173 

Minutes 

of 

The Meeting of the FDIC Advisory Committee on Economic Inclusion 

of the 

Federal Deposit Insurance Corporation 

Held in the Board Room 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation 

June 2, 2011 - 8:48 A.M. 

The meeting of the FDIC Advisory Committee on Economic 

Inclusion ("ComE-IN" or "Committee") was called to order by 

Sheila C. Bair, Chairman of the Board of Directors of the Federal 

Deposit Insurance Corporation ("Corporation" or "FDIC") 

The members of ComE-IN present at the meeting were Michael 

S. Barr, Professor of Law, University of Michigan Law School; Ted 

Beck, President and Chief Executive Officer (CEO), National 

Endowment for Financial Education; Kelvin Boston, Executive 

Producer and Host of PBS’ Moneywise with Kelvin Boston; Martin 

Eakes, CEO, Self-Help/Center for Responsible Lending, Durham, 

North Carolina; Rev. Dr. Floyd H. Flake, Senior Pastor, Greater 

Allen ANE Cathedral of New York; Ester R. Fuchs, Professor, 

School of International and Public Affairs, Columbia University; 

Wade Henderson, President and CEO, Leadership Conference on Civil 

Rights, and Counselor to the Leadership Conference on Civil 

Rights Education Fund; Alden J. McDonald, Jr., President and CEO, 

Liberty Bank and Trust, New Orleans, Louisiana; Bruce D. Murphy, 

Executive Vice President and President, Community Development 

Banking, KeyBank National Association; Manuel Orozco, Senior 

Associate at the Inter-American Dialogue, and Senior Researcher, 

Institute for the Study of International Migration, Georgetown 

University; Rebecca W. Rimel, President and CEO, The Pew 

Charitable Trusts; John W. Ryan, Executive Vice President, 

Conference of State Bank Supervisors; J. Michael Shepherd, 

President and CEO, Bank of the West and BancWest Corporation; 

Robert K. Steel, Deputy Mayor for Economic Development, The City 

of New York; Peter Tufano, Sylvan C. Coleman Professor of 

Financial Management, Harvard Business School, and Senior 
175 

Associate Dean for Planning and University Affairs; and Deborah 

C. Wright, Chairman and CEO, Carver Bancorp Inc., New York, New 

York. Diana L. Taylor, Committee Chairman and Managing Director, 

Wolf ensohn & Company, L.L.C., New York, New York; and Lawrence K. 

Fish, Former Chairman and CEO, Citizens Financial Group, Inc. 

were absent from the meeting. 

Members of the Corporation’s Board of Directors present at 

the meeting were Sheila C. Bair, Chairman, Martin J. Gruenberg, 

Vice Chairman, Thomas J. Curry, Director (Appointive), and John 

E. Bowman, Acting Director, Office of Thrift Supervision. 

Roberta K. McInerney, Designated Federal Officer for the 

Committee and Deputy General Counsel, Corporate, Consumer, 

Insurance, and Legislation Branch, FDIC Legal Division, also was 

present at the meeting. Corporation staff who attended the 

meeting included Willa M. Allen, Gwendolyn F. Alston, Ruth R. 

Amberg, Julie V. Banfield, David Barr, Michael J. Barry, Luke H. 

Brown, Richard A. Brown, Susan Burhouse, Karyen Chu, Glenn E. 

Cobb, Kelly E. Costello, Christine M. Davis, Patricia B. Devoti, 

Doreen R. Eberley, Keith S. Ernst, Alice C. Goodman, Janet R. 

Gordon, Greg Hernandez, Sally J. Kearney, Kenyon T. Kilber, Cheh 

Kim, Ellen W. Lazar, Alan W. Levy, Jonathan N. Miller, Barry A. 

Mills, Tariq A. Mirza, Robert W. Mooney, Nydia L. Moore, 

Christopher J. Newbury, Thomas E. Nixon, Janet V. Norcom, Erika 

Noyes, Yazmin Osaki, Victoria Pawelski, Mark E. Pearce, Sylvia H. 

Plunkett, Carolyn D. Rebmann, Luke W. Reynolds, Sherrie Rhine, 

Jay Rosenstein, Barbara A. Ryan, and Annette M. Somerville. 

Charlotte M. Bahin, Senior Counsel for Special Projects, 

Office of Thrift Supervision, also was present at the meeting. 

Chairman Bair opened and presided at the meeting. She began 

by advising that this would be her last meeting with the 

Committee, expressing sorrow that her tenure as Chairman of the 

FDIC was nearing its end and offering praise for the joint 

accomplishments of Board members, staff and Committee members 

over the previous five years. She then provided an overview of 

the meeting agenda, noting that she was excited at the 

opportunity to hear presentations by recipients of the Chairman’s 

Award for Excellence in Serving Low- and Moderate-Income ("LMI") 

Consumers, who had been honored at a dinner the previous evening, 

and that the meeting also would include presentations on the 

current status of LMI household finances and discussion on the 

future of economic inclusion initiatives, particularly 

technology-based efforts. Providing context for the latter 

topic, Chairman Bair indicated that many households were 

adversely impacted by the recent recession and that understanding 

how LMI households are faring today would assist in determining 

the most appropriate course of action going forward. She then 

June 2, 2011 
176 

turned the discussion over to Ms. Lazar, moderator of the first 

panel. 

Ms. Lazar began by advising, among other things, that the 

panel would focus on the status of LMI household finances, with 

panel members addressing how important drivers of the overall 

economy are affecting the economic conditions facing American 

families and how the economic environment has created financial 

challenges for LMI families and the financial institutions that 

serve them. She indicated that the last recession, which began 

in December 2007 and officially ended in June 2009, was the 

longest and deepest in the country’s post-war history; that the 

recession led to depleted assets, damaged credit scores, 

decreased geographic mobility, and lack of financial security for 

many U.S. households; that the decline in family income and net 

worth pushed the poverty rate to a 15-year high; and that, 

although poverty rates rose for families across all racial and 

ethnic groups, historic disparities continued for AfricanAmericans, Hispanics and, to a lesser extent, Asians relative to 

non-Hispanic Whites. After reiterating that the purpose of the 

panel was to help inform the Committee about the circumstances 

and conditions of LMI households and obtain Committee feedback on 

the topic, she introduced panel members Richard Brown, Chief 

Economist, FDIC, and Keith Ernst, Associate Director, Consumer 

Research, Division of Depositor and Consumer Protection, FDIC. 

Mr. Brown, presenting information on the jobs crisis in the 

U.S., advised that for every decade from the 1960s through the 

1990s, 17 million to 20 million jobs were created and that, in 

contrast, for the past 11 years, ending in 1999, net job creation 

has been approximately 500,000 jobs. Elaborating, he further 

advised that the private sector has shed 1.1 million jobs since 

1999, with a gain in government jobs primarily responsible for 

keeping net job creation in positive territory; that jobs have 

been lost to globalization, technology, and recessionary 

pressures; that there has been a shift in private sector jobs, 

with declines in higher-paying sectors such as manufacturing and 

construction accompanied by an increase in relatively low-paying 

sectors such as education and health and leisure and hospitality; 

and that the decline of 5.6 million manufacturing jobs represents 

one-third of the manufacturing jobs in existence at the end of 

1999. 

Next addressing the issue of income inequality, Mr. Brown 

reported that, in 2006, households in the lowest quintile earned 

3.4 percent of total income in the U.S., down from 4.3 percent in 

1975; that households in the highest quintile earned just over 50 

percent of total income; and that, when compared with other 

industrialized countries and expressed in terms of the Gini 

June 2, 2011 
177 

coefficient, an income inequality metric, the U.S., with a Gini 

coefficient of 45, shows greater income inequality than the 

European Union, which has a Gini coefficient of 30.5, the United 

Kingdom, which has a Gini coefficient of 34, Japan, which has a 

Gini coefficient of 38, and China, which has a Gini coefficient 

of 42. 

Mr. Brown then discussed the impact of the most recent 

recession on U.S. workers and households, noting that the U.S. 

economy lost 8.75 million jobs in the recession, with only 20 

percent of those jobs recovered thus far; that 7.8 million people 

have been out of work for 15 weeks or more, three-quarters of 

which have been out of work for 27 weeks or more; and that this 

long-term joblessness is unprecedented in the nation’s history. 

Regarding the social consequences of such long-term dislocations, 

he advised that a growing body of research indicates that 

displaced workers suffer large declines in earnings that persist 

for more than a decade after the jobless event; that the rates of 

mortality for displaced workers are persistently higher for years 

after the jobless event; that the educational achievement of the 

children of displaced workers suffers in a statistically 

meaningful way after the jobless event; and that the earnings of 

those children years later is also lower. He also advised that 

other life cycle progressions have been affected, with a dramatic 

slowdown in the formation of new households and lower demand in 

real estate markets; a decline in household mobility from 6.1 

percent in 2008 to 4.2 percent in 2009, with approximately 25 

percent of homeowners owing more on their homes than they are 

worth; a skills mismatch in labor markets, with a demand for 

high-skilled labor in markets where high-skilled labor is not 

available; retirement insecurity and delays arising from declines 

in home prices, rising indebtedness, declines in stock 

portfolios, and an overall drop of 26 percent in the net worth of 

U.S. households. 

Next, Mr. Ernst elaborated on the overall change in assets 

held by U.S. households, noting that the 26 percent drop in 

household wealth was fairly equally distributed across income 

categories, with a median decrease of 18 percent, identical to 

the decrease for the lowest income quintile; and that the median 

net worth of the lowest and the second lowest quartiles dropped 

from $1,700 to $1,000 and from $63,000 to $48,000, respectively. 

He then turned to the components of net worth, assets and 

expenditures and liabilities, reporting with respect to assets 

that from 2007 to 2009, the median value of financial holdings 

dropped 5 percent, but the median value of non-financial 

holdings, those most likely to be held by LMI families, dropped 

14 percent. He explained that 27 percent of low-income 

homeowners report that their home is worth less today than at the 

June 2, 2011 
17S 

time of purchase, a phenomenon due in part to substantially 

higher foreclosure rates in LMI census tracts; that lower-priced 

homes have seen the largest average price declines since 2006, 

with an almost 50 percent price drop in contrast to a 29 percent 

drop for the highest-priced homes; that the value of automobiles, 

the most common asset held by LMI households, are down 

approximately 30 percent, with the median car value in the lowest 

income quintile dropping to $4,000; that 25 percent of low-income 

households have completely stopped making retirement 

contributions, versus just 16 percent for the general population; 

that 14 percent of lower-income households took early withdrawal 

of funds from their retirement accounts; and that, as of 2010, 36 

percent of women and 34 percent of men in the $20,0 00- $ 40 , 000 

income range had a loan against their 401k account, as compared 

to 28 percent of all Americans. With respect to expenditures and 

liabilities, Mr. Ernst advised that the lowest income quintile 

saw a 36 percent increase in installment debt, versus a drop in 

installment debt for every other income quintile; that the first 

and second lowest quintiles saw an increase in credit card debt, 

even though aggregate credit card debt had decreased; and that 

those with the lowest incomes have greater exposure to more 

volatile expenses, with food and healthcare accounting for 27 

percent of household budgets for the lowest income quintile, as 

compared to 19 percent of household budgets for the highest 

income quintile. Noting that LMI families make substantial use 

of alternative financial service ("AFS") providers because of 

their economic challenges, he advised that it is estimated that 

such providers process $330 billion on an annual basis across a 

diverse array of offerings. Further noting that FDIC research 

has shown that one in four consumers are unbanked or underbanked 

and 20 percent of lower-income consumers are unbanked, he stated 

that the financial needs of LMI consumers include transactions 

and savings. 

Summarizing the panel presentations to help frame the 

Committee’s discussion, Mr. Ernst stated that the dual challenges 

of long-term job loss and the housing crisis have taken a serious 

toll on LMI households; that, like other groups, lower-income 

households have lost wealth, but that the setbacks may be more 

serious for families already facing significant challenges; and 

that LMI households have financial services needs and are finding 

ways to meet them, in many cases through relatively expensive AFS 

providers. 

The discussion that followed covered a number of topics, 

including credit constriction, particularly as it relates to 

mortgage loans and small businesses; consolidation at the upper 

end of the banking system and the future of community banking; 

and the foreclosure crisis and the future of homeownership. 

June 2, 2011 
179 

Regarding credit constriction, Chairman Bair suggested that 

imposing higher capital standards on insured depository 

institutions is good for long-term economic interests and is not 

the cause of constriction in lending, that loan constriction is 

the result of weak loan demand and undue risk aversion, that a 

pullback in capital standards would have a devastating effect on 

the economy, and, to the extent that lower real estate values 

inhibit small business lending, perhaps financial institutions 

should give thought to prudent unsecured lending. Mr. Brown, in 

agreement, stated that many creditworthy small businesses are not 

expanding because of decreased orders, an uncertain economic 

outlook, and lack of investor confidence; that many small 

businesses that would typically use real estate as collateral for 

a loan have reduced creditworthiness due to dislocations in the 

real estate market; and that a strongly-capitalized banking 

system is a fundamental prerequisite for an expansion of lending. 

Mr. McDonald suggested that regulatory costs have impacted the 

ability of small community banks to extend both housing- and 

small business-related credit, that recent policy decisions on 

interchange and overdraft fees have caused a lot of community 

banks to reexamine their business models, and that the imposition 

of stringent underwriting standards interferes with the ability 

of community bankers to factor into loan decisions their 

knowledge of the communities they serve. Finally, Mr. Murphy 

indicated that the consequence of the constructive tension 

between encouragement to make loans and the need to focus on 

safety and soundness is more cautious and less risky lending on 

the part of institutions. 

With respect to consolidation at the upper end of the 

banking system and the future of community banking, Mr. Eakes, 

citing statistics on the percentage of banking assets held by 

small community banks relative to total banking assets and 

current projections that 3,500 community banks will disappear 

over the next nine years, suggested that a decline in the number 

of community banks would further adversely impact small business 

lending. Mr. Brown, acknowledging that a strong community 

banking sector is essential to the entrepreneurial character of 

the nation’s economy, underscored the FDIC’s support for the 

community banking sector and pointed out that forecasts regarding 

a decline in the number of community banks are based on current 

definitions of what constitutes a community bank, which is 

subject to change over time. Vice Chairman Gruenberg noted that 

there are significantly fewer community banks than existed 20 

years ago and that there is increasing concentration of assets at 

the upper end of the banking system, and commented that the two 

trends are not necessarily linked and indicated that, despite 

continuing challenges, community banks continue to occupy an 

important niche in the financial system and there are still a 

June 2, 2011 
18 

substantial number of community banks that have emerged from the 

recent crisis in sound condition. Mr. Brown, underscoring the 

cyclical nature of banking, advised that, historically, there 

have been periods of mergers that drive consolidation, but there 

also tend to be periods that drive new chartering activity. 

Chairman Bair acknowledged that community banks, which represent 

only one percent of banking assets, are responsible for 40 

percent of small business loans, and suggested that such banks 

are wonderful laboratories for innovation and that regulators 

should ensure that they continue to have the flexibility to 

experiment with and prove the creditworthiness of products 

targeting the LMI community. 

Regarding the foreclosure crisis and the future of 

homeownership, Mr. Henderson pointed to the severity of the most 

recent recession and the impact of the foreclosure crisis, 

particularly in LMI communities, and suggested that the 

government needs to take action beyond the Home Affordable 

Modification Program, which has so far proved insufficient to 

stem the foreclosure problem. Messrs. Henderson and Eakes 

suggested that proposals to raise the margin of down payment 

necessary to purchase a home would have an adverse impact on 

access to homeownership for LMI consumers, and Mr. McDonald 

indicated that, had a 10 percent minimum down payment been 

required, approximately 95 percent of the mortgage loans issued 

by his bank over the past decade would not have been made. Mr. 

Brown suggested that, although homeownership has always been the 

American dream, prohibitive transaction costs that inhibit labor 

market transition, recent credit distress, and high foreclosure 

rates have called into question the value of homeownership for 

the next generation; and Mr. Ernst suggested that it is difficult 

to disentangle the economic benefit of homeownership from the 

public policies that support homeownership, but that research 

shows there continues to be value in homeownership. Reverend 

Flake, observing the destabilizing effects of lost jobs and home 

foreclosures on many LMI communities, recommended taking a look 

at what the banking industry can do to sustain those communities. 

Chairman Bair then announced that the meeting would briefly 

recess. Accordingly, at 10:19 a.m., the meeting stood in recess. 

* * * * * * * 

The meeting reconvened at 10:32 a.m. that same day, at which 

time Professor Barr, moderator of the panel discussion on "The 

Way Forward: The Future of Economic Inclusion Efforts - 

Technology and Innovation," framed the discussion by suggesting 

that when seeking to foster greater economic inclusion, it is 

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181 

essential to keep in mind the importance of educated consumers, 

providing better access to products and services that meet the 

needs of consumers, and effective consumer protection. He then 

touched upon behavioral economics, noting that the traditional 

rational actor model often used in policymaking sometimes misses 

the basic gap between providing information to individuals and 

providing it in a way that actually helps them understand the 

information they are being given; misses the gap between 

intention and behavior; underestimates predictable biases that 

cause us to misperceive reality, misforecast our own behavior, 

engage in myopia, experience decisional conflict, engage in 

faulty mental accounting, and experience attention constraints; 

and fails to take into account the fact that we encounter the 

world through a set of particular contexts or institutions that 

guide and shape our behavior for better or worse, such as 

defaults that cause us to accept the way things are done most of 

the time, which can change the way we behave as well as the way 

we think about and plan for the future. 

Professor Barr next discussed a proposed set of education 

core competencies in finance, released by the U.S. Treasury 

Department ("Treasury") in 2010, which includes as core concepts, 

earnings, spending, saving, borrowing, and protection; identifies 

the knowledge levels for each concept; and sets forth related 

actions or behaviors that lead to the knowledge levels. He then 

moved to the question of access, raising the issue of how 

technology can be harnessed to improve the products and services 

available to LMI individuals and advising that, when asked what 

they want out of financial products and services, LMI consumers 

have indicated the important attributes they want in a payment 

card that can be used for transactional services, that consumer 

responses for different groups can be weighted, and that the 

relative weights can then be used to construct a payment card 

that is low-cost and low-risk to the bank and also the particular 

population. 

Professor Barr also provided information on recent 

government initiatives, including the Direct Express Card 

provided to Social Security and other benefit recipients; a small 

Treasury pilot designed to use technology and a default starting 

position for savings accounts for receipt of tax refunds; the 

FDIC’s pilot on safe and affordable transactional and savings 

accounts; and the Bank on USA program, designed to provide 

support around the country for programs to offer safe, low-cost 

accounts to unbanked and underbanked individuals. Finally, with 

respect to consumer protection, he underscored the importance of 

regulation that is least costly and least intrusive, yet is also 

protective of consumers, noting that in areas where the interests 

of providers are well-aligned with those of consumers, such as in 

June 2, 2011 
the area of savings, regulation can be relatively light and less 

intrusive, whereas in areas where providers interests are not 

aligned with consumer interests, such as in the area of 

borrowing, regulation may need to be more high touch and 

intrusive. 

Professor Barr then introduced panel members, George 

Peabody, Director, Emerging Technology Advisory Service, Mercator 

Advisory Group; Michael Tarazi, Senior Policy Specialist, 

Consultative Group to Assist the Poor ("CGAP"), The World Bank 

Group; Brandee McHale, Chief Operating Officer, Citi Foundation 

("Citi"); Jennifer Tescher, President and CEO, Center for 

Financial Services Innovation ("CFSI") ; and Jonathan Mintz, CoChair, Cities for Financial Empowerment, and Commissioner, New 

York City Department of Consumer Affairs. 

Mr. Peabody, discussing the economy’s impact on financial 

services and how those services will affect consumers going 

forward, advised that, although the payments industry has been 

fairly stable for more than 30 years since the transition from 

paper to plastic, the impact of technology and the introduction 

of new players into the industry are likely to result in a high 

rate of change over the next five to 10 years; that the payment 

industry’s planning and profit was previously predicated on a 

culture of spending, which has ended; that because of stress on 

the banking industry, there is a return to fees as a means of 

generating profit; that other organizations such as PayPal and 

Wal-Mart are now competing with financial institutions to provide 

financial services to consumers; and that technological 

innovation and regulation will significantly shape the payments 

industry of the future. On the topic of technological 

innovation, he discussed the transformational power of mobile 

technology, indicating that smartphone technology blurs the 

distinction between online and offline worlds and has changed the 

way both banks and merchants relate to consumers; that banks are 

expanding their online banking capacities through mobile banking 

and exploring new services such as person-to-person payments, 

with Bank of America, JP Morgan Chase, and Wells Fargo having 

recently announced the formation of an entity, Clear Exchange, to 

facilitate person-to-person payments among their account holders; 

and that merchants are now using mobile payments to engage in 

one-to-one marketing, product merchandising, and the offering of 

incentives and loyalty and rewards programs. 

Next, Mr. Peabody addressed the extent to which LMI 

consumers have access to smartphone technology, noting that 

nearly 60 percent of Americans will have smartphones by year-end 

2011; that smartphones, with internet access, videos, and other 

services, and a projected purchase price of under $200 within a 

June 2, 2011 
183 

few years, are an economically rational choice for consumers; and 

that the cost would make it relatively easy for a consumer to 

purchase a smartphone, along with prepaid or pay-as-you-go 

communications services, and have a means of participating in 

various aspects of mobile commerce. He then discussed prepaid 

regulatory and compliance concerns, including the impact on debit 

costs and fees of the Durbin amendment to the Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 2010; state and 

federal regulation of the prepaid industry; merchant-driven 

activity in financial services and mobile commerce; the roll-out 

of new payment and transaction technologies; and the crisis in 

data security, expressing hope that new tools will help to 

alleviate data security problems. 

Mr. Tarazi began his presentation by explaining that CGAP is 

a trust housed in The World Bank that focuses on financial 

inclusion around the world, with a priority in developing 

countries, particularly those with high unbanked populations. He 

then identified obstacles to financial inclusion, including long 

distances and low-population density, with bank branches often 

unavailable in areas where many low-income populations are 

concentrated; high bank costs relative to income; low education 

and financial literacy; and poor product and channel design, with 

LMI consumers expressing greater preference for savings, 

payments, and insurance services than for credit services; and 

suggested that branchless banking, which he defined as the 

delivery of financial services outside of bank branches using 

technology and non-bank retail agents, provides a means to 

overcome those constraints and offers tremendous potential to 

promote financial inclusion. 

Continuing, Mr. Tarazi explained the mechanics of branchless 

banking for those who want to deposit cash into their accounts 

and those who want to take cash out of their accounts, noting 

that, in the first scenario, both the consumer and an independent 

retail agent open bank accounts, accessible through their mobile 

phones, the consumer provides cash to the agent, who then 

transmits the electronic value from his account via mobile phone 

in real time to the consumer’s account; and that, in the second 

scenario, a consumer requesting cash from the agent 

electronically transmits the amount requested from his account to 

the agent’s account, who upon receipt of confirmation that the 

funds have been credited to his account, dispenses the cash to 

the consumer. He advised that the logic of branchless banking is 

the ability to use existing retail infrastructure and existing 

deployed technology; that the power of existing infrastructure is 

apparent, particularly if you consider that worldwide there are 

approximately 250,000 Western Union offices, 500,000 bank 

branches, 665,000 post offices, 1 million ATMs, 28 million pointJune 2, 2011 
14 

of-sale ("POS") terminals, and 5.7 billion mobile phone 

connections; that there has been a significant increase in the 

number of mobile phone owners in the developing world, as opposed 

to in developed countries; that the percentage of those with 

mobile phones is about double that of those with bank accounts; 

and that the target audience for branchless banking would be 

those with mobile phones who do not have bank accounts. 

Providing insight on the cost of branchless banking, Mr. Tarazi 

stated that the upfront investment for a traditional bank branch 

is $250,000, versus $50,000 for a branch in an existing store, 

$10,000 for an ATM, $2,000 for an agent with a P05 terminal, $400 

for an agent with a mobile phone, and zero upfront investment for 

person-to-person payments. Regarding the global status of 

branchless banking, he advised that there are currently 114 

branchless banking implementations, 22 of which have more than 

one million registered users, with Kenya’s Safaricom M-Pesa being 

the most well-known implementation, with 13.1 million users in 

just four years; and that branchless banking implementations have 

a demonstrated capacity to reach the unbanked as evidenced by the 

fact that approximately 37 percent of customers using mobile and 

branchless banking were previously unbanked. 

In closing, Mr. Tarazi noted that in the most successful 

branchless banking models, mobile network operators, rather than 

banks, are the issuer of electronic funds; that such models tend 

to be more successful because mobile network operators have the 

experience in high-volume, low-value transactions, which are 

exactly the kind of transactions in which low-income consumers 

engage; that the challenge of a model in which a mobile network 

operator, not a bank, has the contractual relationship with the 

customer has been met by requiring that funds be held in a pooled 

account at a prudentially-regulated financial institution; but 

that regulatory issues regarding branchless banking models still 

remain. He indicated that included among the regulatory issues 

are whether low-income users can meet identification requirements 

associated with laws addressing money-laundering and terroristfinancing concerns; how best to regulate agents; consumer 

protection concerns involving price transparency, recourse, and 

education; and whether accounts will be allowed to bear interest 

and benefit from deposit insurance, noting with respect to 

deposit insurance that there is a great deal of reliance on the 

FDIC’s 2008 General Counsel Opinion No. 8, "Stored Value Cards 

and Other Nontraditional Access Mechanisms." 

Ms. McHale then discussed a supply-demand linked approach to 

the future of financial inclusion, first introducing a financial 

inclusion formula that factors in an appropriate balance of 

supply, with a focus on improving the supply of financial 

products; access, which can be increased through innovations in 

June 2, 2011 
technology; and demand, with a focus on building trust and 

influencing consumer behavior through incentives and financial 

education. She suggested that more emphasis on the demand piece 

of the equation could produce better results and advised that, in 

an effort to gain better insight into issues of supply and 

demand, that Citi, in partnership with CFSI and New York 

University researchers, had recently launched a three-year 

project, the Financial Access Initiative, to track the financial 

behavior of LMI consumers. 

Elaborating on the initiative, Ms. McHale reported that it 

will replicate an earlier study, utilizing the financial diaries 

methodology, of households in Bangladesh, India, and South 

Africa, as described in a book entitled, Portfolios of the Poor: 

How the World’s Poor Live on $2 a Day; that the initiative will 

include an urban cohort of African-American families in New York 

City, an urban cohort of Hispanic immigrant families in San Jose, 

California, a rural cohort of White and African-American families 

in Mississippi, and a suburban cohort of families of mixed race 

and ethnicity in Ohio and Kentucky; that a total of 300 families 

would be tracked; and that the initiative would involve bi-weekly 

site visits by a researcher, who would review the diaries, check 

the methodology, and interview the families to add more substance 

to the stories. Noting that one of the conclusions of the 

earlier study was that credit and savings are both viewed as 

cash-flow management tools and that they are interchangeable, she 

added that the U.S. initiative would examine cash flow, use of 

various financial instruments, and the influence of social 

networks. She ended her presentation by identifying the goals of 

the initiative, including a determination of whether there may be 

some standard approaches to financial inclusion that would fit 

the financial needs and preferences of many subgroups; whether 

opportunities exist to integrate the delivery of financial 

services into public and private delivery channels; whether there 

is a need for new private sector products; whether consumers feel 

they have a real relationship with community-based intermediaries 

or whether it is more commodity-based; determining the influence 

of financial education; and understanding, creating, and 

influencing norms. 

Ms. Tescher, noting that CFSI works to improve the lives of 

underserved consumers by attempting to increase access to highquality financial products and services, advised that the recent 

financial crisis emphasized not only the importance of having 

access to safe, affordable, high-quality products and services, 

but also the importance of making certain those products and 

services are used effectively; that, although there is no 

shortage of financial education curricula, most research on the 

effectiveness of such programs focuses on knowledge gain as 

June 2, 2011 
181 

opposed to behavioral changes; and that there appears to be a 

shift from financial education to a financial capability 

framework, with an increase in new online financial management 

tools, educational gaming, social media support, and more direct 

links between consumers and financial products and services. She 

further advised that the most promising financial capability 

framework initiatives seem to have four elements in common - they 

are relevant, timely, actionable, and ongoing; and that CFSI, in 

an effort to increase the number of initiatives that marry 

products with information, created the Financial Capability 

Innovation Fund, which solicited proposals for projects that 

leverage technology to improve the customer experience, build on 

behavioral economics principles, or leverage cross-sector 

partnerships to enhance the provider’s efficiency. 

Describing the winning proposals, Ms. Tescher indicated that 

they included the Mission Asset Fund, which has been 

experimenting with peer lending circles that incorporate an 

education component and a credit reporting capability that allows 

borrowers to build their credit history and access mainstream 

credit providers; the Filene Research Institute, which will be 

working with credit unions across the country to test whether 

upfront information about obtaining a lower interest rate over 

time for on-time payments actually results in more on-time 

payments for subprime borrowers taking out auto loans, and the 

importance of providing certain information at the time the loan 

is made and during the course of the repayment process; Piggy 

Mojo, a startup company that makes tangible the impulse to save 

by allowing users, in lieu of succumbing to the temptation to 

make a purchase, to instead have the amount of the purchase 

transferred from their checking to their savings account and to 

send a text message to their savings goal partners challenging 

them to make a similar effort; the Consumer Credit Counseling 

Service of Delaware Valley, which works with consumers to 

implement debt-management plans and utilizes social pressure as 

an incentive by sending text message alerts to family members or 

friends when payments are missed; and Co-Opportunity, a 

Connecticut organization which operates a coaching program, using 

volunteer coaches to work with consumers who need help with 

budgeting, with plans to test the addition of a technology 

component to determine the effectiveness of in-person versus 

online coaching. In conclusion, she recommended that more use be 

made of competitions to seed innovative approaches to financial 

capability, observing that the FDIC has been at the forefront of 

fostering such innovation; that tools and funding be provided to 

replicate on a larger scale the approaches that work best; and 

that government act as bully pulpit to motivate fresh thinking 

and action. 

June 2, 2011 
is 

Mr. Mintz then briefed the Committee on economic inclusion 

efforts in New York City, advising that local experimentation in 

New York has been augmented by a partnership with the Cities for 

Financial Empowerment, a coalition of cities that also foster 

economic inclusion efforts; that, for cities, economic inclusion 

efforts are not just about success and quality, but also, of 

necessity, about scale; and that financial empowerment efforts 

encompass access to mainstream banking, asset-building, financial 

counseling and education, and targeted consumer protection. 

Focusing his presentation on innovation in approach, he offered 

his opinion that the country is in the middle of a perfect storm, 

with ever-increasing need for government services, everdecreasing resources to meet that need, and evidence of great 

successes in the asset-building field that have been carefully 

cultivated and studied over the past few years. Noting that 

asset-building has, until now, existed as stand-alone, fringe 

efforts, rather than traditional, federally-funded and mandated 

activities, he suggested that asset building be integrated into 

mainstream programmatic social service and anti-poverty efforts 

in our communities to augment and enhance service delivery. 

Providing examples of the ways in which New York City has 

been experimenting with the augmentation of social service 

delivery, Mr. Mintz advised that the city has inserted a bank 

account into the sign-up process for conditional cash transfer 

benefits, which gives banks and credit unions the opportunity to 

establish relationships with clients who will be receiving 

regular streams of money for a couple of years and gives 

consumers a mechanism to safely receive their funds, resulting in 

a decrease from 56 percent to 6 percent in the percentage of that 

population that is unbanked; has worked, through its SaveNYC 

program, to boost the benefits of the Earned Income Tax Credit 

Program by leveraging a split refund, with a portion of the 

refund going into a branded savings product, and using privately 

raised funds to incentivize saving for one year; and, thanks to 

private funding investments, is offering one-on-one financial 

counseling at the city’s Financial Empowerment Centers, with 

counselors actually dealing with creditors to negotiate and 

restructure debt. He stated that New York City is also 

experimenting with integrating financial counseling into other 

vehicles, including mortgage foreclosure services, homeless 

prevention and reentry services, and domestic violence services. 

Mr. Mintz ended his presentation by suggesting that governments 

have to identify the points where augmentation of services is 

appropriate and must force the integration of financial products 

and counseling sessions into social service delivery and that now 

is the time to do it. 

June 2, 2011 
183 

Chairman Bair, commenting on the panel presentations, 

indicated that the branchless banking models appears to be very 

promising and that she was struck by the fact that each of the 

panelists flagged Bank Secrecy Act ("BSA") issues as an 

impediment to many economic inclusion efforts and continues to be 

frustrated that BSA’s major barriers are at cross-purposes with 

very small accounts. Mr. Tarazi mentioned the significant 

activity of the Financial Action Task Force, on which the U.S. is 

a major player, and recommended that there should be some 

coordination on ESA issues at the national level, in response to 

which Chairman Bair indicated that the recommendation was a good 

one. Messrs. Orozco and Henderson and Professor Fuchs each 

expressed some degree of concern regarding the importance of 

making a distinction between payment instruments and assetbuilding instruments, with Mr. Orozco indicating that mobile 

payments could result in the wasting of assets. Mr. Orozco also 

suggested that, although he is a proponent of technology, many 

agents have liquidity issues and the risks of overexposure should 

be kept in mind. Mr. McDonald suggested that many of the 

participants in providing new financial products and services are 

not subject to the same regulatory requirements as financial 

institutions and that it is very important to take into account 

the regulations that community banks must contend with in order 

to compete with non-bank participants. Chairman Bair agreed that 

there is more flexibility for non-bank providers and that she was 

of the opinion that the Consumer Financial Protection Bureau 

could play a role in ensuring a level playing field. Professor 

Fuchs took issue with the notion of shifting from financial 

education to financial capability, indicating that, in her 

opinion, there is no distinction and that, if financial education 

is not done correctly, there is no financial capability; and 

issued a reminder that the Committee’s focus is on quality 

financial services for LMI consumers. 

Chairman Bair then announced that the meeting would recess 

for lunch. Accordingly, at 12:16 p.m., the meeting stood in 

recess. 

* * * * * * * 

The meeting reconvened at 1:46 p.m. that same day, whereupon 

Luke Brown began by noting that the previous evening, a reception 

had been held in honor of the recipients of the Chairman’s Awards 

for Excellence in Serving the Needs of LMI Consumers, providing 

an overview of the awards process and criteria, and expressing 

thanks to Michael Barry, Susan Burhouse, Irma Matias, Barry 

Mills, Claudia Moore, Yazmin Osaki, and Victoria Paweiski, 

members of the FDIC team involved in the effort. He then 

identified the recipients of the Award for Excellence in 

June 2, 2011 
189 

Transactional Accounts for LMI Consumers as Cathy Lowery, 

Danyelle Morris, Jane Woods, Marina Simpson, and Donna Oilman at 

United Bank in Atmore, Alabama; the recipients of the Award for 

Excellence in Affordable Credit for LMI Consumers as Robert 

Young, Joe Flynn, LaReta Lowther, Lisa Werner, and Jayme Payton 

at WesBanco Bank, Wheeling, West Virginia; and the Award for 

Excellence in Other Programs or Products that Creatively and 

Effectively Reach Out to LMI Consumers as M. Licha Ibarra and 

Leonor Padilla at Brotherhood Bank & Trust, Kansas City, Kansas. 

He then introduced Robert Jones, CEO, United Bank, and Ms. 

Simpson, Marketing Officer, United Bank, to brief the Committee 

on United Bank’s award-winning transactional account, the Gateway 

Checking Account. 

Mr. Jones provided background information on United Bank, 

noting, among other things, that it was founded in 1904; that it 

serves a three-county area, including coastal and rural farming 

areas in southern Alabama and Santa Rosa County in the panhandle 

of Florida; and that, since its inception, the bank has served 

LMI consumers and small businesses in a part of the country that 

is economically-challenged. He advised that the Gateway product 

grew out of a desire to provide access to the banking sector for 

those interested in a banking relationship, who had either been 

forced out of the system for poor decisions in the past or who, 

for generational and cultural reasons, had never had a banking 

relationship. He further advised that the Gateway product 

started as a simple checking account with a debit card feature; 

that the debit card feature was subsequently rescinded because of 

problems with customer overdrafts; that the product is very timeintensive for staff and not necessarily profitable; but that it 

helped customers learn how to reconcile their bank statements and 

provided them with a mechanism for making deposits and cashing 

checks without having to resort to use of AFS providers. 

Ms. Simpson then briefly discussed United Bank’s experience 

with the Gateway account, noting that it was introduced as a 

product offering for customers visiting the bank who did not 

qualify for more traditional offerings; that, although the bank 

did not formally market the account, the program grew through 

word-of-mouth among the unbanked community and customer referrals 

from other banks that did not have product offerings to meet the 

needs of unbanked individuals; that after six months of proper 

account management without any overdrafts, the bank will upgrade 

Gateway account participants to one of its more traditional 

checking accounts; and that, thus far, 1,263 Gateway accounts, 

with an average balance of $800, had been opened, with 226 having 

been charged off and 532 accounts having been upgraded. Mr. 

Jones added that United Bank was about to introduce a new 

Advantage account in an effort to retain banking relationships 

June 2, 2011 
190 

with Gateway customers who don’t quite measure up to 

expectations. 

Mr. Brown then introduced LaReta Lowther, Vice President for 

Community Reinvestment Act ("CRA") Compliance, WesBanco Bank 

("WesBanco") , and Lisa Werner, Assistant Vice President and 

Mortgage CRA Officer, WesBanco, to discuss WesBanco’s suite of 

credit products. Ms. Lowther began by providing information on 

the history and characteristics of WesBanco, advising that it was 

founded in 1870; serves communities in West Virginia, Ohio, and 

Pennsylvania; has 11 banking offices and 1,441 employees; and has 

a structured Community Development Department that houses the CRA 

compliance function and WesBanco’s Community Development 

Corporation, which has $60 million in tax credit authority under 

the New Market Tax Credit Program. She further advised that, 

with assets of $5.4 million, WesBanco meets the large bank 

criteria for CRA examination purposes; serves densely-populated 

urban areas such as Cincinnati, Columbus, Dayton, and 

Springfield, Ohio, Charleston, West Virginia, and Pittsburgh, 

Pennsylvania, as well as large rural areas, such as central 

Appalachia; and that the areas served have large pockets of 

poverty, with the national poverty level higher than the actual 

incomes of low-income individuals in some of their assessment 

areas. Within that context, Ms. Lowther indicated that it was 

WesBanco’s goal to offer products that meet the basic needs of 

LMI consumers for safe shelter and transportation, which gave 

rise to the bank’s CPA Freedom Loan Products. 

Ms. Lowther explained that the CRA Freedom Mortgage, 

initiated in 2001, was originally available only to LMI 

borrowers; that it was later expanded to include higher-income 

borrowers purchasing owner-occupied homes in LMI neighborhoods in 

recognition of the fact that the way to stabilize or revitalize 

LMI neighborhoods is to facilitate their transition to mixedincome neighborhoods; that it offers fixed-rate loans for 

purchases or no cash-out refinancing, with 30-year terms and up 

to 95 percent loan-to-value ratios in certain market areas; that 

the underwriting criteria include a reasonable credit score of 

640, with credit based on the previous 12 months of credit 

history, and allowances for medical collections and collections 

for less than $1500 for individuals or $5,000 in the aggregate; 

and that loans made under the program are retained in-house 

rather than being sold in the secondary market. She also 

explained that the bank requires face-to-face pre-purchase 

counseling and an injection of at least $500 in borrower funds, 

and that, if a borrower becomes delinquent for more than 30 days, 

the bank’s collections’ adjuster may require additional postpurchase counseling. 

June 2, 2011 
191. 

Continuing, Ms. Lowther indicated that the bank’s CRA 

Freedom Modernization Home Improvement Loan began as a source of 

funds for LMI borrowers seeking to undertake weatherization or 

other energy saving improvements to their homes; that it was 

later expanded to cover any home improvement project and to 

include higher-income borrowers renovating owner-occupied homes 

in LMI neighborhoods; that the loans, in amounts from $1,500 to 

$10,000, are unsecured and offer a fixed-rate, with up to a 10-

year term; that the origination fee is $60, as compared to the 

bank’s typical fee of $140; and that mobile home improvement 

projects are eligible. She then provided details on the CRA 

Freedom Auto Loan, noting that it is offered for new or used 

vehicles; is fixed-rate, with a maximum term of 72 months on new 

vehicles and 66 months on used vehicles; has a $2,000 minimum; 

requires a minimum credit score of 580; allows a slightly higher 

than normal debt-to-income ratio of 50 percent; has a reduced 

origination fee; and has a recently added refinance option. 

In closing, Ms. Lowther discussed marketing and loan 

performance, advising with respect to marketing that the bank 

uses both traditional and non-tradition approaches, including 

community outreach, calls to commercial and small businesses, 

visits to auto dealerships, realtors, and home improvement 

contractors, and distribution of brochures; and advising with 

respect to loan performance for 2008, 2009, and 2010 that, 

although delinquency rates are slightly higher than normal, the 

portfolio overall performs reasonably well, especially when one 

considers that the country was in recession. 

Next, Mr. Brown introduced Licha Ibarra, Assistant Vice 

President for Business Development, and William Arnold, Senior 

Vice President, Retail Division, Brotherhood Bank & Trust 

("Brotherhood Bank") , to discuss the bank’s Hispanic outreach 

program, noting that program elements include alternative 

identification and certification; homeownership through a 

uniquely-written mortgage product; financial education, products, 

and services in Spanish; a low-cost remittance product; and 

participation in Hispanic and Latino community events. 

Mr. Arnold, providing background information on Brotherhood 

Bank and its Hispanic outreach program, advised that the bank was 

founded in 1924 on the principle of serving the financial needs 

of the working person; that, although the bank’s principle 

remains the same, its market has changed with tremendous growth 

in the area’s Hispanic population; that existing bank products 

were inadequate to serve the needs of the Hispanic market; and 

that senior management had challenged bank staff to create not 

only products, but programs, to reach out to the Hispanic 

community. Ms. Ibarra advised that the centerpiece of the 

June 2, 2011 
I Ck) 

program is is a 15- to 30-year mortgage loan product, with no 

prepayment penalties, for qualified borrowers who have an 

Individual Taxpayer Identification Number ("ITIN") rather than a 

Social Security Number, and explained that borrowers must, as 

part of the application process, submit tax returns for two 

years, pay stubs for a 30-day period, and at least three credit 

letters or evidence of three non-traditional credit references; 

and attend a HUD-certified, homebuyer class, offered by the bank 

in-house and presented in Spanish, that reinforces what borrowers 

should expect from financial institutions, sellers, and real 

estate agents. 

Noting that the ITIN mortgage loan program was initiated in 

2008 and authorized by the bank’s board of directors to fund up 

to $10 million in loans, Mr. Arnold stated that the loan is 

unique in that it allows a higher debt-to-income ratio, up to 45 

percent; considers household, not just borrower, income; requires 

a home inspection and remedy of property deficiencies prior to 

purchase; requires a 10 percent down payment, with only 3 percent 

of the funds required to be contributed by the borrower; and 

provides down payment assistance through a grant from the Federal 

Home Loan Bank for those without sufficient personal resources to 

fund a 10 percent down payment. He reported that, to date, the 

program had assisted 75 families with home purchases and 13 

customers with refinancing adjustable rate mortgages. 

Regarding other aspects of the outreach program, Ms. Ibarra 

stated that the bank has an ITIN program through which it is 

certified to assist individuals in obtaining an ITIN number for 

tax filing purposes; that it has a very affordable, no-limit 

remittance program, Director a Mexico, which provides account-toaccount or account-to-recipient services to Mexico; and that the 

outreach program relies heavily on community outreach and 

aggressive advertising via Hispanic media, with radio advertising 

deemed to be the most effective. With respect to lessons 

learned, Mr. Arnold advised that credibility and relationships 

are important, with most clients wanting continuing contact with 

the person with whom they initially met; that bank services, such 

as the loan closing process, must be modified to accommodate 

family members, including children, grandparents, and aunts and 

uncles, who are oftentimes present to celebrate the fulfillment 

of a dream; that in-house training for customers is preferable to 

third-party training; that the establishment of partnerships is a 

key component to success; and that websites, documents, and other 

materials should be offered in the target population’s native 

language. 

During the ensuing discussion, Committee members asked, and 

panelists answered, questions on the impact of new rules on 

June 2, 2011 
193 

broker compensation, the potential impact of proposals to require 

a minimum 10 percent down payment for mortgage loans, and the 

profitability of products and services targeting LMI consumers. 

Regarding the impact of new rules on broker compensation, Ms. 

Werner, in response to a question from Professor Tufano, advised 

that prior to implementation of the new rules, WesBanco offered 

an additional incentive to its loan officers for CRA Freedom 

Mortgage originations that are no longer permissible under the 

new rules. Regarding the potential impact of proposals to 

require a minimum 10 percent down payment for mortgages, in 

response to a question from Mr. Eakes, Mr. Arnold advised that, 

although clients served through Brotherhood Bank’s Hispanic 

outreach program would likely have had funds sufficient to make a 

10 percent down payment, such a requirement would reduce client 

funds available for remittances to their families or for other 

purposes; and Ms. Werner advised that, because such a requirement 

would put a strain on the financial cushion of LMI borrowers, it 

would definitely have a negative impact on WesBanco’s CPA Freedom 

Mortgage. 

On the issue of profitability, in response to a question 

from Ms. Wright, Mr. Arnold reported that the mortgage loans 

issued pursuant to Brotherhood Bank’s Hispanic outreach program 

employ underwriting standards robust enough to ensure 

profitability, even taking into account projected delinquency 

ratios; that the bank’s Directo a Mexico remittance service, 

although reasonably priced, has a profit margin built into it; 

that the bank’s ITIN customers have, on average, about 20 percent 

more on deposit than the average non-ITIN customer; and that, in 

fact, all of the products and services through the outreach 

program were designed to be sustainable, both from the standpoint 

of scale and with respect to potential future losses. Ms. Werner 

reported that WesBanco’s CPA Freedom Mortgage, although 

attractively priced, is designed to provide earnings to the bank, 

despite concessions on title insurance and other items; and Ms. 

Lowther reported that WesBanco had recently adopted a tiered 

pricing structure on its home improvement and auto loans to align 

pricing with borrower credit scores, and that 60 percent of CPA 

Freedom loan borrowers also maintain a savings or deposit account 

with the bank, both of which also have a positive impact on 

profitability. Mr. Jones reported that, although it is somewhat 

more complicated to identify the profit margin on deposit 

products, United Bank benefits from its practice of upselling and 

graduating Gateway product customers to more traditional accounts 

and that all of the bank’s products are constantly scrutinized to 

ensure efficient and cost-effective operation. 

Vice Chairman Gruenberg asked panelists for their thoughts 

on why word-of-mouth seemed to be the most effective means of 

June 2, 2011 
19 

communicating information on their programs, in response to which 

Mr. Jones indicated that the most credible witness is someone who 

has experienced the product and that, often, members of the LMI 

community do not subscribe to traditional advertising channels, 

such as newspapers; and Ms. Simpson indicated that the media has 

created a negative image of mainstream financial institutions 

and, therefore, LMI consumers are more likely to rely on 

information from someone they know and trust. 

Chairman Bair, Reverend Flake and Messrs. Henderson and 

Eakes offered their congratulations to the award recipients and 

expressed appreciation for their work in meeting the financial 

services needs of LMI consumers. Reverend Flake suggested that 

the FDIC summarize the programs of the award recipients and send 

them to Senator Richard Shelby, Chairman of the Senate Committee 

on Banking, Housing and Urban Affairs, and Representative Spencer 

Bachus, Chairman of the House Financial Services Committee, along 

with a recommendation that the summaries be introduced into the 

Congressional Record, in response to which Chairman Bair, 

agreeing that it would indeed be great to have write-ups on the 

programs included in the Congressional Record, indicated that 

Chairman Bachus’ Chief of Staff was present at the previous 

evening’s awards ceremony, and that FDIC staff could certainly 

send the press release and other information to Senator Shelby 

and Representative Bachus. Vice Chairman Gruenberg stated that 

the panel presentations had been very informative, commended 

awards committee staff for their selection of awards recipients, 

and advised that staff would develop templates of the programs to 

share as examples of ways in which other financial institutions 

can effectively offer products and services to LMI consumers. 

On behalf of the Committee, Reverend Flake expressed 

gratitude to Chairman Bair for her commitment to the Committee’s 

work and Vice Chairman Gruenberg presented her with a small gift 

of appreciation from the Committee, advising that, as a tribute 

to her leadership, all of the Committee members had agreed to 

continue to serve after her departure. 

Chairman Bair thanked Committee members and staff for their 

dedication and expressed pride in the Committee’s work. 

June 2, 2011 
195 

There being no further business, the meeting was adjourned. 

Pe 

Robert E. Feldman 

Executive Secretary 

Federal Deposit Insurance 

Corporation 

And Committee Management Officer 

FDIC Advisory Committee on Economic 

Inclusion 

June 2, 2011 
Minutes 

of 

The Meeting of the FDIC Advisory Committee on Economic Inclusion 

of the 

Federal Deposit Insurance Corporation 

Held in the Board Room 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation 

June 2, 2011 - 8:48 A.M. 

I hereby certify that, to the best of my knowledge, the attached 

minutes are accurate and complete. 

Martin J. GrLgnberg 

Acting Chairman 

Board of Directors 

Federal Deposit Insurance Corporation 

Dated: August 29, 2011