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Community Initiatives to Reach Underserved Consumers Community Development Policy Summit Cleveland, OH June 11, 2008 Louisa M. Quittman Director, Community Programs Office of Financial Education, U.S. Department of the Treasury
Overview • Treasury’s Office of Financial Education • Treasury Community Financial Access Pilot • FDIC Alliance for Economic Inclusion • Bank on Cities Campaign • Bank on California • What have we learned about what works? • Where do we go from here? • Resources
Why is the Treasury Department interested in financial access? Treasury’s mission includes promoting the nation’s economic prosperity, financial security, and enhancing the financial literacy of all Americans. Challenges of being “unbanked” and “underbanked”: • Greater risk for theft and robbery due to keeping or carrying cash • May pay more for basic financial services • Harder to save for emergencies or for the future • Harder to build positive credit history and access credit • Not fully participating in local and national economy Benefits of Financial Access: • Safe savings vehicle which may earn interest • Easier, safer, less expensive transactions • Build relationship with financial institution • Ability to access asset-building credit • “On-ramp” to individual, family and community wealth building
Treasury’s Office of Financial Education • Created in 2002 to promote access to financial education to help all Americans obtain knowledge and skills to make informed financial choices throughout their lives. Activities include: • Public outreach and awareness • Share standards and good practices • Provide technical assistance and broker partnerships • Coordinate the federal interagency Financial Literacy and Education Commission • Support the private-sector President’s Advisory Council on Financial Literacy
Community Financial Access Pilot • 18 month pilot to increase access to financial services and financial education for low- and moderate-income individuals. • Demonstrate effective ways to build sustainable community-based approaches. • Share best practices, advice, referrals, and research with participating communities. • Help strengthen local networks, identify existing resources, and fill any gaps. • Make available information from the pilots, so that other communities may develop their own strategies. • Information and tools are on the webpage: www.treas.gov/financialeducation (more will be added).
FDIC’s Alliance for Economic Inclusion • Provide a gateway into the financial mainstream to enhance the economic well-being of low- and moderate-income individuals and families, particularly in low- and moderate-income neighborhoods, minority and immigrant communities, and rural areas. • Works to provide innovative low-cost products and services and expanded financial education efforts. For example: • Savings accounts • Remittance products • Short-term loans • Builds broad-based coalitions comprised of: financial institutions community-based organizations researchers employers faith-based organizations state and local governmental agencies federal bank regulators bank trade associations • Identifies local partners, convenes meetings, facilitates discussions of local financial service needs and forms working groups to develop products and marketing strategies to reach the underserved populations identified.
FDIC Alliance for Economic Inclusion Locations • Alabama: rural and Gulf Coast area • Greater Boston and Worcester, Massachusetts • Chicago • Houston, Austin and San Antonio, Texas • Kansas City Metro Area • South Louisiana and Mississippi Gulf Coast • Baltimore, Maryland • Wilmington, Delaware • Rochester, New York • Los Angeles
National League of Cities Bank on Cities Campaign National League of Cities is a national member organization. Through this initiative NLC will work with city governments to implement efforts to help residents build and protect their savings and enhance family financial stability by connecting families to the financial mainstream. Activities include: • cross-city peer exchanges • connect the cities with national experts and resources • site visits and one-on-one guidance to city teams • assist in developing action plans and goals Participating cities: Boston, MA Los Angeles, CA Seattle, WA Miami, FL New York, NY Savannah, GA Providence, RI San Antonio, TX San Francisco, CA
Bank on California Announced in January 2008, by Governor Arnold Schwarzenegger, Bank on California will be a state-wide initiative to encourage financial institutions to provide starter accounts for low-and moderate income residents. It is a collaborative, voluntary initiative with the help of financial institutions, city mayors, federal bank regulatory agencies, and community groups. Activities include: • developing baseline product criteria for “starter” accounts • providing education and encouragement regarding opening accounts • forming diverse coalitions of financial institutions, regulators, city mayors and nonprofits to market the accounts to Californians without bank accounts • building the money management skills of California teens and adults. Planned communities: • San Francisco (Bank on San Francisco is already implemented) • Los Angeles • Oakland • Fresno (in conjunction with the Community Financial Access Pilot) • San Jose
What have we learned so far about what works? • Partnerships! • Build on strengths • each partner should do what they do well • Sustainability • be in it for the long term • Make it a core business • serving the low- and moderate-income market as a long-term value proposition • rather than a “special project” • Make it easy and compelling • provide financial education and services in conjunction with other desired or required services • Strong links are crucial • finding and keeping the right partners may take effort
Where do we go from here? • Encourage more experiments • Learn and adapt as we go • Share findings--what works and what doesn’t • What’s the end result? • help people make the most of their money • better use of benefits and asset building opportunities • Expanded financial opportunities and choices • More families are better able to meet their financial hopes and dreams
Treasury Department Resources • Office of Financial Education information resources at www.treas.gov/finanicaleducation. • Technical Assistance Center via the website or (202) 622-9372 • www.MyMoney.gov • Contact us: Louisa Quittman, Director, Community Programs Louisa.Quittman@do.treas.gov (202) 622-8103