Public Symposium on Capitol Hill Focuses on Acute Credit Needs

Washington, Sep 21, 2011 -
Public Symposium on Capitol Hill Focuses on Acute Credit Needs

WASHINGTON, Sept. 21, 2011 A public symposium examining the desperate needs of unbanked and underbanked consumers, who have been dramatically affected by the economic downturn and find themselves with few options to secure emergency funds, has served to focus national attention on a problem facing millions of Americans just two days before a Capitol Hill hearing on the same issue.

The forum, sponsored by the National Urban League, the National Bankers Association, the Competitive Enterprise Institute and the Hispanic Leadership Fund, examined the credit crisis faced by low and moderate income Americans in an in-depth, day-long discussion informed by a new study showing half of all Americans unable to raise $2000 to meet emergency needs.

Michael Grant, President of the National Bankers Association and a symposium sponsor, told the audience he grew up in Nashville, Tennessee, one of 17 children in a family headed by a single mother. "Let's face it. We still have millions of very poor people who need emergency funds and can't come to banks because of the strict regulating criteria. The need has got to be filled, and we all need to figure out how to do it without pointing fingers at each other."

The public forum offered economists, community groups, consumer activists, researchers and representatives of the financial services industry an opportunity to exchange information and strategies for solving this consumer credit crisis two days before a U.S. House Financial Services Subcommittee is to hold a hearing on legislation aimed at expanding opportunities to secure credit for the unbanked and underbanked. Four panels of speakers addressed credit availability; issues surrounding the cost of credit to consumers; the regulatory structures of banks and credit unions; and possible solutions for consumers with limited availability to credit.

Panelist John Berlau, director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute, expressed support of the approach of HR 1909 (FFSCC Charter Act of 2011) sponsored by Rep. Joe Baca (D-CA). The bill proposes easing financial services regulations to offer more options to low and moderate-income borrowers. The bill also calls for the creation of a new banking charter for institutions such "payday lenders" that would allow them to offer a broader range of products and services, as well as financial literacy education.

"Alternative lenders, like the payday loan industry, are offering competitive options and choices and policymakers should recognize that," Berlau said. "Congress and the President should cut red tape that is driving up costs for borrowers and preventing banks, credit unions and non-bank lenders from offering products to better meet consumers' needs."

Of particular concern to the symposium's sponsors were the findings of a study presented by one of the panelists, Dr. Joanne Yoong, that showed one-half of all American respondents, when faced with an emergency need for $2000, said they could not secure the critically- needed funds. Yoong, a Rand economist, presented the work of her colleagues at the Financial Literacy Center whose research found that the middle-class respondents, as well as lower-class consumers, show signs of financial "fragility" and half of all the respondents had no funds set aside for emergencies.

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