” .
In a letter Sent to FDIC President Jelena McWilliams Wednesday afternoon and supplied exclusively to Morning Consult, Senators Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) have criticized the “alarming move” to deliver a biennial report that investigated unbanked and underbanked people to the Insurance and Research Division instead of the Filer and Consumer Protection Division, which was created in the aftermath of the 2008 financial crisis.
The difference, senators say, had a “significant impact” on the “content, focus and conclusions” of the report.
The most glaring difference pointed out by the senators in their letter: The FDIC in its most recent report did not include results on the “underbanked” (those who have a bank account but often rely on high-cost financial services such as payday loans rather than traditional loans and credit cards) versus “ unbanked ”(those who do not have a bank account). Underbanked households, according to the letter, are mostly black, Hispanic, Native American or Alaskan native populations.
The change “makes it impossible to adequately monitor whether the banking system” that the FDIC is responsible for overseeing “provides traditionally underserved communities with the affordable services they need,” the letter said.
The 2019 report, released in October, found that 95% of U.S. households were banked, meaning they had a bank or credit union account, while 5.4% were unbanked, up from 6. 5% in 2017. report. These key figures, says the letter, paint a misleading picture: that 94.6% of households are “well served by the banking system by simply being served at all”.
In the 2017 survey, the FDIC estimated that 18.7% were underbanked.
Senators asked McWilliams for the FDIC’s rationale for handing over the DCP report to DIR, changing the title of the report, and removing the inclusion of underbanked populations from the report. The letter also asks if any objections were raised and if the DCP was involved in the decisions.
A spokesperson for the FDIC said the agency did not comment on those letters before responding to lawmakers.
