Just of few years ago, the FDIC seemed like a sleepy banking regulator hidden somewhere in Washington DC. Sure, we were all glad it was there to offer insurance on our bank deposits but you would be forgiven if you thought that was all it did. The Great Recession and financial crisis of 2008 certainly changed all that. The elevated profile of the FDIC made Former Chair Sheila Bair a household name (at least in households tuning into current events). In her recent book, you can read about her battles with Congress and Treasury Secretary Geithner as she championed aggressive paths to take on the banks that were deemed “too big to fail.”
While Bair has moved on from FDIC, a number of initiatives are being taken up by her capable successor, Martin Gruenberg, who had previously served as vice-chair but was confirmed to the top spot just after the election. One on those efforts is to explore ways to connect more people to the banking system in responsible ways. The fact that millions of families (over 8%) do not own a bank account where they can conduct basic financial transactions means they pay more for these services in the alternative fringe sector of check cashers and payday lenders. It is a travesty that we can’t find ways to solve this problem. It makes being poor much more expensive!
The FDIC is now actively on the case. They have convened an advisory committee focused on issues of financial inclusion. With the catchy acronym ComE-IN, the FDIC Advisory Committee on Economic Inclusion convenes multiple times a year to focus on topics that can help the FDIC work with the institutions it regulates to make sure they better serve families with lower incomes and initially fewer resources. The committee gets briefed on some of the cutting-edge research FDIC staff are conducting (see the recent reports on the unbanked and the pilots for small dollar loans and model safe accounts) and then offers feedback to the FDIC leadership.
Their December gathering focused on saving efforts and I offered commentary on recent trends in savings, debt, and net worth. You can read my testimony here. But I’d also invite you to explore their past meetings. If we are able to make a dent in the legions of unbanked and under-banked Americans, I expect that FDIC will play a leading role.