# O **NEWS RELEASE**

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| ## Comptroller of the Currency      | ##### NR 2002-32               |
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| Administrator of National Banks     |                                |
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FOR IMMEDIATE RELEASE Contact: Robert M. Garsson

April 8, 2002 (202) 874-5770

**Comptroller Outlines the Benefits of Financial Literacy Programs**

Arlington, Va. \-- Financial education programs can be critical to
combating predatory lending, to reaching the unbanked and to meeting the
needs of the underbanked, Comptroller of the Currency John D. Hawke said
today.

"Evidence confirms the people who have been through well-designed and
well-executed financial education programs are more likely to make sound
economic choices for themselves and their families," Mr. Hawke said in a
speech to the Consumer Bankers Association.

Mr. Hawke cited predatory lending as a serious public policy concern
that, while involving only a few institutions, harms the reputation of
the entire industry.

"It's very much in the industry's interests to assist in efforts to oust
the bad actors," Mr. Hawke said. "And one of the best ways we've found
to do that is through education, with programs that focus on the most
common victims of predatory lending \-- particularly the poor, the
elderly, and minority groups \-- programs that provide information on
predatory practices and on non-predatory financial options."

Financial literacy can be an important component of performance under
the Community Reinvestment Act. "Clearly, financial literacy activities
can play a big part in any financial institution's overall CRA
strategy," Mr. Hawke said.

The unbanked and underbanked population represent a significant market
for financial institutions and a primary focus for financial literacy
programs. Mr. Hawke said the two groups have significant differences but
a lot in common. "Both would benefit from more comprehensive banking
relationships. And for both, financial literacy programs may hold the
key to getting there," Mr. Hawke said.

While nonbanks currently dominate the market among the unbanked and
underbanked, banks have some significant competitive advantages that
could help them gain market share. "Banks alone have access to the
payments system. They alone can hold transaction balances. They alone
have deposit insurance coverage and access to the discount window. They
alone are eligible to accept direct deposits. And they alone can offer
banking services in conjunction with a variety of other services," Mr.
Hawke said.

Technology is one of the keys to drawing low-income individuals into the
banking system, Mr. Hawke said, citing as an example the success of the
Electronic Transfer Account in giving thousands of previously unbanked
Americans access to the banking system.

Some banks have developed electronic accounts that combine direct
deposit with debit card access and bill payment options. "Because such
accounts largely dispense with paper, they can be offered at low cost
\-- lower in many cases than the customer would pay for the same set of
services at a nonbank outlet," Mr. Hawke said.

Banks are also addressing the short-term borrowing needs of customers.
One prominent national bank is offering a product that provides low-cost
cash advances for direct deposit customers. "The bank has also automated
the underwriting process, cutting costs for both parties to the
transaction and virtually eliminating the waiting period for established
customers \-- a matter of considerable importance, as we've seen, for
the emergency borrower," Mr. Hawke said.

Mr. Hawke commended the Consumer Bankers Association for its survey of
financial literacy efforts by the banking industry. "But we can't stop
here," Mr. Hawke said, "because the truth is that your work \-- our work
\-- has just begun. There are millions more who remain outside the
banking system \-- and outside the mainstream of our economy. We will
never achieve our full potential as a nation as long as that is the
case. And the banking industry will miss out on opportunities to serve,
to grow, and to profit."

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