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FEDERAL DEPOSIT INSURANCE CORPORATION

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ADVISORY COMMITTEE ON ECONOMIC INCLUSION

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MEETING

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THURSDAY,

OCTOBER 27, 2022

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The Advisory Committee convened, at 9:08 

a.m. EDT, in the Federal Deposit Insurance 

Corporation Board Room, at 550 17th Street, NW, 

Washington, DC, Martin J. Gruenberg, Acting 

Chairman, presiding.

PRESENT:

MARLA BILONICK, President and CEO, National 

Association for Latino Community Asset Builders

MICHAEL CALHOUN, President, Center for Responsible 

Lending

NAOMI CAMPER, Chief Policy Officer, American Bankers 

Association

THOMAS FOLEY, Executive Director, National 

Disability Institute

KENNETH KELLY, Chairman and CEO, First Independence 

Corp and First Independence Bank

MARGARET LIBBY, CEO and Founder, MyPath

BRANDEE MCHALE, Head of Community Investing and 

Development, Citi, and President, Citi 

Foundation

JONATHAN MINTZ, President and CEO, Cities for 

Financial Empowerment Fund

JENNIFER TESCHER, President and CEO, Financial 

Health Network
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ALSO PRESENT:

MARTIN J. GRUENBERG, Director, Federal Deposit 

Insurance Corporation, Acting Chairman

ROHIT CHOPRA, Director, Consumer Financial 

Protection Bureau

MICHAEL J. HSU, Acting Comptroller of the Currency

LUKE BROWN, Associate Director, Division of 

Depositor and Consumer Protection, FDIC

SUSAN BURHOUSE, Senior Consumer Researcher, Division 

of Depositor and Consumer Protection, FDIC

KARYEN CHU, Chief, Division of Insurance and 

Research, FDIC

KEITH ERNST, Associate Director, Division of 

Depositor and Consumer Protection, FDIC

MICHAEL FARRELL, Counsel, Legal Division, FDIC

EDWARD HOF, Senior Policy Analyst, Division of 

Depositor and Consumer Protection, FDIC

MARK KUTZBACH, Senior Financial Economist, Division 

of Insurance and Research, FDIC

JOYCE NORTHWOOD, Senior Financial Economist, 

Division of Insurance and Research, FDIC

ELIZABETH ORTIZ, Deputy Director, Division of 

Depositor and Consumer Protection, FDIC

YAZMIN OSAKI, Senior Consumer Research Associate, 

Division of Depositor and Consumer Protection

JEFFREY WEINSTEIN, Senior Financial Economist, 

Division of Insurance and Research, FDIC

MERON WONDWOSEN, Acting Chief, Division of Depositor 

and Consumer Protection, FDIC
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CONTENTS

Call to Order ................................. 4

Opening Remarks ............................... 5

Results of the 2021 FDIC National Survey of

Unbanked and Underbanked Households

Karyen Chu, Moderator ........................ 16

Jeffrey Weinstein ............................ 18

Joyce Northwood .............................. 23

Mark Kutzbach ................................ 29

Implications of the 2021 FDIC National

Survey of Unbanked and Underbanked

Households

Keith Ernst, Moderator ....................... 71

Yazmin Osaki ................................. 71

Susan Burhouse ............................... 79

Maintaining Confidence in Banks

and Deposit Insurance

Luke Brown, Moderator ....................... 212

Meron Wondwosen ............................. 216

Michael Farrell ............................. 219

Edward Hof .................................. 228

Questions and Comments ...................... 238

Closing Remarks ............................. 260
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P-R-O-C-E-E-D-I-N-G-S

9:08 a.m.

MS. ORTIZ: Good morning.

I'm going to open the meeting by 

making a very brief statement.

There are two members of the FDIC 

Board of Directors in attendance at the 

meeting --

ACTING CHAIRMAN GRUENBERG: Actually, 

we have three.

(Laughter.)

MS. ORTIZ: Oh, I beg your pardon.

ACTING CHAIRMAN GRUENBERG: Just for 

the record. Just for the record.

MS. ORTIZ: All right. If we could 

quickly rewind, I'll try that again.

Good morning, everyone.

We have the entire Board of the FDIC 

here today, and because of that, I would like to 

make a brief statement.

The Government in the Sunshine Act 
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imposes notice and access requirements whenever 

a quorum of the FDIC Board of Directors meets to 

conduct or determine agency business. This 

meeting is not held for such purposes and does 

not constitute a meeting under the Act.

The Board members present will only 

engage in general or preliminary discussions that 

do not relate to specific proposals for action 

pending before the FDIC. Any specific issues for 

official Board resolution will remain open for 

full consideration by the Board following the 

conclusion of this meeting.

If you have any questions, I or the 

general counsel will be glad to answer them.

Thank you.

ACTING CHAIRMAN GRUENBERG: Thank 

you, Liz.

And good morning, everybody, and 

welcome to this meeting of our Advisory Committee 

on Economic Inclusion.

I have to say it is hard to believe 
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this is the first in-person meeting of this 

Committee since 2019. So, it's nice to see you 

all, I've got to say, and it makes a big 

difference; it really does.

I should note that this Committee was 

established by the FDIC in November of 2006 to 

provide us with advice and recommendations on 

important initiatives focused on expanding access 

to the banking system.

Let me note that we are streaming this 

event live for FDIC stakeholders that want to 

benefit from the valuable information that will 

be shared today and the insights from our 

Committee members.

And whether you are here in person or 

joining us virtually, we welcome you.

I'm going to have a brief statement, 

and then, recognize my fellow Board members for 

statements as well.

Let me begin by welcoming the newest 

member of our Committee, Marla Bilonick, who is 
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the President and CEO of the National Association 

of Latino Asset Builders, or NALCAB, I think is 

the acronym.

MEMBER BILONICK: Yes.

ACTING CHAIRMAN GRUENBERG: Marla 

brings over 20 years of experience in small 

business development, community-based financial 

services, and international aid with an emphasis 

on Latin America.

We have a full day's agenda ahead of 

us, beginning with a presentation of the 2021 

FDIC National Survey of Unbanked and Underbanked 

Individuals. As we've done previously, we will 

both present the results of the survey, as well 

as discuss the implications of the survey's 

findings.

And the headline of the survey 

results, as we'll hear shortly, is the continued 

decline in the overall rate of unbanked and 

underbanked households in the United States, and 

the progress has been really steady since the 
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inception of the survey in 2009.

It's important to point out, though, 

that, even as we've continued to make progress, 

the significant demographic disparities in terms 

of who is unbanked and underbanked in the United 

States continued, particularly for African 

American and Hispanic households, for lowerincome households, and for households with people 

with disabilities. And that's going to be an 

ongoing focus of attention for our work.

And I think the other highlight -- and 

then, I'll let our staff go through it all -- but 

the other interesting finding of this survey is 

the unexpected bankable moments that the pandemic 

actually presented to expand access to the 

banking system.

As it turned out, the distribution of 

public benefits, the turnover in the job market 

with people leaving jobs and starting new 

positions, both really increased the value of 

having a bank account in order to expedite access 
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to funds by allowing for direct deposit through 

a bank account. Whether it's for a government 

benefit or for compensation for a new position, 

it really appeared to have created incentives, 

which I think contributed to the improved numbers 

that we've seen during the pandemic. And our 

staff will discuss that at greater length.

This afternoon, we're going to give an 

opportunity to the members of our Committee to 

have a roundtable and give us their thoughts on 

what they're seeing in the marketplace today and 

issues relating to access to the banking system.

And then, we're also going to have a 

panel of FDIC staff talking about what's become 

an increasingly challenging issue for us, which 

is the misrepresentation of deposit insurance 

that we're seeing with increasing frequency. It 

really goes to the core of the FDIC's mission of 

maintaining public confidence in the banking 

system. When misrepresentations occur as to 

whether deposit insurance is provided or not, it 
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really undermines the credibility of the FDIC and 

our deposit insurance system. It's something we 

take very seriously and have acted forcefully on, 

and we're going to have a discussion of that issue 

and the actions we've taken this afternoon.

So, I think we have an interesting 

program planned for today. Wonderful to see you 

all.

If I may, let me recognize Acting 

Comptroller Hsu, and then, Director Chopra for 

their comments.

DIRECTOR HSU: Thanks, Marty.

It's really exciting to be here in 

person. I remember the first meeting I attended 

to this was virtual, which was fascinating, and 

this is just way better. So, just I'm just 

excited to be here.

Maybe to echo something that Marty 

said, there's some really interesting insights in 

this report on this underbanked/unbanked. So, 

I'm really looking forward to that presentation.
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I do think we're at an interesting 

juncture right now, where, on the one hand, there 

are a lot of tailwinds to financial inclusion in 

the sense of commitments, real commitments, by a 

whole range of stakeholders that this is an 

important issue; that we're going to put some 

muscle into it that's more than just dollars in 

real, kind of longer-term projects. So, I think 

that's really good. That's exciting. We should 

do more with that.

At the same time, where we are in the 

cycle, I'm worried. I'm worried that kind of 

what's ahead of us, these issues are really going 

to, as always, disproportionately impact those 

who are kind of the most vulnerable. So, having 

special attention on how we're looking at this 

information and what we're measuring I think is 

especially important.

And I would just close with, you know, 

the headline of how the unbanked number is now 

ticking down is an interesting headline number. 
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I'll just give a shout-out to Jen, who kind of 

highlighted, well, that unbanked number is going 

to continue to march down, hopefully, knock on 

wood. And yet, there are still some underlying 

things that we want to make sure in terms of 

outcomes are more than just that headline number.

And so, I think we are going to have 

to explore a bit more what are we measuring in 

terms of what outcomes we want. And I think 

there's some very interesting ideas. I think 

financial health is one of them. There are 

others. And I think that I can see the direction 

of just getting folks' ideas on that as really 

important.

I want to apologize in advance. I 

have to run. I really want to stay for the whole 

day, but I have to run a little bit early.

But just thank you very much. I'm 

looking forward to today.

DIRECTOR CHOPRA: Good morning, 

everyone, and it's great to see everybody in 
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person.

I really also want to congratulate the 

whole team working on the survey in order to 

discuss the results. I think the survey 

highlights a number of issues, including the 

roles of unexpected high fees, of privacy, and 

other impediments for those entering the system 

with an insured bank or credit union.

And I want to actually throw in 

another dimension to this, and it really relates 

to technology. In addition, today the CFPB is 

launching the first step of its rulemaking 

process on personal financial data rights under 

Section 1033 of the Dodd-Frank Act. So, we're 

developing proposals to require financial 

institutions to set up data-sharing in a secure 

fashion, like an API, on deposit accounts, credit 

cards, digital wallets, prepaid cards, and other 

transaction accounts.

So, by allowing individuals to share 

their personal financial data in a secure way, I 
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think we can facilitate more switching, lower 

fees, higher levels of customer care, and more. 

And in many respects, this is going to move us 

more toward traditional banking and underwriting, 

where we look at cash flow and ability to pay, as 

opposed to black box algorithms that have these 

counterintuitive causations that people 

think -- or correlations that people treat as a 

causation. It invites bias; it invites 

supervisory challenges, and it impedes trust in 

the system, I think.

We also think that greater use of data 

in a responsible way can reduce reliance on 

credit scores, which I think is already a trend 

in financial services that we need to understand 

better.

So, as you discuss the survey's 

results today, I wanted to put two issues on the 

table to add about how we should think about 

technology, where the regulators will welcome 

your input.
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First, as financial service providers 

rely more on personal financial data at more 

granular levels, how might this actually lead to 

greater exclusion of underbanked and unbanked 

households? If it becomes table stakes to hand 

over a lot of data for those who can't, will they 

be pushed farther out of the system? We know 

that transaction data can fill in a lot of gaps 

for those with thin credit files, but what 

happens to those who are not able to provide it 

and their financial future?

The second -- and the survey 

highlights this -- privacy is a concern for some 

of the unbanked and underbanked as an impediment 

for them to have an account. And what can we do 

to give individuals the peace of mind in a world 

where abuse and misuse of personal data has 

become the norm? It was not just the Equifax 

data breach. Over and over and over again, we 

are seeing how data is misused.

So, as part of our rulemaking process 
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at the CFPB, we're exploring safeguards to make 

sure that there are limitations on how personal 

financial data can be used and shared. And I 

think, as you think about this population, what 

are the types of safeguards, and what might give 

more comfort to those who are wary of financial 

companies and how they treat their data?

So, I really look forward to hearing 

all of what you discuss today, but I hope we are 

thinking -- as both the Acting Chairman and the 

Acting Comptroller mentioned, it's going in the 

right direction. I think technology is a piece 

of that, but how do we then make sure that those 

who are still not in the system are not made worse 

off?

So, thank you.

ACTING CHAIRMAN GRUENBERG: Well, 

thank you, Rohit.

And let me turn the program over to 

Liz Ortiz, who is the Deputy Director in our 

Division of Depositor and Consumer Protection, 
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who's going to sort of be our MC for the program 

today.

Liz?

MS. ORTIZ: Thank you. Thank you, 

Mr. Acting Chairman.

So, without any further delay, since 

everybody has previewed it quite excellently, I'm 

going to turn the mic and turn all of you over to 

my colleague, Karyen Chu.

MS. CHU: Thank you, Liz.

Good morning.

Chairman Gruenberg, Director Hsu, 

Director Chopra, Members of the Committee, it's 

our pleasure to be here this morning to present 

to you the results of the 2021 FDIC National 

Survey of Unbanked and Underbanked Households.

So, with that, I'm just going to jump 

right into it.

Many of you know that the FDIC 

National Survey of Unbanked and Underbanked 

Households has been conducted every two years 
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since 2009, in partnership with the Census 

Bureau, as a supplement to the current Population 

Survey.

The current Population Survey is the 

survey that the Bureau of Labor Statistics uses 

to generate unemployment rates at the state level 

every month.

The most recent survey, the results of 

which we're talking about today, was conducted in 

June of 2021 and collected responses from over 

30,000 households. Because we are a supplement 

to the CPS, the survey draws representative 

samples from all 50 states and the District of 

Columbia. So, between the sample size and the 

representativeness, that allows us to make 

estimates available at national and state levels 

and, also, for larger MSAs.

The survey actually has broad coverage 

of many different topics, as you can see from the 

agenda. We will give topline, key results from 

each of these areas today. Given the time, we, 
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obviously, can't go too much into great detail, 

but I encourage you to read the report, where we 

have additional analysis.

So, without further ado, my colleague, 

Jeffrey Weinstein.

MR. WEINSTEIN: Okay. Great. Thank 

you very much, Karyen.

So, in 2021, 4.5 percent of U.S. 

households, approximately 5.9 million, were 

unbanked, meaning that no one in the household 

had a bank or credit union account. These 

estimates represent the lowest number and 

percentage of unbanked households since the 

survey was first conducted in 2009.

As shown in the figure, the unbanked 

rate fell from 5.4 percent in 2019 to 4.5 percent 

in 2021. This decrease corresponds to an 

increase of approximately 1.2 million banked 

households between 2019 and 2021. And about onethird of the decline in the unbanked rate between 

2019 and 2021 was associated with changes in the 
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socioeconomic circumstances of U.S. households, 

particularly, increases in income and educational 

attainment.

Unbanked rates continue to vary 

considerably across the U.S. population. 

Unbanked rates were higher among lower-income 

households, less educated households, Black and 

Hispanic households, working age households with 

a disability, and single mother households. For 

example, among working age households with a 

disability, the unbanked rate was 14.8 percent in 

2021, and among single mother households it was 

15.9 percent in 2021.

Recent declines in unbanked rates have 

been particularly sharp for Black and Hispanic 

households. Despite these declines, unbanked 

rates for Black and Hispanic households in 2021 

remain substantially above the unbanked rate for 

White households.

So, as shown in this figure, 

specifically, in the topmost set of bars, 11.3 
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percent of Black households, the dark blue bar, 

and 9.3 percent of Hispanic households, the 

lighter blue bar, were unbanked in 2021 compared 

with 2.1 percent of White households, the tan 

bar.

The rest of the figure shows that 

these differences were present at every income 

level. For example, among households with income 

between $30,000 and $50,000, 8.0 percent of Black 

households and 8.4 percent of Hispanic households 

were unbanked in 2021 compared with 1.7 percent 

of White households.

As in previous years, the 2021 survey 

asked unbanked households about their reasons for 

not having a bank account. As we see in this 

figure, 40.1 percent of unbanked households in 

2021 cited, "Don't have enough money to meet 

minimum balance requirements" as a reason for not 

having a bank account, the blue bar. This was 

the most cited reason. And this reason was also 

the most cited main reason for not having an 
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account in 2021, 21.7 percent, which is the tan 

bar.

And so, we can see from this figure 

that the survey included several other reasons 

for not having an account, such as avoiding a 

bank gives more privacy; don't trust banks; 

banking account fees are too high, and banking 

account fees are too unpredictable.

We see from the figure, focusing on 

the tan bars, "Don't trust banks" was the second 

most cited main reason for not having an account 

in 2021, 13.2 percent, and "Avoiding a bank gives 

more privacy" was the third most cited main 

reason, 8.4 percent.

This figure shows the primary method 

that banked households used to access their bank 

accounts in the past 12 months, such as mobile 

banking; that is, use of an app, text messaging, 

or internet browser on a mobile phone; online 

banking, use of a computer, and visiting a bank 

teller.
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Between 2017 and 2021, use of mobile 

banking, if we look at the last set of bars, 

increased sharply to 43.5 percent in 2021 and 

remained the most prevalent primary method of 

account access.

Use of online banking, the second-tolast set of bars, was similar in 2019 and 2021, 

after having decreased substantially from 2017, 

and continued to be the second most prevalent 

primary method of account access.

Use of a bank teller declined 

considerably to 14.9 percent in 2021, if we look 

at the first set of bars. While the 2021 survey 

did not include questions on the impact of the 

COVID-19 pandemic, on the methods that banked 

household used to access their accounts, the 

decline in the use of a bank teller and the 

increase in the use of mobile banking between 

2019 and 2021 are consistent with difficulties 

that households may have experienced in visiting 

a bank branch since the onset of the COVID-19 
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pandemic.

For example, the social distancing 

guidelines instituted in response to the pandemic 

may have made bank branch visits more 

challenging.

DIRECTOR CHOPRA: Jeffrey, can I just 

ask, are we defining "mobile banking" as the use 

of some sort of mobile device and online banking 

in a way that people are using a fixed or desktop 

computer to access?

MR. WEINSTEIN: That's correct, yes.

DIRECTOR CHOPRA: Okay.

MR. WEINSTEIN: Yes. So, we're 

making this distinction between, right, use of a 

computer for online, and then, use of a mobile 

phone, whether it be an app, text messaging, or 

the browser on a mobile phone, as mobile banking, 

that's correct.

All right. So, focusing a little bit 

on use of bank tellers, while use of bank tellers 

as the primary method of account access declined 
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across the board, as we show, as we found with 

the survey results, this method remained 

prevalent among certain segments of the 

population, including lower-income households, 

less educated households, older households, and 

households that do not live in a metropolitan 

area. And these population segments also had 

higher rates of use of bank tellers as the only 

method that they used to access their accounts.

And I'm now going to turn the 

presentation over to Joyce.

MS. NORTHWOOD: Thank you.

So, the first thing I'm going to talk 

about is transitions in bank account ownership 

and the role of the pandemic.

The survey took place in June of 2021, 

as has already been said, which was 15 months 

into the COVID-19 pandemic. We asked households 

if they experienced economic changes since the 

start of the pandemic and whether those changes 

contributed to opening or closing a bank account.
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But, first, we classified households 

into one of four categories, based on whether 

they experienced a recent change in bank account 

ownership:

Longer-term unbanked households did 

not have a bank account at the time of the survey 

or at any point in the 12 months before, and 

that's 4 percent of all households.

Recently unbanked households didn't 

have a bank account at the time of the survey, 

but they did at some point in the prior year. 

That's a half percent of all households.

Recently banked had a bank account at 

the time of the survey, but did not at some point 

in the prior 15 months. And that's 4.2 percent 

of all households.

And longer-termed banked had a bank 

account during the entire period, and that's 91.4 

percent of households.

So, one of the questions we asked was 

whether anyone in the household received a 
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government benefit payment, such as unemployment 

benefits or a pandemic stimulus payment. And for 

recently banked households, we asked them if that 

event contributed to the opening of their 

account.

About one in three reported that 

receiving a government benefit payment 

contributed to opening a bank account. So, to 

put this another way, among recently banked 

households, 77.9 percent received a government 

benefit payment, and among those that did, almost 

half said that the payment contributed to opening 

an account. And this represents approximately 

1.9 million households.

We also asked about negative events, 

such as losing or quitting a job, being 

furloughed, having reduced hours, or having a 

significant loss of income.

For recently unbanked households, we 

asked them if those contributed to the closing of 

their accounts. About one in five recently 
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unbanked households reported that at least one of 

these negative economic events contributed to 

closing an account.

Now, I'm going to talk about prepaid 

cards and nonbank online payment services. 6.9 

percent of all households used prepaid cards at 

the time of the survey. As shown in the figure, 

prepaid card use is more common among unbanked 

households. About a third use them, as you can 

see in the blue bar in the middle, compared with 

far fewer banked households, the blue bar on the 

right.

And as in past surveys, we found that 

prepaid card use was higher among lower-income 

households, households with no high school 

diploma, Black households, and working age 

households with a disability.

For online payment services, examples 

are PayPal, Venmo, and CashApp. And households 

were asked not to consider Zelle. And almost 

half of all households were using them at the 
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time of the survey, and that's the tan bar on the 

left.

A higher share of banked households 

used online payment services, the tan bar on the 

right, compared with unbanked households, in the 

middle. And online payment service use was more 

common among higher-income households, more 

educated households, and younger households.

We also asked households that use 

prepaid cards about the types of transactions 

they conducted over the past year, and these 

differed between banked and unbanked users. For 

unbanked households, many used them for core 

financial transactions that most households 

conduct regularly. More than three in four used 

them to pay bills, and almost two in three used 

them to receive their income.

In addition, unbanked households were 

more likely to use prepaid cards to conduct 

multiple types of transactions. Almost half of 

unbanked prepaid card users use them to conduct 
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four or more types of transactions.

Banked households with prepaid cards 

use them differently. The most common 

transaction was making purchases in person, 

followed by making purchases online. And about 

one in four use them to conduct four or more types 

of transactions.

We also asked households that use 

nonbank online payment services the types of 

transactions they conducted using these accounts. 

And again, these are services like PayPal, Venmo, 

and CashApp. These uses also differed between 

banked and unbanked households.

For unbanked households, the most 

common transactions were making purchases online, 

and the second most common was paying bills. And 

almost half of unbanked users used them to 

conduct four or more types of transactions.

For banked households, similar to the 

unbanked, the most common transaction was making 

purchases online, but the second most common use 
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was sending money to, or receiving money from, 

family and friends. And for these banked 

households, a smaller amount, only one in five, 

conducted four or more types of transactions.

Households can link their nonbank 

online payment service account to one or more 

bank accounts, credit cards, prepaid cards, or 

other services, but these accounts can also be 

used without linking them to anything. For 

example, they can be used to send money between 

family and friends or businesses. Some offer 

direct deposit, remote deposit, or both, and some 

also offer check cashing using remote deposit.

The way households link these accounts 

differs between banked and unbanked households. 

For banked households, almost three-quarters link 

them to their bank accounts, and another 10 

percent didn't link their online payment services 

to any account.

For unbanked households with online 

payment services, more than half didn't link any 
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other types of accounts to their account.

And so now, I'll turn it over to Mark.

MR. KUTZBACH: Thank you, Joyce.

So, this figure shows household use of

nonbank money orders and nonbank check cashing in 

2017, 2019, and 2021. The dark blue bars for 

2021 show that 97 percent of households used 

nonbank money orders in 2021, and 3.2 percent of 

households used nonbank check cashing.

From 2017 to 2021, the use of nonbank 

money orders fell by one-third and the use of 

check cashing fell by half.

From 2019 to 2021, use of money orders 

and check cashing fell for almost every 

population segment, as well as for both banked 

and unbanked households.

Use of money orders and check cashing 

remained higher for unbanked households.

For households that used money orders 

in 2021, nearly three in four used them to pay 

bills. And for households that used check 
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cashing in 2021, more than two-thirds cashed a 

check to receive income.

The 2021 survey included a new 

question on household use of nonbank money 

transfer services. Households were asked if, in 

the past 12 months, they used nonbank money 

transfer services from companies like Western 

Union, MoneyGram, Walmart Money Center, or Ria 

Money Transfer. These companies allowed 

customers to pay with cash at physical locations, 

either stores or kiosks, or by using a company 

website.

In 2021, 7 percent of all households 

used a money transfer service. Unbanked 

households were more than twice as likely to use 

money transfer services as banked households. 

Among households that used money transfer 

services, 4 in 10 used them to send or receive 

international remittances; a little over a third 

used them to send or receive money in the United 

States, and about a quarter used them to pay 
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bills.

I'm now going to discuss how banked 

and unbanked households paid bills and received 

income.

In this slide, the first row of this 

table reports the share of banked households who 

used each of the methods listed in the column 

labeled "To Pay Bills or Receive Income in 2021." 

So, the methods listed here are bank account, 

bank account only, nonbank online payment 

service, prepaid card, nonbank money order, 

nonbank check cashing, and nonbank money transfer 

service. Among banked households, 97.1 percent 

used their bank account to pay bills or receive 

income.

The next column, highlighted in 

yellow, gives the share of households that used 

only their bank account to pay bills or receive 

income. 75.2 percent of banked households 

exclusively used their bank accounts to pay bills 

or receive income.
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In the next column, 14.7 percent of 

banked households used an online payment service, 

either alone or in combination with other 

methods, to pay bills or receive income.

The next three rows below give results 

for younger, middle-aged, and older banked 

households. Compared with older banked 

households, younger banked households were less 

likely to exclusively use their bank account to 

pay bills or receive income and more likely to 

use a nonbank online payment system for those 

transactions.

64.6 percent of younger households 

exclusively use their bank accounts compared to 

82.4 percent of older households. The older 

households here are those 55 years or more, and 

the younger households are those age 15 to 34.

Well, 22.9 percent of younger 

households used a nonbank online payment service 

compared to 8.8 percent of older households.

Turning to unbanked households, about 
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half of unbanked households -- yes?

DIRECTOR HSU: I have a quick 

question.

MR. KUTZBACH: Yes. Yes?

DIRECTOR HSU: Do you have trend data 

on this? Or is this the first year that you 

collected this particular cut?

MR. KUTZBACH: So, this is based on 

follow-up questions that we included in the 2021 

survey --

DIRECTOR HSU: Okay.

MR. KUTZBACH: -- that asked about the 

purpose of using these different methods.

DIRECTOR HSU: To pay bills?

MR. KUTZBACH: And so, this exactly 

configuration is not available --

DIRECTOR HSU: Okay.

MR. KUTZBACH: -- in the earlier 

years.

MS. CHU: However, in the 2015 and the 

2017 surveys, we did have a slightly different 
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series of questions. Where in this survey we 

asked about many different methods, and then, we 

asked what you did with them, in the 2015 and 

2017 surveys, we asked specifically about paying 

bills and receiving income. Obviously, at that 

point, we didn't have a question about nonbank 

online payment services, but we did ask about all 

these other methods, and we also asked about 

cash.

DIRECTOR HSU: It would be 

interesting -- I don't know how to do this -- to 

cross this with information on overdraft usage 

relative to the different options and 

demographically with the different cuts. 

Obviously, the big focus is trying to understand 

kind of this intersection between paying bills, 

and then, kind of that usage, where that usage is 

helpful, where it's hurtful, and how it stacks up 

relative to other options.

I think this is something where 

there's lots of different -- there's conflicting 
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information about that. And just to the extent 

that that could get tied together, that would 

be -- I am sure we can get views from others on 

that over the course of the day.

Thank you.

MS. CHU: Thank you.

MR. KUTZBACH: Okay. Yes, thank you.

So, yes, these were questions about, 

do you use this method to pay bills or to receive 

income? And now, I'm going to discuss some of 

those same results for unbanked households. So, 

let's see, yes, for unbanked households.

So, about half of unbanked households 

used at least one of the methods included in the 

survey to pay bills or receive income. So, among 

underbanked households, 3 in 10 used prepaid 

cards to pay bills or receive income. A similar 

share used money orders, and smaller percentages 

used check cashing, online payment services, or 

money transfer services. So, the smaller 

percentages, the check cashing was 17.5 percent; 
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the online payment services was 12.5 percent, and 

the money transfer services was 7.4 percent.

Other methods the unbanked households 

could have used to pay bills or receive income 

that were not included in the survey are cash and 

credit cards. So, turning to that above value 

of 56.4 percent used at least one of the methods 

listed to pay bills or receive income, there are 

some methods not covered in the survey that they 

may have used to pay bills or receive income.

Thank you.

I'm going to turn it over to Jeffrey 

now, yes.

MR. WEINSTEIN: Okay. Great. Thank 

you, Mark.

So, the next three slides discuss use 

of bank and nonbank credit, focusing on products 

that households may use to address cash flow 

imbalances, unexpected expenses, or temporary 

income shortfalls.

In 2021, 71.5 percent of all 
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households had a Visa, Mastercard, American 

Express, or Discover credit card. We're going 

to call that just "credit card" from now on as a 

shorthand. 8.0 percent had a personal loan or 

line of credit from a bank. We'll call that a 

"bank personal loan" for shorthand. And 2.8 

percent had a personal loan or line of credit 

from a company other than a bank. And we'll call 

that a "nonbank personal loan."

4.4 percent of all households used a 

rent-to-own service or a payday, pawn shop, tax 

refund anticipation, or auto title loan, with 

about 1 percent of households using each of these 

five nonbank products or services.

MEMBER TESCHER: Can you tell whether 

those 1 percent are the same households?

MR. WEINSTEIN: Right. So, for each 

household, we do know which of those products are 

being used. It seems like there may not 

be -- let's go back to that -- so much overlap 

because we have the five products and 4.4 percent 
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used at least one of them. And then, 1 percent 

used each product or service. So, it doesn't 

seem like -- I haven't looked particularly at 

overlap in terms of, say, number of products they 

used, but it doesn't look like there would be too 

much overlap, given the 4.4 percent for five 

products and 1 percent for each of the products, 

specific ones.

MS. CHU: But the data is available, 

and it is available, so if you're interested in 

looking further, it's available for use.

MR. WEINSTEIN: All right. So, 

differences in the use of a credit card or bank 

personal loan between Black and White households 

and between Hispanic and White households were 

especially pronounced. So, this figure is 

generally organized the same as an earlier figure 

I presented with unbanked rates by income and 

race and ethnicity.

So, as shown in the topmost set of 

bars in the figure, 49.9 percent of Black 
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households, the dark blue bar, and 60.0 percent 

of Hispanic households, the lighter blue bar, had 

a credit card or bank personal loan in 2021 

compared with 78.8 percent of White households, 

which is the tan bar.

The rest of the figure shows that 

these differences were present at every income 

level. For example, even among households with 

income between $50,000 and $75,000, 64.8 of Black 

households and 71.2 percent of Hispanic 

households had a credit card or bank personal 

loan; whereas, 81.3 percent of White households 

did so.

As shown in this figure, the 

proportion of households that used a rent-to-own 

service or a payday, pawn shop, tax refund 

anticipation, or auto title loan declined sharply 

between 2017 and 2021 overall and among unbanked 

and banked households.

For example, 9.5 percent of unbanked 

households, if you look at the middle set of bars, 
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used at least one of these five products or 

services in 2021, down from 13.4 percent in 2019 

and 14.2 percent in 2017.

And in addition, as we can see from 

the figure, use of these products or services in 

2021 continued to be more prevalent among 

unbanked households than among banked households. 

And again, we see that 9.5 percent of unbanked 

households used at least one of the products in 

2021, and that's more than twice the percentage 

among banked households, 4.2 percent.

And so now, I'm going to turn the 

presentation bank over to Mark.

MR. KUTZBACH: Thank you, Jeffrey.

So, in 2021, 14.1 percent of U.S. 

households were underbanked. That share amounts 

to 18.7 million underbanked households. 

Underbanked households are banked households who 

in the past 12 months used at least one of the 

following nonbank products or services: money 

orders, check cashing, or international 
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remittances; or rent-to-own services, or payday, 

pawn shop, tax refund anticipation, or auto title 

loans. The first set of these is referred to 

here as "nonbank transactions," and the second 

set is referred to her as "nonbank credit." 

These products and services are 

disproportionately used by unbanked households to 

meet their transaction and credit needs.

Because of changes in how the survey 

asks about international remittances, the 

underbanked rate in 2021 is not directly 

comparable with earlier years. However, we can 

compare banked household use of the remaining 

nonbank financial products and services that 

classify a household as underbanked.

Consistent with the declines in the 

use of nonbank transaction credit products 

described earlier, banked household use of the 

remaining products and services declined by about 

one-third from 2017 to 2021.

In 2021, 81.5 percent of U.S. 
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households were fully banked. Fully banked 

households are banked households who in the past 

12 months did not use any of the above nonbank 

transactions and credit.

Underbanked rates continue to vary 

considerably across the U.S. population. 

Underbanked rates were higher among households 

with less than $15,000 in annual income, 19.2 

percent for that group; households age 24 and 

younger was 21.9 percent for that group; Black 

households at 24.7 percent; Hispanic households 

at 24.1 percent, and working age households with 

a disability at 20.5 percent. So, that's all 

compared to the 14.1 percent underbanked rate for 

U.S. households.

Households classified as underbanked 

are a fairly diverse group with a variety of 

experiences and levels of engagement with the 

banking system. Underbanked households can be 

segmented into three groups based on their use of 

nonbank transactions and nonbank credit products 
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used in the classification of underbanked.

Among underbanked households in 2021, 

71.6 percent used only nonbank transactions; 18 

percent used only nonbank credit, and 10.3 

percent used both nonbank transactions and 

nonbank credit.

So, we have a table here. For 

underbanked and fully banked households, this 

table reports the use of online banking and 

mobile banking as the primary method of bank 

account access. We're just highlighting those 

two methods in this slide.

Mobile banking was the primary method 

of access for 48.8 percent of underbanked 

households, in the first row, compared to 42.5 

percent a fully banked households, in the last 

row. Among the underbanked, use of mobile 

banking as a primary method of access was higher 

for those using nonbank credit only and for those 

using nonbank transactions and credit. So, it 

was 51.7 percent and 53.1 percent for those 
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groups.

Use of online banking was the primary 

method of access for 11.6 percent of underbanked 

households. That's about half the rate of fully 

banked households, which was 23.8 percent.

Use of online banking was lower among 

households in all three underbanked segments than 

among fully banked households, and was lowest 

among underbanked households that used both 

nonbank transactions and credit. It was 4.2 

percent for those households.

And here's another table. For 

underbanked and fully banked households, this 

next table reports the methods households used to 

pay bills or receive income. So, again, we have 

results here for underbanked and fully banked 

households as well as the underbanked segments. 

And the methods are using a bank account only to 

pay bills or receive income, nonbank online 

payment services, prepaid card, nonbank money 

order, nonbank check cashing, and nonbank money 
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transfer service.

The yellow highlighted column gives 

the share that used only their bank account to 

pay bills or receive income. 38.1 percent of 

underbanked households exclusively used their 

bank account to pay bills or receive income. 

That's compared to 81.6 percent of fully banked 

households.

Exclusive use of a household's bank 

account to pay bills or receive income was lowest 

compared to the other underbanked segments for 

underbanked households that used both nonbank

transactions and nonbank credit.

Among underbanked households that 

used both nonbank transactions and nonbank

credit, 14.7 percent exclusively used their bank 

account to pay bills or receive income.

Now, I'm going to pass it back to 

Joyce.

MS. NORTHWOOD: Okay. So, for 

further information, we would refer you to our 
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website at the address listed on this slide.

As Karyen mentioned before, this is 

just the top level of a lot more information, and 

we have a lot of detailed appendix tables that 

you can download. And we also have some data 

tools where you can create custom data tables and 

charts. For example, we have everything by state 

and metropolitan area, and you can use the data 

tool to look at anything you want by your state.

And if anybody is interested in doing 

further detailed analysis with the data, we also 

have all the raw data available for each year of 

the survey that you can download.

And with that, I'd turn it back over 

for questions.

MEMBER KELLY: Good morning, Karyen 

and Joyce and the team. Great job on this 

report.

I have a question for you. Is there 

anywhere in the report, or should you consider in 

future reports, looking at the cost associated 
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with the use of alternative financial 

services -- For instance, the cost to buy a 

money order -- and extrapolate that? As you look 

at the demographic data that you have, I think 

it's superb, but I believe the messaging 

associating the cost of not being banked and 

using these services I believe could be very 

compelling as we take our message to the market.

MS. CHU: Unfortunately, the survey 

does not have information by cost. We have not 

asked consumers that, but we certainly are taking 

note of the suggestion.

MEMBER KELLY: Thank you.

I have one other question. On the 

money order -- I believe it was on page 19 -- the 

question is, is that a supply-side-driven issue, 

meaning recipients who expect to get paid are 

requesting money orders, or are individuals 

deciding from the demand side I'm going to pay in 

money orders?

And the reason I ask that question, 
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when I looked at the data, I just found it odd 

that the 15-to-34-year-old had an 8.2 percent 

rate there on the nonbank money order, which 

would kind of be baffling to me for a group who 

would typically be more digital-savvy. So, is 

the market demanding and requiring them to use 

money orders or is that a demand side, is my 

question.

MS. CHU: That's a question we can't 

directly answer. We also don't ask why they're 

using a money order, just what they're doing with 

it. And certainly, to the extent that households 

are using -- if you look at households and they're 

just using money orders, I think that may show 

some difference from households that are using 

maybe their bank account and money orders. That 

may suggest, although we have no direct evidence, 

that there could be a payee request.

MEMBER KELLY: Exactly. That's my 

thought.

Thank you.
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MS. CHU: Thank you.

Naomi?

MEMBER CAMPER: Hi. Thank you so 

much. This is an amazing survey, and we look 

forward to it every two years. And this one did 

not disappoint.

I wondered if I could get your insight 

into the difference and what you're trying to 

tease with online banking versus mobile banking, 

especially as we've seen sort of innovation and 

new products like Mr. Kelly's iPad. I don't know 

if that counts as mobile. It has apps and, you 

know, maybe it has cellular interface -- versus 

online.

And so, what is it and do you have 

meaning behind the shift from online to mobile? 

I know in the past there was a difference between 

cellular and internet and availability and last 

mile. But what do you see in those numbers?

MS. CHU: The question about online 

banking and mobile banking is a longstanding one 
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that we've been asking for a long time. And 

we've certainly seen, as you saw from the 

data -- I don't know if you can move to -- you 

know, even in 2017, just two surveys ago, the use 

of mobile as primary, right, as the primary 

method was only 15 percent, and certainly it has 

jumped tremendously.

MEMBER CAMPER: Right.

MS. CHU: Back then, there was 

reticence, right? We found that consumers, 

especially lower-income households, had some 

concerns, potentially, about using mobile. 

Clearly, we're seeing an upward trend.

And I think, as with new services in 

the marketplace, things are changing, and we'll 

continue to evaluate whether it makes sense for 

us in the future, right, to continue to break 

this out.

MEMBER CAMPER: Yes, I'm just 

wondering like, is there a significant difference 

between the online and mobile? I would say 
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myself I'm sort of agnostic. Sometimes I have 

my phone; sometimes I have my laptop.

I don't care because my app is now 

fully functional in a way that a couple of years 

ago I had to do certain things online, right? 

You could only add a new online bill pay recipient 

from a computer, and now you can in apps, at least 

in my case.

So, I'm just wondering about the 

distinction of that distinction going forward. 

That's all.

MS. CHU: Yes. No, and that is a very 

good point. You know, I think even in the last 

two years we're seeing more functionality in the 

apps and what you can actually do just with your 

mobile phone. So, point well taken.

MEMBER CAMPER: Thank you.

MS. CHU: Thank you.

Jennifer?

MEMBER TESCHER: Hi. Before I ask my 

question, I just wanted to say to Kenneth, in 
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response to your initial question about spend 

data, we actually publish a report every year 

that's called "Spend." And it does exactly that. 

It uses secondary market data to assess about two 

dozen different kinds of products and services, 

and what the costs of those products and services 

are, et cetera.

And then, we survey a representative 

sample of consumers to understand their usage. 

We also have demographic data for those 

consumers. So, as an example, we were able to 

show the difference by race in the amount of money 

folks were spending on overdraft.

So, I'm happy to make that available 

to you if it's useful.

My question is about prepaid cards. 

On slide 13, it shows that about a third of the 

unbanked, if I'm understanding this correctly, 

are using a prepaid card of some kind. I'm 

curious how you're defining prepaid card in the 

context of the survey.
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Because let's pretend that all of 

those cards were general purpose, reloadable 

cards. Many, if not most, of those cards are 

issued by a regulated FDIC-insured bank, and 

thus, have access to pass-through FDIC insurance, 

if I understand that correctly. Marty is going 

to tell me if I'm wrong.

So, I'm curious to understand a little 

bit more about what additional data we would need 

to gather to determine whether that's true, and 

thus, whether the rate of unbanked is actually 

even lower than the 4-plus percent figure that 

the current definition relies on.

MS. NORTHWOOD: So, the question is 

prepaid cards allow others, like relatives, an 

employer, or government agency, to load or reload 

funds that can later be spent. Prepaid cards 

also allow you to withdraw cash from ATMs. And 

we are not asking about gift cards or debit cards 

linked to checking account.

MEMBER TESCHER: So, some of these 
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cards aren't reloadable? Because you're saying 

they could be single-use or reloadable?

MS. NORTHWOOD: Right, and they 

should answer "no" this question if it's one of 

those. So, we're asking them specifically only 

to consider those that are reloadable and 

excluding gift cards.

MEMBER TESCHER: Thank you.

MS. CHU: Brandee?

MEMBER MCHALE: I know we have a 

segment on the implications. So, it's kind of a 

two-part. I'll hold the other part for that next 

section.

But I'm really struck by the data 

around, still, trust and the trust gap. Although 

recognizing that trust -- I think that I want to 

clarify; I think I heard in one instance that 

trust actually was increasing, or is it fully 

staying the same? What's the trend? I have this 

page up, but is it a trend that trust in 

banks -- did you see any difference over the 
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years, that there's an increase in trust or a 

decrease, or is this constant?

And I'm asking because, in general, 

trust in all institutions we see across the board 

is decreasing significantly. And I think we have 

to dig in and understand the trust in banks to 

know if it's flat; actually, thinking an 

environment where distrust is growing so high 

that it's actually a win.

So, my specific question, then, is, in 

this column, "The Other Reason," there's a high 

percentage of other reasons. Can you just 

provide one or two examples of what another 

reason might be?

MS. CHU: So, on the trust question, 

I would say that, certainly, in the last three 

surveys -- so, '17, '19, and '21 -- trust, you 

know, don't trust banks has been one of the top 

three. And my memory is faulty now going back 

further than that. But I can't quite remember 

the exact sort of percentages that cited that.
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The other reason, people don't 

necessarily have to say what another reason is.

MEMBER MCHALE: Okay.

MS. CHU: And then, the other thing 

that we often see, you know, because we do ask, 

or rather, the interviewers ask, and there are 

verbatim responses. And a lot of times, 

actually, the responses are ones that really 

should have been coded in one of those responses, 

but the respondent just didn't pick it. And 

then, when they tell the interviewer, it's 

something that really is one of the selected 

reasons.

MEMBER MCHALE: Thank you. Okay.

MEMBER MINTZ: If I could jump a 

little bit on the conversation Brandee started, 

when we've tried to dig further into some of these 

factors, not with 30,000 families, what we tended 

to find was that, when people talked more 

specifically about trust, they were often talking 

about their money and not necessarily an 
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individual institution or even an industry. It 

was about whether they trusted that they would be 

in control of their money.

And so, I know that you all struggle 

with this question, and we could all cherry-pick 

all sorts of, you know, conflicting options, but 

I do think that it might be worth trying to take 

research like ours, and a bunch of others around 

the table and around the country, to maybe ask 

more specific versions that get to trust, rather 

than just banks in general. I think it would be 

more helpful for all of us because we could jump, 

then, on those issues.

So, I think that this concept of 

control of money for us seemed to be what people 

actually meant in this case.

MS. CHU: So, in 2015, we actually 

conducted qualitative research in which we talked 

with unbanked, underbanked, and lower-income 

consumers, as well as financial counselors. And 

in that series of qualitative research, in fact, 
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trust in banks organically came up. We were 

asking about barriers to becoming banked.

And the reasons, you know, when we 

asked them to talk more about that, were really 

pretty varied, right?

MEMBER MINTZ: Uh-hum.

MS. CHU: There were certainly -- it 

ranged from, you know, there were consumers that 

had negative experiences with overdraft fees. 

There were consumers that had come from countries 

where the banking system, you know, there was no 

deposit insurance and they had lost money. There 

were consumers who had no experience, right? 

They had grown up using nonbank financial 

services and not banks.

So, it really was, you know, just very 

heterogeneous in terms of what saying you don't 

trust banks actually meant, when we dug a little 

deeper. And that report is actually available 

online as well.

MEMBER MINTZ: I would also just add, 
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similarly, that the concept of not having enough 

money to meet minimum balance requirements, from 

our experience, is very much a perception issue, 

not a reality issue. And that what it really 

went to was something a little bit more personal, 

which was like, "Am I the type of person who's 

ready for an account?,” not "Do I literally have 

enough money?"

And so, again, as we try to think 

about like what level can you legitimately drill 

down in a survey of this size, I wonder, 

particularly as the market is changing around 

minimum balance requirements, how helpful that 

is.

MS. CHU: And actually, since you 

talked about minimum balance requirements and the 

market changing, I did want to point out that, 

you know, among all these reasons, we actually 

have three related to minimum balance or fees.

MEMBER MINTZ: Yes.

MS. CHU: And if we aggregate them 
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all, the proportion of unbanked households that 

cited one of the three reasons, fee or minimum 

balance, for not having an account fell 

tremendously from 38 percent in 2019 to 29 

percent in 2021.

MEMBER MINTZ: Yes.

MEMBER CAMPER: And I would just say 

we'll get to this next segment, but I think the 

more that we get the message out about Bank On 

accounts and other similar type of accounts that 

really don't have an ongoing minimum balance 

requirement, and have very low monthly fees and 

no overdraft fees, and are now available in 60-

some percent by deposit share of all banks in the 

country, that should further reduce, I would 

hope, the number of people who cite that as an 

obstacle, because it really is less and less a 

true obstacle, and maybe it's a perception gap or 

a knowledge gap. So, I think there's a lot that 

we can all do to bring that down further.

MEMBER LIBBY: Right, and one thing, 
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I think building on this conversation, I was 

definitely struck by these numbers. And I think 

I was interested in looking at this by some of 

those subgroups, like looking at age and income 

and race to sort of see, are there any 

differences? Is it sort of similar across 

groups?

But I think, as we think about the 

conversation around implications and how we 

message, how we target, what is perception, what 

is real, but how do we think about getting this 

sort of final 5 percent and seeing the 

discrepancies in unbanked/underbanked for 

particular populations? It would be really 

interesting just to see this cut in those ways.

MR. WEINSTEIN: Yes, I'll just say, 

we don't have particular breakdowns by 

race/ethnicity, although all that can be done 

with the data.

MEMBER LIBBY: Yes.

MR. WEINSTEIN: And for instance, it 
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could be done using the custom data tool that

Joyce was talking about.

But in the report, we do discuss 

differences by households that had previously 

been banked, so had had an account in the past, 

and also, differences by whether households were 

interested in having a bank account -- whether 

they were very interested, somewhat interested, 

not very interested, or not at all interested.

So, we do find some interesting 

differences if we cross, you know, previous bank 

account ownership and interest in having an 

account with unbanked reasons. And that's all 

discussed in the report --

MEMBER LIBBY: Okay.

MR. WEINSTEIN: -- and then, in the 

appendix tables of the full version.

MEMBER MINTZ: Can I ask one more

super-quick question? And maybe I didn't do 

enough homework. But the prevailing wisdom was 

that half of the unbanked used to be banked. Do 
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we know that number for 2021 data?

MS. CHU: Yes.

MEMBER MINTZ: Is it the same?

MS. CHU: Yes.

MEMBER MINTZ: Approximately the 

same? Uh-hum? Okay.

MS. CHU: 48.8 percent were 

previously banked.

MEMBER MINTZ: Thank you.

MR. WEINSTEIN: I think it was 50.4 

percent in 2019. So, pretty much the same.

MEMBER MINTZ: Uh-hum.

MR. WEINSTEIN: It's pretty 

consistent.

ACTING CHAIRMAN GRUENBERG: Before we 

finish with this panel, I just want to say a word 

of thanks for the massive amount of work that 

this group did. I mean, they've worked really 

with tremendous dedication.

I mean, it's a vast resource in terms 

of the data collected through this national 
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survey by the Census, and sorting through all of 

that, and organizing it in a way that really lays 

out these issues in a clear and understandable 

way, and really frames the policy implications 

that the data present, is really an enormous 

public service.

So, I just want to say a word of thanks 

to both this panel and the one that's coming up 

next.

I do think, on these reasons for not 

having an account, that the numbers around 

privacy are interesting and worth understanding 

better, and may relate to the trust issue as well. 

There could be a linkage there. So, it would be 

worth digging in.

I mean, this survey is a little bit 

like lifting the hood on the car and getting to 

see what's going on underneath. And there may 

be even more that we'd like to understand.

And this may be a question for the 

next panel, but the numbers relating to the use 
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of nonbank financial products, both credit and 

non-credit, the declining numbers consistently 

over the last three surveys on both sides are 

meaningful, particularly among the 

unbanked/nonbanked.

And I'd be interested, unless this is 

a question for the next panel, what line of sight 

do we have into the reasons that may be underlying 

that?

MS. CHU: I think when we looked 

at -- and, Mark, correct me if I'm wrong -- when 

we looked at, when we tried to see if the declines 

were associated with changes in socioeconomic 

characteristics of households, like we do when we 

look at unbanked rate changes, we were not able 

to see much association with changes in 

socioeconomic characteristics.

MR. KUTZBACH: Yes, so when we looked 

at from 2017 to 2021, the changes, the 

socioeconomic demographic characteristics only 

explained about 10 percent of that change, 
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changes in the shares of different 

characteristics among the population.

So, it was very broad-based, the 

decline. There were not increases in usage for 

any groups for like money orders and check 

cashing. So, it was very broad-based.

MS. CHU: I mean, those are paperbased instruments, right? And I think, 

certainly, I mean, the pandemic has, I think, 

accelerated, potentially, a trend in a way.

ACTING CHAIRMAN GRUENBERG: That's 

interesting to think that may be a factor here. 

That's interesting.

MEMBER CALHOUN: I had a related 

question on that. It was striking to me that,

when you look at those declines, for the banked 

groups, those declines occurred primarily between 

2017 and 2019; whereas, for the unbanked, it's 

occurring during COVID relief, 2019 to 2021. Do 

you have any takeaways on that?

MR. KUTZBACH: Well, also, so the 
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transactions had actually some large drops from 

2017 to 2019, and there was more drop in the 

credit products from 2019 to 2021. So, there 

were sort of some staggered drops across this 

period. Some of them were in 2019 and 2021, but 

some of them were ongoing before that.

MS. CHU: I mean, I think the next 

survey might help us be able to tell a little bit 

more cleanly how many of these changes, you know, 

sort of, right, with the pandemic, changes in the 

way businesses operated, whether they accepted 

cash, right, the use of paper instruments.

I think it's a little hard to just 

disaggregate with this data point from 2019 to 

2021 because, obviously, a lot was happening in 

the economy. As we continue to look at this 

trend through 2023, I think that can be 

informative as well.

MEMBER CALHOUN: Well, now you've 

done it; we're hungry for your next report.

(Laughter.)
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MEMBER TESCHER: Just to put a finer 

point on Mike's question, on the other slide you 

have on this, the one of use of rent-to-own 

service or a payday, pawn shop, tax, that slide, 

it defies expectation in the sense that you see 

the much bigger drop is between 2017 and 2019. 

Maybe that's due to strengthening labor market 

effects perhaps.

You would have expected, though, the 

bigger drop to be between 2019 and 2021, because, 

during the pandemic, consumers had significant 

influx of cash from the government, et cetera, 

lessening the need for some of these products. 

So, that's, to me, very interesting, and I'd love 

to find ways to try to better understand that.

MS. CHU: Well, I mean, the all drop 

for all households is, obviously, really 

dominated by the drop for banked households, 

which is really what's driving, right, the drop 

from 2017 to 2019 and kind of flat to 2021. But 

you see a slightly different picture, right, when 
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you look at the unbanked?

ACTING CHAIRMAN GRUENBERG: That's 

interesting.

MEMBER CALHOUN: And one more 

question, if I can, related to this, and it's 

always a challenge with longitudinal studies and 

the underlying market changing. There has been 

a decided shift in the market of payday lending 

going online and turning into online installment 

loans, often similar high cost, relatively short 

terms. And those don't really get picked up, it 

seems, in the questions about high-cost, nonstorefront, payday lender with an actual physical 

check. So, I don't know how you address that 

going forward.

MS. CHU: Right. We aren't really 

picking up the online payday. However, the 

switch to installment types of payday loans, I do 

believe -- we think we are picking those up. 

We've done some cognitive testing around, you 

know, when people say "yes" or "no" to those 
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questions, to that question, in particular, what 

they're thinking of. And it appeared that we 

were picking up the sort of payday installment, 

but the in-person ones, not the online.

MEMBER CALHOUN: so, is there a 

definition for "payday" that you use? I mean, 

the FDIC definition in your 2005 guidance is a 

lump sum, usually payable in a lump sum in the 

short term.

MS. CHU: So, the question doesn't 

specifically say "lump sum" or "installment." It 

simply says, "payday loan," and it's up to the 

household to interpret. And people say "yes" 

based on what they think of as a payday loan.

All right. Well, it looks like we 

have no other questions.

So, thank you, everyone. Great 

discussion.

ACTING CHAIRMAN GRUENBERG: Thank 

you. Thank you all. It was terrific.

MS. ORTIZ: All right. So, we're 
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going to take a short break to set up for the 

next panel.

And I ask everybody to try to come 

back as close to 10:30 as possible. All right?

(Whereupon, the foregoing matter went 

off the record at 10:22 a.m. and went back on the 

record at 10:35 a.m.)

MS. ORTIZ: Welcome back, everyone.

All right. I'm going to turn the 

microphone over to Keith Ernst, who's going to be 

the moderator for the next panel.

Keith?

MR. ERNST: Great. Thank you, Liz.

Good morning, Mr. Chairman, Members of 

the Committee. It's a pleasure to be back in 

this room with you today.

The previous panel explored in some 

depth the findings from the report we released 

this week. In this session, we'll explore the 

implications. Now, the implications are 

intended to give us the opportunity to assess 
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what we learned from the last panel and think 

about how we can use that information to expand 

and support participation in the banking system.

I'd like to join the Chairman in 

thanking the authors, and all the authors who we 

now have at the table here, for their 

contributions to today's effort, but I'd 

especially like to recognize the contributions of 

Karyen Chu.

Karyen has been the Managing Director 

directly responsible for the survey for over a 

decade. Following this edition, she'll be 

refocusing her efforts on other topics.

And so, it's fitting to take this 

opportunity to recognize that her dedication to 

high standards and to ensuring the survey stayed 

relevant has been critical to its success. Her 

service is nothing short of exemplary. So, thank 

you, Karyen.

(Applause.)

Now, in a minute, I'm going to invite 
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Yazmin Osaki and Susan Burhouse to walk us 

through the implications. As they do, I want to 

encourage you to consider how these implications 

resonate with your experiences, the work of your 

organizations, and the communities you serve.

We're going to have ample time for 

discussion in this panel, and I know you will 

have questions. I have questions, too, but we're 

eager to get your observations, your thoughts, 

your comments.

And with that, I'll ask Yazmin to 

start off.

MS. OSAKI: Thank you, Keith.

Good morning, Acting Chairman and 

Members of the Committee.

I'm Yazmin Osaki. I am a Senior 

Consumer Research Associate in the Division of 

Deposit and Consumer Protection, and it is my 

pleasure to be here today in person with my 

colleague, Susan Burhouse, to highlight some 

takeaways from our 2021 household survey.
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And I want to also acknowledge and 

thank our colleagues who you heard from before 

the break -- and, of course, they're sitting here 

with us -- who really were the ones who analyzed 

all our vast survey data and produced this report 

with very interesting findings.

And Susan and I had the fun role of 

reading the results and thinking about what ideas 

and takeaways can we elevate to inform the work 

that the FDIC and other stakeholders do to 

advance economic inclusion opportunities.

And it was very interesting to think 

through these takeaways, or survey implications, 

as we call them, because the survey was collected 

still during the pandemic times. And it became 

apparent that the pandemic created some unique 

economic inclusion opportunities and, also, 

accelerated trends that have been changing the 

ways consumers interact with financial services.

And let me talk a little bit about 

this context before we delve into the 
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implications per se.

So, one thing to consider is that the 

need to receive stimulus payments and other 

pandemic relief funds created what we call a 

"bankable moment," to bring in bank consumers to 

the banking system. And we'll get into that in 

a minute, in the first implication.

But the pandemic also helped 

accelerate consumers' use of digital finance. 

And we know from our own FDIC data on mobile 

banking -- and that's just a section of digital 

finance -- that this trend has been going on for 

some time. But, with the in-person restrictions 

during the pandemic, more consumers shifted from 

conducting financial transactions in person to 

doing them online or via mobile.

Another trend that we observe 

happening more and more is the disaggregation of 

consumer financial services. There are more 

players in the marketplace. There are more 

nonbank players that are different from our check 
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cashers or the traditional payday lenders, and 

more consumers appear to use a mix of both banks 

and nonbanks, and for very specific purposes.

And the line between banks and 

nonbanks can be blurry for many consumers, and we 

need to understand better this phenomenon. And 

these are some observations that provide some 

context. And the implications that we present 

today build on these observations using our 

household survey data.

So, our first implication is about 

finding bankable moments to connect consumers to 

safe and affordable bank accounts and learning 

more about strategies to keep the consumers 

banked.

So, despite the financial challenges 

that many consumers experienced through the 

pandemic, more consumers became banked. And the 

2021 survey data provides strong evidence that 

receiving income such as stimulus payments, 

unemployment benefits, and also employment income 
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was an important motivator for account opening.

Almost half of the households that 

became banked and had received a government 

benefit payment said that the payment contributed 

to opening an account. And among recently banked 

households that started a new job, one in three 

said that the new job contributed to them opening 

an account.

Now, these results are consistent with 

survey results that we had back in 2013, where we 

found that the No. 1 reason recently banked 

households opened an account was to receive 

direct deposits.

So, together, these findings 

highlight how effective it is to bring people 

into the financial mainstream when they are 

receiving funds, which is what we're calling the 

"bankable moments."

And we acknowledge that these efforts 

have been going on for some time. But it is 

important to point out that today there are 
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opportunities to connect consumers to safe and 

affordable bank accounts. The Bank On movement 

has been growing and there are over 250 financial 

institutions offering certified accounts, 

banking accounts.

And also, there are more robust 

options for account opening. With the pandemic, 

many banks had to roll out and enhance their 

mobile banking applications, their online account 

opening applications. And as I mentioned 

earlier, also, more consumers are more 

comfortable with using technology for financial 

purposes.

So, the call for action here is to 

continue economic inclusion efforts focused on 

bankable moments in which bank consumers receive 

income from a new job, government benefits, tax 

refunds, and continue to increase public 

awareness of safe accounts and opening options 

that are now more robust than they were prepandemic.
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And a great example of this, if I may, 

is FDIC's Get Banked Campaign, which is a 

consumer education campaign that encourages the 

unbanked population to consider opening bank 

accounts, or checking accounts, specifically.

And also, when the stimulus payments 

were being rolled out, the FDIC partnered with 

Treasury to help consumers connect to banks that 

offered online opening of safe accounts, so that 

they could receive their stimulus payments more 

quickly and securely.

But the other important point here to 

make is that the 2021 survey showed that not only 

did more household become banked, many were able 

to maintain their banking accounts, their bank 

accounts, despite the income disruptions.

Unfortunately, that was not the case 

for some consumers. We found that one in five 

households that became unbanked recently reported 

that losing or quitting a job, being furloughed, 

having reduced hours, or having a significant 
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loss of income contributed to closing of bank 

accounts since March 2020. So, that was one in 

five, and 20 percent is sizable.

But, back in 2013, our survey found 

that over a third of households that recently 

became unbanked had experienced a significant 

income or job loss that they said contributed to 

the household becoming unbanked. It's not 

exactly the same wording. So, there are 

differences in the estimate.

But if we were to use 2013 as a rough 

reference of what to expect when income 

disruptions come, then perhaps we can start 

thinking about the factors that happened during 

the most recent crisis that helped consumers 

maintain their bank accounts. The obvious ones 

were the government aid and financial system 

flexibilities that very likely played a role in 

helping the consumers maintain their banking 

relationships.

But we don't want to lose sight of the 
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fact that banks also had to adapt to be able to 

deal with larger-than-usual volumes of consumers 

experiencing financial distress. So, are there 

lessons learned regarding bank communications or 

outreach strategies, or staff training, or 

changes in bank policies that were particularly 

effective in helping consumers and financial 

institutions navigate this financial disruption? 

And more importantly, what strategies can be 

carried forward and amplified to help consumers, 

and particularly LMI, cope with short-term 

financial shocks without them becoming unbanked?

These are some questions that we think 

are worth exploring and posing. And hopefully, 

they invite conversation today and going forward.

I'm sure we're all very, very pleased 

that the unbanked rate continues to go down and 

it is as low as it has ever been, but one thing 

to keep in mind, and also I think that was 

mentioned earlier today, that, similar to 

2009 -- and it continues to be so in 2021 -- about 
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half of the unbanked households had an account at 

some point in the past. So, being banked is not 

necessarily a permanent state. So, it is very 

important to find strategies that help consumers 

access bank accounts, but also create banking 

relationships that are sustainable for both the 

consumer and the financial institutions.

And with that, I'll turn it over to 

Susan, who will walk us through the two other 

implications.

MS. BURHOUSE: Thank you, Yazmin.

As we turn to the second implication, 

this one is really centered around the fact that 

we've seen such a pronounced decline in the use 

of nonbank financial products and services that 

we've tracked over the years during this survey. 

And this picks up from the conversation that we 

started in the earlier panel. We want to really 

take some time to highlight this trend and think 

about the implications for economic inclusion, 

and maybe ways to evolve those efforts in 
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response to the changes.

So, as we've heard, the decrease in 

nonbank financial services use has been a really 

notable and long-term trend, looking back over 

the history of the survey. You've heard the 2021 

data show that the share of households that use 

nonbank money orders and nonbank check cashing 

has fallen to half of what it had been 10 years 

back in 2011. These declines have been broadbased. They're happening among unbanked 

households as well as banked households, and 

they're happening across demographic groups.

We're also seeing declines in nonbank

credit use. The share of households using 

nonbank credit fell by 40 percent between 2013 

and 2021.

But, in order to think about what this 

means for economic inclusion and what we should 

be doing here, it's useful to try to think about 

what might be driving these trends. And we've 

come up with a few possibilities.
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The first is, given the decline in 

unbanked rates over the survey history, the 

decline in nonbank financial services use could 

really simply be reflecting that there are more 

consumers who are banked and are meeting their 

needs within the banking system with bank 

products and bank services. Clearly, this would 

be a welcomed development. That's what we're 

here for. You know, we do hope that this is the 

answer, but we do need to know a little bit more 

to be able to connect the dots here.

In particular, we want to be able to 

more carefully consider households' 

characteristics and usage patterns to help figure 

out whether this makes sense. For example, we 

know that some unbanked households tell us in the 

survey that they are very interested in having an 

account. So, maybe it's not too much of a 

stretch to think that there is a group of 

households that have established banking 

relationships; they don't need their nonbank 
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providers anymore.

But other unbanked households tell us 

that they don't trust banks, as we've heard. So, 

that's always been a main reason why households 

don't have an account, and in that case it might 

be harder to assume that these households are

happily shifting from nonbank financial services 

into banking. So, while we know that the 

unbanked rates are declining, we do need to 

continue to do some study and research here to 

really know how this is impacting the nonbank

financial services use.

The decline in the use of nonbank

financial services could also reflect changes in 

demand and changes in consumers' underlying 

needs. For example, we know that the use of 

paper checks is a lot less now than it had been 

in the past. So, that's going to reduce demand 

for check cashing services.

You know, in addition, there's been 

all kinds of changes in economic conditions, 
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shifts in societal attitudes towards and 

perceptions of nonbank providers, just different 

approaches to messaging and educating consumers 

about nonbank services. So, that all could be 

affecting consumers' demand.

And, of course, there's also forces on 

the supply side. The market has been changing 

so rapidly. There are so many new nonbank 

providers and services out there. The entrance 

of fintechs, online payment services, the 

development of emerging credit products like all 

the "buy now, pay later" products and things like 

that, you know, those are really changing the 

market.

And to the extent that consumers are 

shifting from using the more traditional, for 

lack of a better word, nonbank services like 

check cashers and payday lenders, to using these 

newer services, well, then, there are still 

people that are outside the banking system. You 

know, there are still economic inclusion 
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challenges there, but the parameters have changed 

because of the changes in the supply side of the 

market.

So, we have all this great 

information, and what should we do about it? One 

thing that we can do is more research, which we 

love to do because we're researchers.

(Laughter.)

But I really do think this is an 

especially important area in which to focus 

research efforts. You know, there are certainly 

things that we can do here at the FDIC, maybe 

even with the survey, going forward, and with 

other efforts like qualitative research or other 

research. And we hope that others out there, 

other researchers and stakeholders, will dig in 

here as well. And that's why we want to 

highlight these topics, so everyone who's working 

in this space can kind of be contributing and be 

researching here.

But we can also use this information 
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to shape action. I think economic inclusion 

strategies are going to work best if they're 

really properly aligned to the current state of 

the world. So, knowing about how consumers are 

using and choosing between these older and newer 

types of nonbank services can really help those 

strategies evolve.

I'm thinking, for example, of things 

like messaging. If there's messaging out there 

that had been targeted towards explaining the 

benefits of banking relative to using a check 

casher or a payday lender, that's not necessarily 

going to be as relevant today or it's not going 

to resonate the same way it did in the past, 

because more households aren't considering or 

using those products. So, messaging and 

strategies should really reflect the current 

choice set facing consumers to meet people where 

they are.

So, just reflecting on this trend of 

the decline in nonbank financial services use 
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really implies that we can follow up, as I said, 

both with research to better understand the 

dynamics, and how and why consumers are making 

their choices, and also with action, to better 

target economic inclusion -- outreach, messages, 

and strategies that we're putting out there in 

the world.

And moving to our final and third 

implication, this one really builds from the 

previous one and it looks more deeply at 

households' use of one specific nonbank service, 

the online payment services. And that's PayPal, 

Venmo, CashApp.

This is one of the newest nonbank 

services that we have information on from the 

survey. So, we wanted to take some time to tie 

together some of the insights that we heard 

presented by Joyce today and discussed throughout 

the report. And we want to take a moment to 

think about the different use cases for these 

services and highlight the need to clarify the 
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limits and the applicability of consumer 

protection, especially deposit insurance.

Nonbank online payment services have 

really quickly become important tools. They're 

used by so many households now to help manage 

their finance and conduct transactions. Nearly 

half of all households have used nonbank online 

payment services in 2021, with even higher usage 

among certain segments, such as young people. 

These payment services were used by two-thirds of 

households younger than age 35.

And this product, the online payment 

services, really stands out as pretty distinct 

from others that we've tracked in the survey. 

This isn't something that can be considered just 

a product for the unbanked. While the other 

nonbank financial services that we've been 

interested in over the years, and the ones that 

we specifically use for the purposes of defining 

underbanked households, those are products that 

are disproportionately used by the unbanked, that 
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is not the case here.

These payment services are used by a 

sizable minority of unbanked households, about 

one in five, but they are also used pretty 

frequently by banked households. You know, about 

48 percent of banked households are using these 

payment services.

So, doing a deeper dive into the 

different ways that these groups use the payment 

services is really useful because it prompts 

discussion of the different economic inclusion 

implications for these different groups.

So, banked households -- and we heard 

a little bit about this earlier -- they appear to 

be using the payment services to complement their 

banking relationship. Banked households are 

connecting their PayPal accounts or their payment 

services to bank products, like credit cards and 

bank accounts, and they aren't necessarily using 

these services for what we are considering the 

core financial transactions, you know, getting 
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their income and paying bills. They are using 

them to send or receive money from family and 

friends. They're using them to make payments 

online. They're using PayPal to make a purchase 

on eBay or things like that.

So, it really seems that this is an 

example of the disaggregation that Yazmin was 

talking about. You know, banked households are 

using banks for a lot of their core transactions, 

but they're also using these other providers to 

meet specific other needs.

Unbanked households look really 

different, though. The way they're using these 

payment services is just really different from 

how bank services are using them.

The unbanked households who do use 

them are using them rather extensively. You 

know, they're often using these payment services 

for multiple types of things, including the core 

transactions -- getting money, paying 

bills -- and the secondary types of transactions, 
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like exchanging money with family members and 

making purchases.

And for unbanked people, these also 

appear to be acting as a standalone product, 

meaning that they aren't connecting the payment 

services to a prepaid card or any other type of 

account. So, that's why it really looks like for 

this subset of unbanked households the online 

payment services are really functioning as bank 

account substitutes.

Interestingly, this is consistent 

with earlier FDIC research. Karyen referenced 

back in 2015 we did qualitative research on 

mobile financial services for economic inclusion. 

And one thing we heard from consumers who were 

part of the focus groups was that, yes, even back 

then, unbanked households were telling us that 

they felt that P2P services like PayPal and 

CashApp were functioning like bank accounts, and 

they were good substitutes to them. So now, we 

have this data that seems to be providing even 
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more evidence along those lines.

So now, again, what should we make of 

this? You know, what do we want people to do and 

to take away from this? I think it's useful to 

consider the different economic inclusion 

considerations for these different use cases.

So, first, for the unbanked, we see, 

not surprisingly, they continue to have financial 

needs. They're transacting; they're paying 

bills; they're getting money, but they're just 

not turning to banks for that. You know, they 

are finding online payment services to be good 

substitutes, and I think that's something that 

economic inclusion stakeholders should know when 

they're thinking about ways to maybe design 

products or to create effective messaging to 

clarify the unique value of banking versus these 

types of payment services.

Banked households are an interesting 

case because, especially the fully banked, 

they're not often a group of households that we 
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talk about a lot in these economic inclusion 

discussions. But now that we see a lot more of 

these banked households combining bank and 

nonbank services in new ways, there may be new 

vulnerabilities.

Banked households, who may be more 

familiar with the protections of the banking 

system, you know, they may even take those 

protections for granted. They really might not 

understand what happens when they start moving 

money through or keeping money in these online 

payment services accounts.

So, I think for both unbanked and 

banked households, education and awareness are 

really even more important than ever. Helping 

consumers distinguish between what is a bank, 

what is not a bank; you know, helping them 

understand where consumer protections apply; 

where deposit insurance does/does not apply, 

these are really important needs out there now. 

And we think the FDIC and others can definitely 
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play a role in clarifying and educating consumers 

about the implications of using these nonbank 

online payment services and other nonbank 

services and the benefits of banking.

So, that's sort of what we have for 

you today. I'll turn it back to Keith.

MR. ERNST: Great. Thank you, Susan.

And now, this is really our favorite 

part of the meeting, when we get to hear and 

engage with you.

Over the years, this Committee has 

really helped us think through our implications 

and think through our survey and give us great 

ideas about where we can take our efforts next. 

And so, I'm going to open the floor here, first, 

broadly for your questions. If we have lots of 

hands, I'll take names. We'll get everybody in, 

I'm sure.

We will start with you, Marla. I 

already see your hand.

MEMBER BILONICK: Thanks.
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MR. ERNST: And then, if you give me 

the opportunity, I will ask my questions. But 

your opportunity comes first.

(Laughter.)

Marla?

MEMBER BILONICK: Thank you very much 

for the privilege.

So, I just had one -- well, I had two, 

a question and a comment.

So, the question is, this slide 

-- which I don't expect everyone to turn to -- but 

it was just about the uptake of credit products, 

basically, credit card or personal loan, and the 

fact that differences were present across income 

levels. To me, that was just a huge takeaway 

because I'm certain that the need for credit is 

not as different as is indicated by these bars 

between the Black, Latino, and White, or other 

population.

And so, I think that that's an area 

that we should definitely focus on: sort of why 
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it's laying out that way. I don't necessarily 

want to make the jump all the way to 

discriminatory practices, but I would assume that 

that is part of it. Access, I just think that's 

a huge, huge observation from the numbers that we 

should dig deeper into.

And then, the other thing that I 

wanted to touch on that we talked about earlier 

with regard to trust, I just find it fascinating, 

even for myself as a consumer, that there is a 

lot of pushback with regard to trust of banks. 

But, then, these newer players have like implicit 

trust. People will Venmo people; will use 

PayPal.

In fact, I think sort of the marketing 

around PayPal is that it's a safe way to transact. 

And so, I'm just curious why society sort of has 

this broad, sweeping trust for online payment 

methods versus sort of how they're looking at 

banks. Because, sensibly, the online payment 

services, like Venmo, or whoever it might be, are 
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risky ventures to engage in, particularly if 

you're linking your bank account to them.

So, those are my thoughts.

MR. ERNST: Yes, thank you for those 

thoughts. Some information I can share with you 

from the survey. As Karyen and the authors 

mentioned, we weren't able to share all of the 

findings.

MEMBER BILONICK: Of course.

MR. ERNST: One of the findings that 

stands out in the report is that households that 

have a credit card are more likely to also have 

a bank personal loan. So, there does appear to 

be some sort of gateway entrance there.

In previous surveys, we've also 

observed that Black and Hispanic households were 

less likely to have a credit score, which, of 

course, can be a key attribute for accessing 

credit in the system.

But it's a great point and there's 

certainly much more to learn about what is 
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driving the differences in that chart you held 

out. So, I appreciate you calling attention to

that.

In terms of your second question, I 

think we are looking to you and the members of 

the Committee, quite frankly, to help us 

understand that more and thinking more about 

where we can take research to delve into 

developing a deeper understanding of what these 

reasons mean and what the answer to those 

questions suggest about promising strategies for 

addressing them. So, thank you for that point 

as well.

MEMBER MINTZ: Can I also jump in?

Marla, I have a theory that I've 

completely made up. So, I may upset the 

researchers in the room who use data, apparently.

(Laughter.)

I wonder whether this dovetails a 

little bit with the findings that I referred to 

earlier and some of our research around people's 
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desire to feeling in control of what's happening 

with their money, and whether or not there's 

something about these apps that feel more like 

they're controlling what's happening, maybe 

because of the ad hoc nature of the app and their 

choice to download the app, and things like that.

I wonder whether all of that is the 

other piece, but I'm making it up.

MEMBER BILONICK: I think that's 

really interesting, and I think it's more of a 

psychological analysis that needs to take place. 

But I think that could very well be one of the 

reasons, if not the reason.

MEMBER LIBBY: Can I build on that?

Is this on? Yes.

So, what we hear from young people, 

and BIPOC, low-income youth from 16 to 24, is 

really that like CashApp is a big, you know, one 

of the apps that they use primarily. And I think 

it's the speed with which the transactions 

happen. They know like when the money hits, when 
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they money goes out.

And so, this fear around overdraft, 

and prior experience with it, I think it is 

connected to this idea of control because you see 

it happening, and then, there's a lot of 

communication around, ooh, you're getting close. 

And they don't feel that same kind of -- like 

they've got my back -- they don't feel that same 

experience, I think, with banks. And so, that's 

sort of what we hear from that group of folks.

MR. ERNST: That's really 

interesting. Thank you.

So, Tom, and then, Brandee.

MEMBER FOLEY: As long as we're 

throwing out research ideas -- (laughter) -- so, 

one of the things that we've seen and heard, 

particularly around fintech, and I'll just take 

it to crypto as well, right, is that those are 

some really sophisticated marking campaigns, 

targeting groups of people who, quite often, 

aren't sort of targeted, right?
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And part of the messaging is we're not 

a bank; we're doing things differently. This is 

your opportunity to do it differently, to have 

access in a new, quicker, faster way.

So, putting aside all the downsides of 

that, I think there is a piece to be learned 

around the messaging for bank accounts and 

financial inclusion that we can take away from 

that.

MR. ERNST: That's really 

interesting.

And, Jonathan, I may ask you to talk 

a little bit about what you learned, I know, 

because you all have invested in research around 

marketing accounts.

But Brandee first.

MEMBER MCHALE: Okay. I mean, this 

is a similar theme. I'll just say the one thing 

about apps like a Venmo is it actually 

facilitates not just the payment side, but it 

actually provides a way to support the mental 
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accounting that, you know, when you're working 

within a scarcity environment with your finances, 

actually, you can build up a balance that you 

actually believe is actually savings.

So, people will pay you. You know, 

I'll tell you my own personal experience. My 

kids never cash out the money that they have in 

their Venmo. They just keep building up that 

balance and keep using it.

So, that's one thing, is that we 

should really try to understand how consumers 

really think of these applications because I 

don't think they're only just considered payments 

platforms.

The second thing is that there is a 

social media and network connection here. It's 

part of a social engagement. So, the irony is 

that we hear that consumers are concerned about 

privacy. You're using these apps. There's a 

lot of information. I'm like, yeah, let's not 

share that, you know, all those details about why 
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so-and-so is paying you for this and paying you 

for that.

(Laughter.)

So, I think understanding the 

psychology of those applications is important. 

And I thought Margaret for sure was going to talk 

about, you know, how young people see this as 

actually part of their social engagement with one 

another, the use of these apps.

The other thing is, I just want to 

say, go to implication No. 1 around the bankable 

moments. I actually think we should really not 

discount how incredibly powerful and simple of a 

tool this has been to require an account in order 

to receive your public benefits or in order to 

receive your -- an employer to pay their 

employees. And it's not complex and it's 

actually working.

Hopefully, what we'll see is 

that -- I'm concerned that we're not getting 

people in the system. I'm still not sure I fully 
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understand the data or maybe we haven't had 

enough time to understand if the accounts really 

are being -- I'm hearing very high percentages of 

accounts closing.

But I just think we can keep looking 

for those moments that just make it an automatic, 

and you can opt out versus having to opt in.

MR. ERNST: Great. Thank you for all 

those thoughts.

And, Jonathan, if I can ask you both 

about the messaging and I also know there's new 

data coming out later this year that's going to 

address some of that account activity, right?

MEMBER MINTZ: Yes, we do have a 

partnership with the Federal Reserve Bank of St. 

Louis, who collects anonymized and -- what are 

the adjectives, Naomi?

MEMBER CAMPER: I think I used 

aggregated.

MEMBER MINTZ: Yes, aggregated, 

anonymized, and synchronized data among financial 
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institutions that offer Bank On accounts.

And while I can't comment specifically 

on the report that's about to be released, 

unfortunately, I can say that the data continues 

to show that the closure rates of these accounts 

are not notably different than closure rates of 

other accounts. And I'm told again and again and 

again in line with expectations of financial 

institutions offering them.

So, I don't think that there's a 

closure rate sort of asterisk around the 

continued progress in opening those accounts. 

But that's not to say that the underlying issue, 

which is people drop out, you know, as you all 

were talking about, isn't an issue that we need 

to pay attention to.

And that's why I couldn't agree more 

with what Brandee said about, if particularly 

ongoing government payment streams are utilized 

for these banking moments, then, at the very 

least, even if it's just unemployment insurance 
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payments, you've got a reason to keep that 

account open and keep using it.

MR. ERNST: Yes, I see Jennifer, and 

then, Naomi.

MEMBER TESCHER: Naomi, if your 

question is piggybacking, I'll let you go.

MEMBER CAMPER: It is.

MEMBER TESCHER: Go ahead.

MEMBER CAMPER: Yes, and it's less a 

comment than an observation about one of the 

bankable moments that we saw during the pandemic. 

There were actually several, right? It was the 

Economic Impact Payments, but it was also 

enrollment for the Advanced Child Tax Credit.

And from my seat as part of the 

banking industry that was really working very 

hard to get more and more banks to offer Bank Oncertified accounts, from our perspective, it 

wasn't just that there was a bankable moment; 

there was convergence and collaboration among 

lots of different parties. So, the banks were 
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ready with a growing number of Bank On-certified 

accounts that came with the trust and sort of 

features that everybody had confidence that were 

right for a certain population.

There was the FDIC with its Get Banked 

Initiative and really pushing the importance 

generically of a bank versus not a bank.

And then, the IRS really, I think, 

also did very important work in terms of making 

it possible for people to enroll at the last 

minute or very spontaneously to link their 

payments to a bank account.

And the cross-pollination of those, I 

think, again, no data -- no data; I'm making this 

up, as Jonathan would say -- I would have to 

presume that that really helped, and I think that 

if we have ongoing collaboration among lots of 

different parties.

The other thing that I'll say from the 

industry's perspective -- and we're getting to 

sort of sustainability -- we are encouraging even 
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those banks that already have Bank On accounts, 

the role of coalitions and working very 

collaboratively with trusted third parties in 

communities, that's going to be a really 

important engagement point to keep people banked.

So, yes, unemployment benefits, 

whether you are employed or not, having a reason 

to keep the account, but then, also, that 

engagement to maintain trust and develop those 

relationships we think is going to be important.

So, I don't know if there's a way to 

test my sort of surmises there, but something 

like that where it gives us guidance about, okay, 

so we now have lots of banks with these great 

accounts; what should we be doing now? And 

getting some observations from you all in two 

years would be terrific.

MR. ERNST: Thank you.

Jennifer?

MEMBER TESCHER: I wanted to shift the 

conversation back to implication No. 2 for a 
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moment and the nonbank payment services, in 

particular.

And I think it's notable that, when 

you described in the survey what was included in 

that definition, you expressly, you intentionally 

left out Zelle. And I think we need to be really 

careful about confusing form versus function, 

because some of the same challenges, consumer 

protection challenges, that the three that you 

include face are also faced by consumers using 

Zelle.

Zelle is owned by a group of banks, 

but it's a separate, third-party, nonbank 

company, right, Early Warning Systems? And I 

think Zelle has done amazing things in the 

marketplace, but, recently, there have 

been -- not even recently -- concerns about the 

lack of recourse.

And some of the other services 

actually offer a couple of different versions of 

their service. So that, if you're using it to 
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not just pay your friend to split the check, but 

you're paying a business, right, that there is a 

different version of the product that costs more 

and that comes with that recourse. Zelle doesn't 

offer that. And so, it could.

So, I just want us to be careful, as 

we're thinking about assessing this broader 

market and how it's changing, that we're not 

drawing arbitrary lines because we think 

something is more akin to bank and something is 

not. I think that's probably unique to payments 

relative to maybe some other products, where it's 

either fish or fowl. Payments I think are a bit 

more complicated in that regard.

MR. ERNST: Yes, so I acknowledge that 

we did explicitly formulate the question in the 

way you're describing it. And the intent was 

really to try and get at those products, not in 

an effort to confuse form over function, but I

take your point that we've got a bit of a blind 

spot in terms of that exclusion.
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But, given that Zelle, even though it 

was a third-party company, was implemented 

differently within many bank structures, right, 

but I take your point. And it's something we can 

look at and think, is that a hole we can close in 

terms of our visibility?

MEMBER KELLY: Keith, a comment. The 

thing that I noticed in the report was that the 

prepaid card percentage was pretty linear, so to 

speak, across several of the demographics. And 

it may be worth the while to look to see if that's 

being driven by the market, meaning that payers 

are kind of forcing those prepaid cards onto 

employees as one example, and understanding the 

implications of utilizing those funds that way.

Are there any challenges? While it's 

only 3 percent today, will that expand to 10? 

And are there implications there? Would be a 

question that I would have, and maybe one we ought 

to think about going forward.

MR. ERNST: Great.
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MEMBER KELLY: And I would love to 

have insight, if you have some data on that at 

this point in time.

MS. CHU: So, the use of prepaid 

cards, actually, we've been tracking for a while 

and it has actually been going down over time. 

Again, we don't have questions that ask, you 

know, "Why are you using this as opposed to 

something else?" as opposed to something else.

MEMBER KELLY: Okay. Thank you. 

Thanks.

MS. CHU: Thank you.

MEMBER MINTZ: Can I -- oh, no.

ACTING CHAIRMAN GRUENBERG: No, no, 

go ahead, Jonathan.

MEMBER MINTZ: Oh, really? Okay. 

Thank you.

(Laughter.)

I'm glad our first panelists here are 

still here, in part, because I'm not willing to 

let you go yet, Karyen.
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(Laughter.)

So, I'm not sure whether this question 

spans the two, but I hesitantly ask about the 

breakdown or whether we can figure out some sort 

of a disaggregation among those who are the 44-

plus percent of folks who cited a government 

payment as a reason for becoming banked, which 

is, obviously, of a huge amount of interest.

We don't necessarily know whether it 

was, "Oh, I got more money, so I got banked," or 

"Oh, I did this cool FDIC/IRS collaboration 

thing, and took advantage of the opportunity to 

get banked." We don't necessarily know that, is 

that correct?

But what I do wonder is, assuming 

that's true, I do wonder whether there's a way to 

disaggregate that 44 percent by income. And I 

wonder whether that might tell us something about 

this was desperately needed money versus maybe 

not the kind of factor. Just a thought.

I'm not sure I want to know the 
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answer, but I feel like we should.

MS. CHU: So, we didn't do that, but 

it is doable. And again, I will point you to the 

website.

MEMBER MINTZ: Use one of Joyce's 

fancy tools. Okay, okay.

(Laughter.)

MR. ERNST: And your question, I 

think, brings back sort of Naomi's question of, 

you know, what was in this moment that came 

together to have this powerful effect, right. 

You know, there was an environment, there was 

preparation that taken place, and there was an 

opportunity and a need that was met.

I mean, one of our working hypotheses 

is consumers were looking to get their payment as 

quickly as possible and securely. You may 

remember, at the time there was a lot of concern 

that people who were waiting for checks were 

going to wait for extended periods of time.

MEMBER MINTZ: Oh, it was May or 
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September when they first started talking about 

direct deposit versus checks.

MR. ERNST: That's correct.

MEMBER MINTZ: And I do have a little

bit of data about this which is about whether 

this collaboration meant something. So we set 

up a landing page for bank on accounts in 

particular highlighting those that could be 

opened by new customers online.

And we saw about -- we did some 

advertising, but also there was this wonderful 

GetBanked page. We saw about 500,000 or so 

visits to that site and about 30 percent of whom 

then went on to a bank site, you know, presumably 

to consider if not open a page.

So of the traffic that we got from 

other websites, between the FDIC, which was the 

vast majority of it, and the IRS, it was, like, 

94 percent of that traffic came basically from 

you all.

So I do think it's not much of a 
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stretch, you know, to suggest that the numbers 

that you all saw in your survey, and the numbers 

that we're going to be excited to reveal next 

month, you know, do suggest a real strong 

causative impact.

MR. ERNST: Thank you for that. Mr. 

Chairman, you've been moving forward.

ACTING CHAIRMAN GRUENBERG: So I've 

had a chance to save up a few thoughts here. I 

agree there would be value in understanding 

better the impact that the sort of ad hoc 

public/private partnership that emerged in 

response to the pandemic had, in terms of the 

increase in banked households.

I'm not sure we need to wait for the 

research though to draw a reasonable conclusion 

that this kind of collaborative effort across the 

public and private sectors to utilize public 

payments and other vehicles to encourage people 

to open accounts is not something we can move 

forward on. And doing it, rather than -- we 
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should use the ad hoc experience, perhaps, to 

build a more formal partnership here.

And certainly the FDIC could play a 

facilitating role in terms of putting together, 

on both the public side and the private side, 

including the industry and the nonprofit 

organizations, to focus around the opportunities 

for expanding access to the system. So that's 

something we can think about coming out of this 

meeting is one initiative for us to undertake.

Two, I do think, Naomi raised the 

point about, you know, the mobile phone versus 

the online. I think functionally they're the 

same. I think in terms of access and mobile phone 

access, appears to be far broader in terms of 

accessibility. And it's reflected, I think, in 

the interesting fact that underbanked households 

actually utilize mobile phones more than the 

general population in terms of banking services.

And so that is something that I think 

is really worth focusing on and plays into these 
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other alternative forms of access. If we can 

utilize mobile phones as a vehicle for accessing 

banking services and promoting bank accounts, 

that seems to me to have a real potential in 

better coming to the -- I very much agree that we 

want to understand better what we're seeing in 

terms of the reduced utilization of nonbank 

products with a creditor or non-credit products.

I think the fact that we don't have a 

clear line of sight, and the fact that it appears 

to be undifferentiated across income categories, 

just raises some questions that would be 

important for us to understand.

And then the final point that I 

hesitate to make but can't quite resist is that, 

you know, this survey was initiated in 2009. And 

so in effect the whole period of the survey, 

excluding the immediate dip at the outset of the 

pandemic, but then a rapid recovery, has 

generally been a rather extraordinary period of 

sustained economic growth.
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So we all welcome the steady 

improvement in the, as it were, unbanked numbers, 

but I think that has generally coincided with a 

prolonged period of positive economic 

performance. And somehow I cannot disconnect 

those two observations. So it'll be particularly 

important, as we proceed to the next survey, we 

may be seeing a change. We're already beginning 

to see a change in the economic outlook.

And as we may move into a less 

favorable economic environment, will that be 

reflected in the underbanked numbers and to what 

degree? I think that'll be an important thing 

to understand, to place in context, what this 

been this, you know, sustained period and really 

meaningful improvement in terms of access to the 

banking system.

MR. ERNST: Yeah, thank you for all 

those observations. And on that last point in 

particular, I know Yazmin spoke to, you know, our 

interest in understanding better some of what may 
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have been happening during this most recent 

period of time to help households sustain their 

banking accounts.

Because even though there was 

tremendous public support to consumers, there 

still were real challenges in the marketplace. 

And yet, through some of those challenges, 

consumers showed a degree of resilience that was 

even greater than we might have anticipated based 

on prior findings.

And so understanding that better could 

be very important, especially if some of the 

economic winds that we've had at our back shift 

in the coming periods of time.

You know, it is something that we have 

explored in previous surveys. And in fact, some 

recent research by Mark and another economist, 

who is not on the panel with us who have delved 

into this topic, and pointed out that periods of 

unemployment should be expected to come with 

increased rates of unbanked among different 
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households.

And that could be pointed out that it 

could be especially important to identify ways to 

know when households are facing those challenges 

and think about support that could be delivered 

during those moments.

ACTING CHAIRMAN GRUENBERG: And it's 

exactly at those moments when the connection to 

public benefits, which may kick in in those 

circumstances, as it were, could be a 

countervailing tool here.

MR. ERNST: Right, so public benefits 

may not just be a gateway, but they can be an 

important moment in time to sustain --

ACTING CHAIRMAN GRUENBERG: -- to 

sustain a relationship.

MR. ERNST: Yeah.

ACTING CHAIRMAN GRUENBERG: Depending 

on the circumstance.

MEMBER MINTZ: Do you think it's 

possible, Keith, I asked you yesterday but it was 
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a reception and, you know, who remembers what 

happens at a reception.

But I was wondering whether or not 

there was a way to, because I think the good 

numbers defy expectations that we might have 

feared because of the pandemic, I wonder if 

there's a way to quantify or estimate how much 

they defy expectations? Is there a way that 

wizards could look at the data and figure out 

what would have normally been anticipated of a 

drop in the banking rate and then compare it?

MR. ERNST: You addressed the 

question to me. I don't have my wizarding 

credentials, but we have credentialed wizards.

MEMBER MINTZ: I sort of cast a glance

towards the people who might actually know if 

that's possible.

MS. CHU: I mean, that's difficult, 

but it's partly because the, you know, the 

support that was provided, right, during the 

pandemic was just unprecedented. I mean, the 
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large sums of stimulus payments, for example, you 

know, we estimated that the drop in the unbanked 

rate, right, between 19 and 21, about a third of 

it is associated with changes in socioeconomic

conditions of US households.

But that leaves two-thirds that we 

couldn't explain with, sort of, macro data, 

right. And some of that two-thirds is probably, 

you know, the extraordinary efforts of coming 

together. But it's hard to quantify exactly how 

much.

MEMBER MINTZ: So maybe in the future, 

and this is a half-thought idea, but maybe 

there's a way to disaggregate different versions 

of disruptions of income, right, to talk about 

the difference between employment-based income 

and benefits based income. And maybe that could 

help us figure it out if we thought that was 

useful.

MEMBER FOLEY: I had a similar 

question and related comment. What did you 
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include in socioeconomic? Was it employment 

income, did it include benefits, did it include 

the wealth effects of the stimulus payments and 

the like? Or were those exogenous from that and 

counted in the other factors?

MR. WEINSTEIN: Yeah, so for the 

socioeconomic characteristics, we included 

income, education, employment status, and homeownership. And that's, you know, these are all 

variables that are measured in the base 

population survey that's given every month.

But it's, like, income from all 

sources, you know, education, educational 

attainment, and then, employment is for the --

you know, given how things are measured, like, 

things like employment which are at, like, person 

level, it's based on the employment status of the 

householder or the, you know, person or one of 

the people who owns or rents the home.

And we observed in general that, you 

know, comparing 19 and 21 in order to understand 
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what could be going on, like, income levels went 

up, education attainment went up, unemployment 

went up. So that would tend to have the opposite 

effect on bank rates. And homeownership went up 

slightly, but it was pretty similar across the 

two surveys.

But, you know, we found, when we 

looked at the change in our bank rate, the effects 

of income and education definitely sort of 

overpowered the effect that one would expect from 

the change in employment, or the increase in 

unemployment.

MEMBER CALHOUN: So were enhanced 

unemployment benefits, were those -- did people 

understand those were income, or the stimulus 

checks, the multiple ones, were they included in 

income within that definition?

MS. CHU: I think that the, you know, 

the Census Bureau basically asks households their 

income. I'm not sure it was differentiated 

between the different sources. We do have, 
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right, we did ask in our survey whether they 

received government benefits, like a stimulus 

payment or unemployment benefits. So we can tell 

if they did or didn't. But we don't have amounts 

of what they received.

MEMBER CALHOUN: And then to comment 

on the research we've done, there were a whole 

host of programs here. We focused, for example, 

in one area of student loan benefits. And we did 

focus groups and the like on what was the impact 

of the payment pause that's still in effect now. 

And a high percentage of people reported that it 

had a dramatic impact on them.

That's not income. I don't think most 

people would call the payment pause income. But 

that's, you know, 30 million or so people 

benefitted from it. And they reported there, and 

this is consistent with other things, that they 

used it to pay down debts that provided huge 

amounts of impact on their daily financial 

stress.
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And I think we see that elsewhere 

that, you know, credit card balances adjusted for 

inflation generally went down. Payday lending 

and high cost installment lending went down.

I think the concern starting with the 

student loan, the respondents we dealt with, they 

were very much afraid of what would happen when, 

for example, student loan payments started. They 

were very apprehensive about their capacity to 

restart the payments.

We see credit card balances going up. 

We see payday lending and installment lending 

volumes going up now. So it is one of the warning 

signs of what's ahead here for these households.

MR. ERNST: Yeah, it's really great 

and interesting comment. You're highlighting, 

you know, while we asked about sort of income and 

with this moment of opportunity in mind, you're 

highlighting that, in fact, there were also drops 

in expenses for households.

They didn't have to make to make those 
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student loan payments. Maybe rent didn't go up 

as much as it might have otherwise. But those 

conditions are changing in many places across the 

country. And I think there's an excellent case 

in that student loan payments will resume. And 

what will happen as those changes come into play 

is worth some consideration.

Jennifer?

MEMBER TESCHER: I was planning to use 

my roundtable remarks later to share a little bit 

more about the results of our financial health 

pulse work. Our survey came out in early 

September. And, you know, we obviously always 

look at yours as a bellweather and a benchmark. 

Are we, you know, are we in the right ballpark, 

given that your survey sample size is six times 

ours.

So I won't go into great detail here, 

but just a couple of things based on some of the 

comments that have been made. We similarly find 

that households that have the lowest incomes and 
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who benefitted from the tight labor market 

experienced meaningful improvements in their 

financial health score. And we go into detail 

about whether it's a new job, or increased hours, 

or those sorts of things.

And this isn't surprising, right. 

There's obviously a very significant connection 

between work and income. But I also feel like, 

in the conversation about moments, I still think 

there's more to be doing to leverage the 

employment moment and/or the enrollment, benefit 

enrollment moment.

And, you know, over the last few 

years, we've really extended our work into sort 

of the world of HR and employers across 

industries, not just financial services 

companies. And it's a, for a variety of other 

macro trends, it's a very hot topic at the moment 

and something that a lot of employers are 

thinking about. We'll see what happens when the 

labor market maybe isn't so tight. So that's 
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another -- there's just a lot there. And it's 

sort of obvious, but there's just more to do, I 

think.

The other thing, just in light of the 

comments that Acting Controller Hsu made earlier 

this morning, only three percent of unbanked 

individuals in our survey are financially 

healthy, relative to 36 percent of banked. So 

that gap is obviously significant. But I think 

it's really important to note that only 36 

percent of banked people in this country are 

financially healthy.

And so as we start to think about what 

else, what next, what's the next frontier, I 

think that's meaningful and important. And I'll 

share just a few other relevant statistics later 

on.

MR. ERNST: Great, thank you.

MEMBER TESCHER: Oh, and the last 

thing I wanted to say is on this question about 

how are people interpreting income with this 
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inflows, we might have a way to look at that in 

a non-representative way. So we have a sample 

size of about 6,000. For about 500 of them, 

we're also, with their permission, ingesting 

their transactional data. And so we might be 

able to use that as a way to understand, so happy 

to dig into that more if it's useful.

MR. ERNST: Great, we'll follow-up 

with you about that. Thank you.

MEMBER CAMPER: Just one response, 

you know, thinking through employment, the 

bankable moments, banking moments with 

employment, I would observe the government is a 

very large employer across lots of different 

levels. And so I don't really know how it works 

to onboard. I haven't on-boarded with a 

government agency in a very long time. But maybe 

there's an opportunity for a pilot program.

MR. ERNST: Thank you, Naomi. Now, 

that also actually brings me to one of my 

questions.
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(Laughter.)

MR. ERNST: You know, I wonder --

ACTING CHAIRMAN GRUENBERG: An hour 

later you get to ask some questions.

MR. ERNST: I get to ask a question. 

That's not bad, actually. You know, we're 

focused on moments of employment, enrollment, and 

benefits as key opportunities to bring people in 

the banking system. But, Margaret, I know you 

deal with people in a variety of contexts, and 

other people on the panel do as well.

And so I'm wondering, you know, do you 

see other moments that feel similarly like they 

present similar potential that we should be 

thinking about, you know, for research, for 

action, and just in general.

MEMBER KELLY: Well, I had the 

pleasure of meeting Margaret last night, and many 

of her constituents from California. And hearing 

this discussion around kids who have the ability 

to work at 16 and 17, but don't have the ability 
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to have their own bank account, I think really 

aligns with what we see trending around the 

nation which is many states now are requiring 

financial literacy as part of their curriculum.

I think the number may be 20ish 

states, if I recall correctly, that have that as 

part of their curriculum. So this may be an 

opportunity to at least heighten the awareness of 

literacy along with banking as a safe way of doing 

that. So it's something that I would suggest to 

you.

MR. ERNST: Thank you for making that 

connection. There are several people watching 

from our Community Affairs program who are 

applauding at home.

(Laughter.)

MEMBER KELLY: Yes.

MEMBER LIBBY: Yeah, and thank you, 

Kenneth. And I'll add, I feel like this idea of 

extending the timeframe, you know, backwards to 

the 15, 16, and 17 year-olds, is a really 
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important part of that conversation, whether 

that's around the employment embedding banking 

into employment opportunities, first employment 

opportunities.

Because I think, you know, when you 

think about the survey that we're going to be --

or the survey data we'll be looking at in two 

years, those are the households, right, that are 

going to show up.

And to the extent that we can engage 

them now through their employment opportunities, 

through schools, all the ways that we've been 

doing it, and I think that, you know, Jonathan 

and others have been engaging minors in accounts 

that they can own, you know, to avoid or to reduce 

the barriers to entry for the 16 and 17 yearolds, I think that could just go a long way, I 

think, in sort of getting us this final mile in 

terms of getting to 100, getting to 99.

And so I think looking at that barrier 

is a really important thing when we're thinking 
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about younger people and just knowing that it 

really is, you know -- I think some of you had a 

chance to meet these young people yesterday.

And they're now, you know, 22, 23, and 

able to really look back at what was the impact 

of having that access, having it on their own, 

being able to engage with that account 

independently and avoid some of the challenges 

they saw their peers face who had accounts that 

were, you know, abused by various adults in their 

lives, or who just couldn't open an account 

because there was not an adult in their life that 

could be that custodian.

And so I do think that is a really 

important thing, you know, for us and I think 

maybe for all of us as we think about trying to 

close the banking gap.

And so I guess the final thing I would 

share is that I know there was some guidance, the 

joint guidance that came out in 2015 really 

looking at non-custodial youth savings accounts. 
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And I think that was a great step in this 

direction of really thinking about how can we

bank young people, and especially low income 

youth, BIPOC youth, for whom that custodial 

barrier is very real.

And I think, you know, in order to 

maybe think more about how we can get more young 

people, and I think looking at guidance around 

transactional accounts would be really important. 

I think that's really the message that our young 

adults were here talking about.

So I appreciate the question. And I 

do think that is something that we're excited to 

engage further and I'm sure others here as well.

MEMBER MINTZ: Brandee and I are 

arguing about which one of us should talk about 

it. You know, Brandee and the Citi Foundation 

made a massive investment over the last several 

years in the Summer Jobs Connect Program which 

was leveraging the Summer Youth Employment 

Program infrastructure in cities across the 
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country.

That's been a very helpful way of 

taking more than a moment to educate but a moment 

to educate and act with those, you know, first 

pay checks and -- I shouldn't say first pay 

checks, first salaries and learning how to use 

direct deposit and to work with your account, 

things like that.

And that's been hugely successful. 

And think we are now at the tipping point, thanks 

to Brandee's team investment, about this becoming 

a more standard approach to summer youth 

employment programs across the country rather 

than sort of an add on.

So I think that the success of some of 

these types of programs, and Margaret's team has 

been incredibly helpful as well, and so many of 

our SJC partners, I think that the ability to 

translate success in some of these other local 

versions, like this Summer Youth Employment, can 

help piggyback other opportunities.
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Well, the one that's in my sights at 

the moment in particular is youth exiting the 

foster care system. There are money moments 

there. And for sure there are ethical and moral 

imperatives. So we're trying to figure out 

whether we can make some inroads there too.

MEMBER TESCHER: And this line of 

comments has sparked something in my mind. We're 

talking often about moments to open an account or 

to get connected. But it also strikes me that 

we now need to think about moment of transition 

once you have it. So I wonder if you, Jonathan, 

or you, Margaret, have data that shows, okay, 

opened the account for this younger person, and 

they used it. And then what happened when your 

programming was over or the job was over.

I know your work, Margaret, I think 

has a little bit more of a tail than maybe your 

Summer Youth --

MEMBER MINTZ: We've surveyed the 

youth afterwards to see how many kept their 
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accounts open how that's going. And I don't 

remember the numbers. My recollection is it was 

actually a pretty strong continued use rate, that 

for youth, unlike for adults, for youth it's 

about the onboarding into their financial lives 

rather than just, oh, you've got some money. You 

know, it's not like an EITC moment where you got 

some money and --

MEMBER TESCHER: Right. But I think 

the similarity is that for people who don't have 

a lot of money, when they have less they may see 

less need to have an account. And so I'm 

thinking about youth. I had a summer job, right. 

Maybe I'm not generating any income during the 

school year. Or maybe it's really small, or 

similarly with the survey results.

And so I just think there's more 

thinking to do about once you get someone, how do 

you either help them see some other income stream 

that makes it relevant, or how do you get them to 

see that, this is to your point, Jonathan, like 
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part of their broader financial life. And so 

there's a hold button, right, where --

MEMBER MINTZ: Well, actually it's 

one of the reasons -- Margaret, go ahead, yeah.

MEMBER LIBBY: Yeah, I was going to 

say, I think for a lot of people that we engage, 

they are working not just in the summer but 

they're continuing to work. Because, you know, 

in a lot of cases they're supporting their 

families, or they're taking care of their own 

expenses.

And so I think getting into that 

account makes an enormous difference. I mean, 

one of our youth was talking about needing to use 

his debit card which, you know, sort of 

underscores that transactional account piece to 

keep the Wi-Fi on during the pandemic. And 

without the Wi-Fi, you know, there's no school.

So I do think that there's a lot of 

earnings that they're doing, you know, earning 

that they're doing throughout the year. And I 
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think with additional touch points, and whether 

those are through, like, financial coaching, 

financial mentoring, I think there is a pathway 

where they take up other products, they begin to 

borrow. And so I do think there is a little bit 

-- there's touch points that need to be there. 

But I think it does continue into a longer 

relationship with a financial institution.

MEMBER TESCHER: But I think that part 

of this, and I'm almost sort of -- and the work 

have funded was less focused on the maintaining 

of the account and the ongoing usage and more 

upon this was the moment to build the direct 

trust.

And it was about the experience and 

then the sense of self-efficacy that, oh, the 

banking system is for me. And this is part of 

being an adult. This is just once, like, you get 

your driver's license, you have to also get a 

bank account. And I had a positive experience, 

unlike what I may have heard from family members 
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or community members. And then you may come back 

in at a later date.

But I think if there was something we 

could do to think about this bridging the trust 

gap, maybe it's actually too late for all of us 

over a certain age, it's like that's the hardest 

part, and to so focus on this, you know, the next 

generation.

MEMBER LIBBY: And I think it trickles 

up and out in families because of that positive 

experience. And we've definitely seen that 

happen. And it is adulting, is the way that we 

hear young people talking about it, right, having 

the account and then connecting it to direct 

deposit means that, like, banking plus savings is 

really the way that they're experiencing it which 

I think is, again, part of that feeling, that 

self-efficacy of, like, I set a goal, I met it. 

I have savings, I've got a cushion. But it does 

trickle. We see that with parents, and siblings, 

and other people in their networks.
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MEMBER MINTZ: I also think, oh, I'm 

sorry, go ahead.

MEMBER CAMPER: Can I ask you a 

question, because there are totally different 

issues that's with more mature people like us and 

youth.

MEMBER CAMPER: And with a sample size 

of three, which is my --- I thought they were 

well informed teenagers, but apparently not --

(Laughter.)

MEMBER CAMPER: I'm not sure they, and 

again, massive failure from a mother in the 

banking industry, I'm not sure they actually know 

the difference --

MEMBER LIBBY: You're not alone, 

Naomi.

MEMBER CAMPER: I know, I'm not alone, 

-- the difference between, I mean, your nonbank 

payment app and their bank account. I asked them 

the other day, where do you think that in your 

VENMO comes from, honey?
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And no answer, no good answer. But 

I'm wondering if one of the challenges we have 

collectively, as a society, is educating youth on 

there actually is a difference in protections, 

and functionality, and “long-termed-ness”

between a regulated bank and this thing, whatever 

it is. And you're so directly connected with 

youth. Do you think they know the difference? 

And if so, what's your secret?

(Laughter.)

MEMBER LIBBY: So I think one of the 

secrets is, like, having youth-facing content. 

I think a lot of the education, the financial 

education resources are targeting adults to 

prepare adults to then prepare young people. And 

a lot of the adults that we're giving those 

resources to are not comfortable with financial 

content, with financial materials. They're not 

sure about the answer to your question. They're 

not sure about how to navigate credit, talk to 

others about it.
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So I do think one thing is the 

importance of just materials that are going 

directly to young people. I think peer to peer 

approaches are really important. Because that's 

sort of the other issue is, you know, listening 

to adults is not necessarily, especially about 

something as personal as money, is not always, 

you know, the source or the messenger that you 

want to be hearing those things from.

And yeah, I mean, I think those are 

two really important things but also just getting 

them in the accounts so that they can start 

practicing and using them, making some mistakes 

which, as they say, they always will, but having 

those safeguards so that, you know, they're not 

having, with the thin margin of error that they 

have, you know, disastrous implications.

But I do also think that financial 

coaching or having access to financial coaches is 

really important. Because, you know, you can 

have the youth-facing content, you can have the 
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peer to peer approaches, but I think they do need 

to have access to experts that they can go to 

with questions as they're making decisions so 

that they're not --

MEMBER MINTZ: And I think --

(Simultaneous Speaking.)

MEMBER LIBBY: -- more questions like 

that.

MEMBER MINTZ: And I think this safe 

experience that the two of you both talked about, 

you know, as a reminder, part of this equation is 

the term of the account that they're opening.

And so making sure that it's an 

account that doesn't have minimum balance 

requirements, making sure in most of our youth 

programming that they have no monthly fees at 

all, allows for, forgive the expression, a, 

quote, "temporarily dormant account" to not 

become a bad experience but to be a tool remaining 

in the tool belt. So there's been a lot of 

thinking done in that regard.
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MEMBER TESCHER: And I think there's 

more work for banks to do in this regard. 

Because in the similar experience, right, there's 

what you do before your child is of age, and 

there's what's available after.

And even with a knowledgeable parent 

in person, in a branch, many banks will tell you 

it's just easier to start over than it is to say, 

oh, I'll take your mother off the savings account 

now, or I'll transfer -- I will add a checking 

account, a transaction account now to this 

savings account, as opposed to saying oh, let's 

close this savings account and open -- like, that 

journey is clunky in a tangible way also.

MR. ERNST: Now, I'll take this 

opportunity to make a connection to one of the 

findings that we have seen durably in our survey. 

And it goes to the part of the conversation that 

talked about the value of making these 

connections and how that impacts people's lives 

over time.
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And it's not directly for this 

population, but one of the findings we 

consistently see in our data is that households 

that have had previous banking experience are 

more likely to want to open a bank account than 

unbanked households who have not have had those 

experiences and connections.

So I think it goes to the point you 

were making about how just having that exposure 

can help people build trust connection and 

understand for the potential that's there.

And that doesn't take anything away 

from your point, Jennifer, about sort of the work 

to do or, you know, the importance of thinking 

about what are the on-ramps that get people 

connected there. But it is something that feels 

like it buttresses the points you're making.

Marla, please. And I apologize, I do 

try to look left and right. But this is a very 

--

MEMBER BILONICK: That's all right. 
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No, I was just going to say, on the topic of 

youth, I think something that I've been thinking 

about a lot recently, and it's, I don't think 

that we think about this enough, and it's not 

exclusive to the Latino population, it's really 

any immigrant population.

Oftentimes, the children of the 

families are the representative, the advocate. 

And as they get older, they take on a lot of 

financial responsibility for their families, for 

their parents, grandparents, maybe even siblings. 

And that has a very strong impact on their credit 

score.

One thing that I had never thought of 

that someone brought to my attention was a lot of 

times young people will purchase their home for 

their family. And that puts them in a very 

vulnerable spot and also limits them from 

accessing down payment assistance programs for 

first time homebuyers when they are ready to buy 

their home for themselves.
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And so it's just something to think 

about. How does that impact your financial 

trajectory when you're sort of starting out 

carrying this very heavy load that can have 

adverse effects that, you know, coming from a 

very good place but still -- so I just wanted to 

bring that up.

MR. ERNST: A great observation, 

thank you. All right, we are about an hour and 

20 minutes into this session. And a few minutes, 

just a few short minutes from lunch. So let me 

just ask if there are any final questions before 

I turn the floor back over to the Chairman.

ACTING CHAIRMAN GRUENBERG: Before we 

close out, if I could just -- I want to thank you 

all again, because it's been just a terrific 

presentation. And there have been a number of 

useful thoughts and suggestions made by the 

Committee this morning. And we will follow-up 

on them.

But perhaps we could, if any of you 
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are so inclined to jot down briefly things we 

should be thinking about in terms of follow-up 

from this meeting that would be very helpful to 

us. And then we then, in turn, could follow-up 

with you. But this has been very productive on 

both ends. So I just wanted to say thanks to 

everybody unless, I think, we want to take a 

picture too?

MS. ORTIZ: Yeah, so in terms of folks 

who are joining us on the public webcast, we're 

going to be taking an hour and a half break for 

lunch. So thank you for joining us. And then 

for those of you who are here, we're going to 

have a picture, right here in the boardroom. 

Thank you, everybody. See you soon.

ACTING CHAIRMAN GRUENBERG: Thank you 

all.

(Whereupon, the above-entitled matter 

went off the record at 11:54 a.m. and resumed at 

1:36 P.m.)
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AFTERNOON SESSION

ACTING CHAIRMAN GRUENBERG: Liz, you 

want to start?

MS. ORTIZ: Absolutely, and we're 

back. Thank you for coming back for the second 

half of today's ComE-IN meeting. And we are 
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going to begin the afternoon's presentation with 

the members’ roundtable. This is the opportunity 

for the members to share with us and with each 

other things that are happening in their 

organizations, in the communities that they 

serve, and things that we, as a Committee, can 

consider and look to move forward in a variety of 

ways as we continue our work together.

Starting us off today is going to be 

Marla Bilonick. I told her that going first is 

part of her hazing --

(Laughter.)

MS. ORTIZ: -- as the Committee's 

newest member. So I hope you will treat her 

appropriately. Marla?

MEMBER BILONICK: Thank you, yes, I

was told this was part of my hazing. And I'm 

moderately terrified. But I think it should be 

okay.

So as was said, my name is Marla 

Bilonick. I'm the president and CEO of the 
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National Association for Latino Community Asset 

Builders, otherwise known as NALCAB. And no, I 

did not come up with that name, but I have 

inherited it. And maybe someday we'll make 

something shorter.

You know, just as a quick aside, we 

had someone join our team, and their grandmother 

was asking them why they were working for a taxi 

company. And no, that is not what we do.

(Laughter.)

MEMBER BILONICK: But we are, in 

essence and in reality, a network and membership 

organization that represents around 200 nonprofit organizations that are entrenched in 

Latino communities across the US, including the 

District of Columbia, Puerto Rico, and even 

Hawaii.

And all of our members work in the 

economic development space doing activities like 

housing counseling, affordable housing 

development, financial coaching, small business 
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technical assistance, small business lending, and 

consumer lending. And about a third of our 

members are CDFIs where half are community 

lenders of some sort, but not necessarily all 

CDFIs.

And I wanted to just speak to some of 

the challenges of our community. And of course, 

these are broad brush strokes, and I don't 

purport to speak for the entire community.

And I also wanted to just say that we 

are not a monolithic community just like, you 

know, every group would probably say. But in 

particular we have kind of two subsets which 

would be more recently arrived immigrants, and 

then Latinos that have been here for generations 

and that have, you know, built more financial 

wherewithal just having been here for longer and

having had a chance to establish themselves more.

But some of the challenges in 

particular for recently arrived immigrants center 

around linguistic challenges, challenges 
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navigating unfamiliar systems, and the financial 

system is certainly not an exception to that, 

documentation status.

The trust issue is a big issue for our 

community. And that's across the board 

universally, partially because in our countries 

of origin, you know, people have had real life 

experiences where, for example, I can point to an 

example of my own family. My father had savings 

in a bank that shut down, and that's just the end 

of the story. There was no recourse, there was, 

you know, no return of that money. And so, you 

know, the proverbial money under the mattress is 

not -- it's grounded in real -- oh, gosh, I've 

never gotten more phone calls than in this 

meeting.

But anyhow, so that being said, you 

know, other issues are around credit, so either 

no credit score, a thin credit file. I thought 

it was interesting that that was one of the 

reasons why that was cited in the previous 
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presentation around why there was a lesser uptake 

in credit products.

Because it's a vicious cycle. You 

can't get credit if you can't demonstrate that 

you can pay down credit. But you can't, you 

know, establish any credit without a credit 

score.

And part of that is also cultural. 

There is not a big credit of external culture --

credit, sorry, culture of external credit. There 

is a culture of familial and community credit 

through rotating savings and credit associations, 

“susus” in other languages. So there's that.

Also I think it's important to note 

that sending remittances actually limits your 

availability of funds to save that can be then 

applied to building assets. And so I think it's 

interesting when we think about alternative ways

of measuring someone's credit worthiness that we 

look at the payment of remittances. Because it 

demonstrates the ability to, sort of on a monthly 
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basis, pay a certain amount.

But in addition, it has a negative and 

adverse impact on people's ability to have, you 

know, just other sort of variable finances that 

could be used either for savings, or a buffer, or 

for building assets.

In terms of opportunities, we're a 

very fast-growing demographic, a very young 

demographic in terms of the makeup of the Latino 

population in the U.S., which I think, based on 

some of the things that we've discussed, lays out 

an opportunity to kind of change the trajectory, 

financial trajectory for a community.

Latinos, historically, pre-pandemic, 

were the fastest demographic with regard to home 

ownership, the fastest growing, I should say. 

And also our community is over-indexed on mobile 

usage. So anything that we've been talking 

about, you know, in mobile banking, I think 

there's a real opportunity to leverage.

We were talking at our table, 
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actually, about how the primary use of mobile 

banking is checking your balance. But there are, 

as we all know, so many other functionalities 

that can happen through mobile banking. And so 

I just think that's a huge area of opportunity.

And then I did mention earlier this 

issue around generations and the fact that a lot 

of children of immigrants take on the financial 

burden of their extended family and how that can 

negatively impact their personal financial 

trajectory.

And then just a couple of things that 

I just wanted to mention about things that are 

coming up for us. We've been doing a lot of work

recently, and of course it's top of mind, because 

I just came from the Opportunity Finance Network 

Conference last week. But we are doing a lot in 

the space of supporting Latino-led and Latinofacing CDFIs.

The Hope Institute put out a study 

that demonstrated that, even through the CDFI 
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fund itself, the investment in White-led CDFIs is 

greater than for Black and Brown-led CDFIs. And 

so we've created an alliance that is a sister 

organization to the African American Alliance of 

CDFI CEOs which is called the National Alliance 

of Latino CDFI Executives.

And there we are supporting our member 

CDFIs through advocacy efforts, joint fund 

raising opportunities. We just leveraged 

actually, in partnership with the Alliance, which 

is the Alliance of African American CDFI CEOs, an 

investment of $25 million from Bank of America 

jointly into our two entities. And so just 

really exploring that and developing kind of a 

pipeline of incoming and new Latino-led CDFIs.

So I don't know if I've met time. I 

see Liz looking at me. But yeah, we're really 

excited. And I'm very excited to be here. And 

I'm not sure if I fulfilled sort of what the 

purpose of what I was I supposed to say was, but 

I am sure you guys will be nice to me as a 
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beginner.

(Simultaneous Speaking.)

MEMBER BILONICK: Thanks.

MS. ORTIZ: That was pitch perfect, 

Marla. I was not nodding my head to nod you 

along. I'm much less subtle. Jonathan Mintz 

can attest to that. No, I was nodding my head 

as somebody who worked at a CDFI for many years.

And, like, a lot of what you were 

saying was resonating for me, and the importance 

of having community among the leaders of the 

organizations. And thinking about, you know, the 

future leadership of CDFIs is incredibly 

important. So I'm just very impressed with the 

work that you're doing.

MEMBER BILONICK: Thank you.

MS. ORTIZ: All right, top that, Mike 

Calhoun.

(Laughter.)

MEMBER CALHOUN: Right. I'll not be 

so friendly next time. You gave me a hard act 
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to follow.

I'm going to address two things and 

try to do it quickly to stay within our time 

constraints. One is just an overarching issue 

that I think is still worthwhile to remind 

ourselves about. And then a very urgent and 

present danger that we see from our perch at CRL.

And the broad issue is one of the 

unstated premises of the bank account efforts and 

getting people in is to help people gain 

financial security and specifically wealth.

And I think it is worthwhile though to 

remind ourselves of what those wealth disparities 

are and to think about these problems through 

that lens and maybe even in collection of data. 

Because one of the frustrating things is there's 

pretty limited data on wealth and race with what 

we have.

So I think everybody here is, you 

know, the frequent phrase of if you look at the 

median wealth level, the well accepted statistics 
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are an eight to one disparity Black to White and 

a five to one for Latino to White.

That's you know, one snapshot, and 

there are a lot of dimensions. And let me just 

give a couple. When you start to peel down in 

the numbers though, particularly for things like 

bank accounts, there are other aspects.

So first of all, that figure includes 

non-financial assets. The biggest one being 

automobiles. And given the very low median 

wealth level, particularly of Black households, 

and even with Hispanic, that changes the numbers 

significantly. So if you look at just financial 

assets, the ratio at the median level goes to 20 

to one for Latino, and 40 to one for Black 

households.

And while a car is an important asset, 

you can't easily turn it into, at least in a good 

way, into cash to pay a bill if you've got a 

financial disruption, so the ability to withstand 

financial shocks, and unfortunately the 
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vulnerability to getting income and expense shock 

is very asymmetrically distributed.

So a couple other facts on that, that 

just bear out, I mean, this is the legacy of 

literally centuries of deliberate policy to keep 

Black families and other families of color from 

being able to build wealth. So it's not 

surprising that they're not these huge 

disparities. And I call them disparities, not 

gaps. This is not a natural phenomena. This is 

the natural result of explicit policies that had 

this goal.

So a couple of other stats there. So 

one, if you look at the impact of this, the 

average, at the median White high school dropout, 

non-completer, has greater wealth, and a greater 

homeownership than for Black households headed by 

a college graduate. And that is so much about 

this inter-generational wealth that is not just 

a thumb but a massive weight on the scale of 

everything we look at.
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And then on stat that comes to me as 

we talk about this, particularly for younger 

households, if you look at, and you see this is 

one of the places where the inter-generational 

wealth plays out, if you look at households under 

35, one of the prime targets we're trying to get 

into bank accounts, the median wealth for White 

households is right around $25,000 for households 

below 35. For Black households it's $600, $600.

And, I mean, these are the 

gravitational forces that play out in all this, 

and so I would urge we look at this. And one 

challenge is, and banking is an aspect of this, 

is wealth begets wealth. And so we need to look 

for places for -- that's why this wealth gap 

hasn't just, you know, reduced with the passage 

of time. The passage of time expands the wealth 

gap. So we need to look for where 

are those places and interventions where we'll 

break that cycle. And I see government supported 

programs, which I would include the support for 
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insured depositories, as a place to do that, that 

there is an obligation to use that.

I would say, you know, the housing 

market we believe is heavily government 

supported. And we need to do that as well. So 

I would urge collecting that data, looking at it 

through this lens as we would urge for most of 

your actions.

And one place we see that play out, 

for example, in the account field, and FDIC has 

been a leader going back to the Chairman's work 

in, I remember, 2009 was really the first big 

study on overdraft, but the stats show that the 

bulk of overdraft fees are collected from 

accounts that have an average balance of less 

than $350. And that is the life for so many 

families. They are juggling this every month and 

a mobile phone helps some.

So if I haven't got you depressed, 

folks, enough with that, here is the second one 

that we really are trying to get the word out on. 
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There is an assault on home equity going on right 

now of the type we saw with the sub-prime mortgage 

crisis. And it is because of a confluence of 

factors.

There is a huge push in the mortgage 

industry to push market cash-out refis. And we 

have gone through an inflection point of 30 years 

of declining interest rates which you're not 

likely to see again for a while. So the rate 

refis are gone. The purchase mortgages are down, 

and there's over supply in the mortgage industry.

One of the few places left to push is 

cash-out refinances. And people are used to 

taking money out of their house equity on a pretty 

regular basis. And the impact of that was 

cushioned in a declining rate market, because 

they got tail winds on that with declining rates. 

They were financing to lower rates.

Now you're looking at people 

refinancing their whole mortgage, just like the 

debt consolidation loans of the early 2000 sub-
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prime loans, into a significantly higher rate 

mortgage, usually 200 basis points or more, on 

the whole mortgage.

Now the broker gets paid about ten 

times as much for doing a full cash-out refi of 

the whole mortgage as they would get paid for 

doing a HELOC or a second mortgage, so tremendous 

financial incentives to push people in that 

direction.

They will mask -- and if you listen to 

the radio and, at least in North Carolina, there 

are ads every 15 minutes pushing these and 

targeting people behind on debts and VA loans, 

which allow 100 percent cash-out refis which is 

particularly dangerous.

We are talking about a massive 

stripping of home equity. They extend the term 

out, of course, to 30 years. So it'll be 15 

years here, and that's how they hide the cost of 

it. They finance all the fees into the loan to 

mask that as well.
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So people don't see any of that. 

There's nowhere really in our disclosure process 

where people see, gee, if I have a $300,000 

mortgage, and they raise it, you know, two 

percentage points, most people don't realize 

that's an extra six grand a year interest before 

you've gotten any new cash.

And there are a lot of trends pushing 

the wrong way. We need help. You know, what you 

could do with the community banks and the FDICinsured, encourage the HELOCs, encourage second 

mortgages. And put heavy screens on showing that 

cash-out refis are not abusive. But with 

accounts seen with homeownership, it's a lot 

easier to preserve people than to fix them after 

the fact.

MS. ORTIZ: Thanks, Mike. Naomi?

MEMBER CALHOUN: You can at least be 

cheerier than I am.

MEMBER CAMPER: I'm going to try. I 

usually am.
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(Laughter.)

MEMBER CAMPER: So thank you. So 

what I wanted to do is, first of all, set a little 

context. So ABA represents the banking industry 

and, of course, the acting chair talked earlier 

about, you know, we are seeing economic 

conditions change and they're projected to change 

further.

And, you know, the core mission of our 

members is to provide economic opportunity to 

people through good times and bad. I think what 

we're all facing is how to find the balance 

between making sure that our customers and 

communities have access to the credit and 

services that they need to make it through this 

time well.

We're here at the FDIC maintaining 

safety and soundness of those institutions, 

because we need both things to be true. So 

that's just the context for the work that we're 

doing. And since I only have between five and 
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ten minutes, I won't tell you all of the things 

that banks are doing.

I wanted to focus on two things in 

particular. One is to update you on how ABA is 

working on Bank On to promote it still further. 

I think we've all heard enough. We know it's 

working. We're up to, I won't steal Mr. Mintz's 

thunder, but I think we're closing in on 300 

certified accounts, and just a few things that 

we're doing as an association to push that 

further.

So first of all, at every opportunity 

we try to use the scale of having members from 

the very smallest to the very largest congregate 

together to reinforce our message. So at our 

largest annual convention just a couple of weeks 

ago, we not only had main-stage appearances about 

this, we also, I have a prop, we gave out all of 

our registration materials to our members in --

oh, and I look really cheesy in the photograph.

We're really trying to, I mean, 
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frankly create a sense of FOMO for those who do 

not have a Bank On certified account, that they 

really need to, you know, get with the program. 

But what I always hear from David Rothstein is, 

after we've done some sort of big push, he texts 

me and says, did you guys just do something with 

your membership? Because we've gotten a huge 

influx of inquiries about Bank On.

So what we're doing now is making sure 

that our members who offer Bank On certified 

accounts take the next step. And we're 

encouraging them to report their data into the 

St. Louis Bond Hub.

We're really pushing, and this is 

where we can use everybody's help, co-branding 

their accounts not with just their own bank name 

but also with the Bank On seal. So the more 

there is an echo chamber talking about Bank On 

accounts to both community groups and regulators, 

but also directly to consumers, we want that to 

be a recognizable force.
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We are really encouraging banks to get 

involved in their coalitions, state and local. 

In our state associations, ABA has relationships 

with each state association. They're a really 

important amplifier in this regard. And several 

of them are actually trying to start state-wide 

coalitions to bring together the groups that 

really reach these consumers.

We've created training programs for 

front line bank staff, not just about what are 

the product features, but this is, you know, one 

of the things that you all ask is how is the FDIC 

report informing your work.

The qualitative questions around why 

are people unbanked, we feel that it's very 

important for front line staff, who are helping 

to guide customers into accounts, deeply 

understand why people may be hesitant, or first 

time, or returning customers to find the 

appropriate account. So we're really excited 

about the training.
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And then for those banks, you know, 

there's a lot of opportunity for those who still 

don't have Bank On certified accounts. We are 

confident that we're going to continue to get 

people opting in. I think there's a sense of 

excitement and wanting to be part of something. 

So I'll stop with our Bank On advertisement.

The second thing I wanted to talk 

about, and I had mentioned this, I'm getting to 

my notes, last meeting I mentioned that we were 

going to be relaunching our “BanksNeverAskThat”

campaign. And we had done this last year, and 

we've relaunched it.

I think everybody is aware that there 

is a huge assault on the American consumer trying 

to trick them into doing lots of things. And 

sometimes you, you know, get just, you get 

phishing calls, you get phishing emails, people 

are impersonating other people. It's really a 

scourge.

And one of the most, we think, 
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destructive campaigns has been people 

impersonating an individual's bank and 

encouraging them to click through and then there 

is account takeovers. And so one of the things 

that we've done is create a really, what we hope 

is engaging campaign called hashtag, 

BanksNeverAskThat.

And so it's got these sort of young, 

to my eye, hip influencers who -- I'm not sure 

I'm the target audience for who's responding to 

this, but we're on, you know, all the social 

platforms. And it brings in humor and other ways 

to engage consumers. You know, banks never --

it'll show funny things like, hey, oh, I got to 

take this call, it's from my bank. Oh, you want 

my pin, or you want my account number? Banks 

never ask that. And so we're seeing really good 

engagement.

So more than 2,000 banks have 

participated since we launched the campaign three 

years ago. And even since just the last couple 
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of weeks since we started, another 1,500 banks 

are part of the current campaign. We've had, 

since October 1st, more than 200,000 individual 

visits to BanksNeverAskThat.com.

More than 73,000 people have played 

our “Scam City” videogames which give you tips on 

avoiding scams as you play, so if you've got a 

gamer in your household, like this seems better 

than some of the others that they could be 

playing.

We also have a cyber-fraud expert inhouse at ABA, and he's appeared on dozens and 

dozens of TV and radio programs promoting the 

campaign. And so, you know, again, the more we 

can get amplification, whether it's our campaign 

or anybody else's, we just want people to 

understand where they may be vulnerable to this 

kind of imposter.

And then the final thing I'll say is 

we also really understand and recognize, through 

incredible members like Kenneth Kelly and other 
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banks of ABA’s that are either MDIs or CDFIs, the 

important role that they play in having trusted 

relationships with more vulnerable or 

traditionally underserved communities.

And so ABA is really working hard to 

build out resources for MDIs and CDFIs, including 

our new advisory committee. And I had a 

wonderful discussion at lunch with FDIC's MDI 

expert. And so we would welcome collaboration 

and partnerships with any of those around the 

table to help us build those resources for our 

members.

And I think that made it under my time 

limit.

MS. ORTIZ: I don't know what I've 

done to all of you.

(Simultaneous Speaking.)

MS. ORTIZ: You must be so fearful of 

me. I feel both apologetic and powerful at the 

same time.

(Laughter.)
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MS. ORTIZ: Tom, you are next please. 

Take your time.

MEMBER FOLEY: Okay.

MS. ORTIZ: And share with us what you 

would like us to know.

MEMBER FOLEY: Excellent, I hope 

nobody has plans.

(Laughter.)

MEMBER FOLEY: Hey, everybody, Tom 

Foley, National Disability Institute. Again, 

from a context perspective, for the last 18 

years, we're the first and only national 

disability organization that works exclusively on 

issues of financial inclusion and wealth-building 

for folks with disabilities.

There are three kind of related things 

that I wanted to hit on, and a few we were 

actually talking about at lunch. So it's 

probably no surprise that, you know, at the 

beginning of the pandemic a lot of folks with 

disabilities were laid off, like everybody else. 
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And some of that was, you know, the areas where 

they worked, and some of it is, you know, 

sometimes last hired, first fired.

But once things sort of settled in, we 

started seeing this kind of interesting trend, 

particularly for folks with disabilities who are 

part of the knowledge workforce. And basically, 

you know, for 30 years people with disabilities 

have been saying hey, can I work remotely? Can 

I work from home? And the answer has always been 

no, you know, we don't do that.

Well, we all got really good at 

working from home pretty quickly. And so, you 

know, I just saw this statistic last week. Even 

given long COVID, right, which has increased the 

disability numbers, we've seen up to a million 

new net people with disabilities entering the 

workforce. It depends on the stat you look at, 

but we're very close to the highest level of 

disability employment ever, you know, which is 

saying something through this kind of pandemic.
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And so when we were having the earlier 

conversations, you know, really excited that the 

unbanked rate for folks with disabilities moved 

down, and I do wonder if the employment outcomes, 

it sure feels like that would be something that 

is tied to that banked outcome.

And so, you know, one of the things 

that we've been talking about a lot is, as we're 

looking at the return to the workforce, not the 

workforce but the return to work, to make sure 

that we're doing that in sort of a thoughtful, 

flexible way so that people with disabilities, 

you know, can still contribute, and be 

productive, and add to a company's bottom line.

I have a board member who talks about 

living in New York. They're a wheel chair user 

and, you know, what it was like trying to get to 

the office when the elevator, you know, at Metro 

was down, or there was a foot of snow on the 

ground. And as a blind guy, I should think about 

these things, but I didn't.
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But it so makes sense, you know, let's 

just make sure, particularly when it comes to 

disability, that those sorts of barriers that we 

have some control over, you know, we continue to 

be able to remove for folks.

Because from an economic inclusion 

point, I mean, obviously, and someone said it 

earlier, you know, probably the first and most 

key factor is employment. And so that's just a 

critical piece of what we've been looking at.

Another part that we've been looking 

at is sort of a policy piece. And we'd love 

everyone's help on this. And just real quickly 

for anybody with a disability who's on a federal 

benefit program like SSI or Medicaid, there's a 

$2,000 asset limit.

So when we talk about, you know, 

savings and wealth building, the way it works is 

the second you have $2,001 you lose your Medicaid 

and you lose your SSI. So that's a pretty good 

incentive to not save.
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So about eight years ago after, you 

know, many years of effort, we were able to pass 

a thing called ABLE Accounts. And for those of 

you that don't know, it's basically a flavor of 

529 savings accounts for folks with disabilities.

And you can save money in it, and the 

money that you put into it accumulates tax free, 

and you can use it for, you know, virtually 

anything. But it is not a countable asset for 

this asset limit test. It's a really, really 

important savings tool, the first savings tool 

for a lot of people with disabilities.

And it hasn't been as successful as we 

would like. There's about a 15,000 accounts. 

But, you know, there's over a billion dollars in 

savings. And one of the things, you know, I've 

been doing this work for a while, one of the 

things we've been hearing for years is well, you 

know, people with disabilities can't work, and 

they can't save. And they certainly can't do 

that if there's a $2,000 asset limit.
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So ABLE accounts have been a really 

effective tool for many people and many families 

of folks with disabilities to be able to, you 

know, save some money. And maybe during an 

economic downturn that kicks in or the air 

conditioner breaks in the summer and it kicks in.

And some people, you know, that's 40 

to 50 percent of the accounts are transactional. 

And there's usually an FDIC-insured bank account 

that's part of this. The others are more longer

term investments. So, you know, people use them 

for all sorts of things.

The one piece around ABLE accounts of 

note is that, in order to qualify for one of 

these, you have to have a disability onset before 

age 26. And so if you're in traffic accident at

27, you're kind of out of luck. Or if you're a 

veteran who gets an injury at, you know, 27 or 

28, you're out of luck.

So this has been another piece that 

we've been working on for quite some time. And 
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the reason they put that in place was to sort of 

manage the CBO score back in 2014. So we are 

hopeful that in the lame duck session the ABLE 

Age Adjustment Act will raise that from 26 to 46, 

so disability onset before age 26. And we think 

it's going to get built into one of the retirement 

bills that is happening once that all gets sorted 

out between the House and the Senate.

But it will reach as many as six 

million new people, including a million veterans 

with disabilities. And so it's a really 

important piece of legislation. And so to the 

extent folks weigh in on such things, any support 

would be greatly appreciated.

And then, you know, the third piece, 

I guess I just want to say thank you to the FDIC 

and thank you to the whole team for a number of 

things. You know, the disability data that is 

reported on is really important to us. And I 

guess there's two pieces to that.

One is, you know, thank you for asking 
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the questions that you do about disability, 

because there are a number of data sets, and a 

number of surveys, and a number of regulatory 

requirements that ask lots of questions. But 

they never ask about disability.

And a number of you have heard me go 

on about this. But, you know, when we're trying 

to make the argument for including the people 

with disabilities and whatever, the first piece 

folks always ask for is the data. So thank you 

to the FDIC for that data.

And it's been really important to our 

work. Back in 2017 we issued our first brief on 

the intersection of race, ethnicity, and 

disability. And we did it at the Congressional 

Black Caucus Conference. And Naomi was there, a 

couple of other people were there.

And what we highlighted and, you know, 

not to go too deep on the statistics, is just not 

only the disparity between people with and 

without disabilities, but it's the first time we 
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really broke it down and looked at that 

intersection. And we did it again two years 

later in 2019.

And, you know, the numbers that, I'll 

just share one, but roughly speaking, sort of 

average household net worth is about $84,000 in 

2019 according to the data. For folks with 

disabilities, it's about $14,400, so huge 

disparity there, right?

But if it's a household that is Black 

and has a disability, it was $1,282. So that's 

about a 70 to one change. But being able to 

highlight that has been critical to our work, 

because ever since 2017, we've really focused not 

just on disability but on this intersection 

between disability and BIPOC communities.

And so, you know, we're running 

demonstration programs, we're running pilot 

projects in 15 or 17 communities across the 

country looking at this intersection to work with 

communities to find out the best ways to have 
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impact, not only from a financial inclusion 

perspective but from housing and from the wealth 

building perspective as well.

So we're really excited to see the 

disability number drop about eight and a half 

percent down to what it was reported on today and 

are planning to go much deeper into the data to 

look at this intersection between, you know, 

disability and race, disability, race, and 

gender, so that it can continue to inform our 

work so can work in communities to change this.

And without you guys, and without your 

support, and without that data, we wouldn't be 

able to do it. So thank you for everything you 

do.

MS. ORTIZ: Thanks, Tom. Kenneth?

MEMBER KELLY: Let me say good 

afternoon, everyone. And Chairman, thank you so 

much for the invitation to serve on this 

Committee. I feel like I know all of the smart 

people in the room. They're all over to my right 
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at this point. You guys have done a phenomenal 

job in talking about these issues.

(Laughter.)

MEMBER KELLY: They haven't spoken 

yet. I'll talk about them after they speak. But 

I will tell you --

MS. ORTIZ: Shame on the left slide.

(Laughter.)

MEMBER KELLY: That's right, strong 

side, left side. But I will tell you, you know, 

when you think about the goals of this Committee, 

talking about asset accumulation, I think were a 

couple of the last words in the goals of this 

Committee.

Michael, I will say, as an African 

American man, I rarely hear someone speak to 

topics like you did just a moment ago. And I 

want to commend you for that. It's hard to talk 

about lot of these topics in a way that now we 

can deal with the reality of how do we make change 

and how do we go about changing our current 
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status.

And so it was very authentic what you 

said. I hear it loud and clear. And I hope those 

in the listening audience heard you loud and 

clear that, when you think about things like the 

Black Bottom community in Detroit that was 

rummaged through to build an interstate, or Rondo 

community in the Twin Cities, those things 

matter.

And to your point, I would say, Tom, 

as you talked about the disparities in 

employment, even along the lines of disabilities, 

it's just very eye-opening and awakening. And I 

think we need to learn to have the cultural 

competence to have these conversations without 

them feeling threatening.

And so with that in mind, I'll share 

a little bit about, you know, what's going on 

with us at First Independence Bank and some of 

the roles I've shared and worked on in trying to 

create asset accumulation in a way that doesn't 
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have to be so clearly distinct across the lines 

of race, and gender, and age.

And so when I think about that, I 

think about our efforts, and what we were doing, 

and what Naomi talked about. We did Bank On. We 

were heavily engaged with the conversation with 

Secretary Mnuchin back in the spring of 2020 

about payments and the timing that they were 

dealing with those. I think that's a program 

that we need to continue to support across the 

industry.

We were speaking with the Chairman 

just a moment ago, and I think hopefully we'll 

see some of that come to fruition sometime here 

in the near future.

I will say to you, Margaret, last 

night was eye-opening for me in hearing what your 

team is thinking about. And I will tell you I'm 

going to one of your strongest advocates, because 

I believe if a child can work at 16, they should 

have the ability to control their money at 16.
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I mean, we trust them in a car at 

whatever, $10,000, $20,000, $30,000, $40,000, 

$50,000. But we don't trust them with a bank 

account. It doesn't make sense to me. And so 

need to highlight those opportunities and look at 

ways we can we make a difference in these young 

people's lives.

When I think about our industry and 

inclusion, the data is there along our industry 

lines. We do not have enough diversity and 

inclusion across the industry. And I'm proud to 

say at the ABA, where Naomi is one of the leaders, 

we have created a Black employee resource group, 

again, making it more comfortable to have these 

conversations in way that can make a difference.

And that, I'll tell you, one of those 

first calls on one of the executive sponsors, we 

had over 100 people a Zoom call. That's kind of 

typical, but it's atypical. It just shows the 

demand and the need is there.

And I think we're in a great point in 
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our country where those leaders who are willing 

to talk about these topics, inclusion, economic 

inclusion, I think will be leaders in a way that 

will hopefully change the direction and move it 

in the right direction going forward.

At our bank level, we've celebrated a 

couple of great events this year. Actually, 

First Independence was started as one of the 

positive outcomes of the 1967 riots in Detroit. 

And many of you may know about that, but there 

was a movie made about that police brutality 

incident in 2017.

This year we actually opened a branch 

there in Minneapolis, Minnesota where George Ford 

was murdered. Two plus weeks ago we opened an 

office there on Lake Street where you probably 

saw the Target burn and others.

As I've shared, we collected a lot of 

pledges with the help of several banks. And I 

want to name them, because their effort were 

extraordinary. That was Bank of America, Bremer 
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Bank, Huntington/TCF at that point in time, U.S. 

Bank, and Wells Fargo were partners with us in 

looking at making that happen.

And so as I've shared, we've collected 

a lot of pledges. Now we've got to do the work 

and go pick up the cash, so to speak, in terms of 

operating the bank. But I share that to say I 

think all of us can find ways to collaborate with 

each other and other institutions in a way that 

hopefully can make a difference.

So as I get ready to close, I want to 

just make note again to Chairman and all of the 

Committee members here of the FDIC. I thought 

the report that was done today was exceptional. 

Yes, there is more work to be done, but I think 

the education, as you all have talked about, 

highlights the need for us looking at changing 

policies in a positive way.

And so I just want to thank you, Mr. 

Chairman, for having me on this Committee, and 

just want to say that I'm looking forward to 
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working with all of you. And at this point in 

time, I will yield so I can hear from those to 

the left of me.

(Laughter.)

MEMBER LIBBY: Okay, so here begins 

the left.

(Laughter.)

MEMBER LIBBY: So I'm Margaret Libby. 

And I am CEO and founder of MyPath, and so what 

we do as an organization is really focus on 

financial inclusion and access to wealth building 

tools of BIPOC young adults.

And I first want to say I appreciate, 

Kenneth, your comments about our young leaders 

that have been able to be here in D.C. for a few 

days having a series of meetings, excuse me, 

promoting their youth economic bill of rights 

which really outlines, you know, some of the 

banking topics that we've been talking about, but 

a handful of other supports or economic rights 

that they really feel like they and their peers 
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need to get into a position really to create an 

on-ramp into the financial system, into the 

economic system, so that they do have that 

footing under them as they're moving into 

adulthood.

And so I want to highlight a couple of 

those, you know, in the context of this 

conversation. But I did want also say I really, 

I'm grateful to you, Mr. Chairman, and also to 

you, Liz, for inviting them to join the 

reception.

I think that was very meaningful for 

them to be able to meet some of the members of 

this group and be able to talk about the work 

that they're doing so that, you know, folks like 

Kenneth had a chance to meet them and really 

understand what it is the having an account as a 

15, 16, and 17 year-old has meant to them. You 

know, they're all in their early 20s at this 

point, and also for you for making time to meet 

with really appreciate that.
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I think that one of their top rights 

is really about access to banking. We had a 

conversation, I think we had a great conversation

about that area earlier. And I think this idea 

of starting when you're old enough to earn money 

in a bank account that you own that's, you know, 

a savings account and a transactional account is 

one of the core economic rights that they have 

identified.

And, you know, in a lot of ways we've 

seen this in the pandemic and people opening 

accounts to get the stimulus dollars. It's 

really the rails of the economy. And we want 

them to, you know, get in there. They want that 

for themselves and their peers as well.

And I feel like, based on some of the 

conversation earlier, I think one of the things 

that I would love to kind of figure out how we 

might do is to have a next step where we can bring 

some banks together, credit unions together, and 

even regulators, to really look at this question 
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around, you know, FDIC and other regulators, I 

should say, to look at this question of how might 

we get something started where we could do a 

pilot, offer these kinds of non-custodial 

accounts through a handful of financial 

institutions that are willing to step up.

And we've had some credit unions that 

have adopted our banking standards, but just 

excited about the interest in this area and 

looking to see, you know, what kind of steps we 

can take together to really look at this and get 

something started.

I want to say too though that I think, 

Mike, your comments have underscored -- I think 

this idea that, you know, getting into the bank 

account is really important. But it's really 

like a first step. And I think that if we really 

want to address the racial wealth gap, I think 

figuring out how to move young people along this 

pathway to get into credit building, to get

access to capital, I think is really what we want 
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for them.

So I think, Marla, you highlighted 

earlier the results from the survey around credit 

access and the disparities there. And I think 

that's just another area that our young people 

are concerned about in places where they really 

want to see, you know, greater access.

I think there have been a couple of 

reports. Jennifer, I know you and also the Urban

Institute have put out reports more recently 

about the disparities in credit for Black and 

Brown young adults. And so I think that's, you 

know, something that we are concerned about and 

looking at.

I think, in addition to money that's, 

you know, coming to them through borrowing, you 

know, we're looking at strategies to increase 

their income. And so whether that's through 

guaranteed income or certainly employment, I 

think we're doing a couple of pilots where we're 

providing Black-identified young adults with $500 
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a month along with some financial inclusion, 

financial capability supports, to start them on 

this pathway.

And I think one of the economic rights 

that the youth have been talking about here this 

week is making sure that people under 25 have 

access so the earned income tax credit. Since 

that's something that they can't access until 

they're 25 while they're earning money and, you 

know, paying those taxes.

So we're looking at strategies to 

ensure that they have access to borrowing, to 

capital that way, but also to other forms of 

income that can, you know, add to what they're 

earning in employment.

So I guess the final thing that I will 

say, because I suspect that I'm close to time, is 

one of the things that we're seeing is --

MS. ORTIZ: I'm just looking at you 

Margaret.

(Simultaneous Speaking.)
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MS. ORTIZ: I'm paying attention.

MEMBER LIBBY: Okay. Crypto is sort 

of an issue that we are seeing, a lot of young 

people getting, you know, targeted. And this 

FOMO idea, Naomi, that you are trying to use in 

a good way, right, is really alive and well inside 

this whole area of crypto.

And so I think it's something that, I 

think, connects to this idea of, like, how do we 

get more targeted messaging out to different 

groups around, I mean, crypto being one thing 

but, I think even just like the positive, or the 

benefits of banking.

I think, going back to the 

conversation around the reasons people aren't 

banking, and I think this was sort of discussed 

around what kind of qualitative look may we be 

able to take to really understand what are the 

challenges, what are the barriers for different 

populations so that we can target different 

groups with particular messaging to really engage 
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them, get them into banking but, I think, 

similarly to get messages out about things and 

risks like crypto so that folks really have the 

information they need.

Because, yeah, we're seeing a lot of 

you know, with especially the folks who were in 

crypto, are younger, Black and Brown, lower 

income. And so it's clear that there's that some 

targeting on there. So we want to make sure that 

they have the information and resources that they 

need to really be making the best decisions for 

themselves.

So just thank you for this report to 

the staff that has worked on this. It's just 

enormously helpful to us in our work. And just, 

yeah, really appreciate the conversation here in 

the meeting and wonderful to see everybody again.

MS. ORTIZ: Thanks, Margaret. 

Brandee?

MEMBER MCHALE: Hello. There is so 

many things I want to talk about. Just for those 
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of you that I don't know as well, I'm Brandee 

McHale, I'm the president of the Citi Foundation.

We've been a long time funder and 

supporter of work to bring people into the 

financial mainstream, help them develop financial 

assets, financial security and have been working 

and supporting efforts to address the racial 

wealth gap.

I am actually going to talk about 

something that, the guidance was to talk about 

something that's top of mind for your institution 

and what it might be pointing to. And I wasn't 

sure a hundred percent what I was going to say 

until, Chairman, you actually gave us some, I 

think a dose of reality a few hours ago where you 

said, it's great the gains that we've made, but 

we've been doing it for an economic moment where 

the wind was with us, and now what is going to 

happen when the wind is against us. And that was 

a forward looking comment.

And I actually want to build on that 
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and say that I think the wind is against us in a 

very real way for the communities that we serve.

Ten years ago, I can't believe it's 

ten years, Jennifer, we partnered with Financial 

Health Network on a project called the Financial 

Diaries, that tracked households over a period of 

about a year and a half to understand the inflows 

and outflows of money into their households and 

how they were coping and adapting.

There were lots of takeaways. 

Perhaps the biggest one that has informed our 

work was around the impact of income volatility.

I think what we are about to face 

right now is building, that income volatility 

actually hasn't gone away, but it is now being 

exacerbated by incredible expense volatility. 

The pressure on both sides of the household 

balance sheet I think we have not seen forces 

like this in quite some time.

And in particular, the high cost of 

housing, the high cost of energy and the high 
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cost of food all happening at the same time I 

think are going to create real stress for our 

households and communities in a way that we 

haven't seen. And so, one of the things that on 

the, kind of frontier for us, is to really look 

at this intersection in particular.

And it’s hard for me to even say that 

this is an issue in our country. But how the 

food insecurity is impacting financial health.

And I just want to cite a couple of 

things. You know, we're a global foundation, so 

we're thinking about this work globally.

You know, the World Food Program has 

done research. The number of people facing acute 

food insecurity has tripled over the past year 

and a half. Almost a billion people go to bed 

hungry each night. That's global. But it's the 

same, almost the same statistics here, right here 

at home.

And I don't know that we have really 

have fully felt what the effects of this growing 
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trend. You know, food prices are surging. And 

the supply chain chaos is only exacerbating the 

situation.

The other thing I want to point out is 

that really core to the work we've done in the 

foundation is to also make sure that we are 

investing, not only in innovation and ideas, but 

also in the change agents themselves that are 

really on the front lines. And many of the 

organizations here, we certainly work with CFE, 

we have referred to you as the economic first 

responders during COVID.

The front-line first responders in

food insecurity are actually themselves going 

through a period of real chaos. I mean, food 

banks around this country are incredibly 

understaffed. And funding is actually not 

keeping pace with the challenge.

And so, one of the things that we are, 

you know, and ultimately it's creating households 

having to make really tough economic choices. So 
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while we should keep, and I really appreciate 

Mike and Kenneth, you've re-in-doubled downing on 

this, let's not forget our North Star here, which 

is to make sure that households have real 

financial security and the ability to develop 

wealth that allows them to have both economic and 

social development gains.

I think we are in the midst of a real 

crisis point. And one of the things I would 

encourage us to look at is, how this inflationary

crisis is going to, could potentially undo some 

of the gains. And think about creating new 

connection points.

And certainly, I think at the public 

policy level, break down some of the silos we 

have between the economic inclusion arena and 

then some areas where we haven't been working. 

And I would put on the table that I do think that 

pulling together with other agencies and 

policymakers focusing on food security, both at 

the national, but also at the local government 
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level. Where local government really has the 

ability to touch individual people.

But I don't want to leave us on a 

negative note. And I'll just say very quickly, 

that in the same way that COVID relief turned out 

to be a tool that actually helped us achieved our 

goals of bringing people into the financial 

mainstream, I actually think this is a touch 

point that could potentially be a distribution 

mechanism for us to reach families that we 

haven't been able to reach.

And as we're thinking about benefits 

on the food side, it could be, again, a way to 

link them up and to look at, again, your food 

security with your financial security. I'll stop 

there.

MS. ORTIZ: Jonathan?

MEMBER MINTZ: Liz. You know what's 

top of mind for me, at the moment, is the critical 

importance of, not just the numbers that we saw 

in this report, but in the numeric validation, 
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the data rich validation of this equation that so 

many of us have been working on and positing as 

the right North Star in banking access for so 

long, which is to combine the supply of the right 

kind of products with the opportunities to 

connect people to those products through large 

scale approaches, to bankable moments.

And I bring that up, not as a victory 

lap that I think everyone deserves, but I bring 

it up because it didn't happen by accident. 

Market forces didn't suddenly create this new 

formula that the Chairman mentioned earlier, has 

been really so amazing.

You know, we start with the concept of 

supply, you know, deeply informed by the FDIC's 

work in the early days on the model safe account 

and whether banks would be open to playing ball 

in an apples-to-apples kind of context. The 

regulatory aspect of the changes to the laws and 

regulations around overdraft.

And of course the data about what 
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drove people to stay out of the system in banking, 

all led to this concept of a single ask. This 

Bank On certification program.

And the supply has exploded. And that 

happened because among other heroes, first and 

for most, the ABA just absolutely made it as clear 

as possible to their members that this was the 

collective strategy.

And as of yesterday at 4 o'clock, 

according to David, we hit our 300th account. 

Those 300 financial institutions offering these 

accounts represent, and this is what we call our 

Keith number, they represent 60 percent of the 

U.S. deposit market share. Those institutions.

And you can walk into 53 percent of 

the branches in this entire country and you will 

find that they have a Bank On certified account 

available.

So the supply part of the equation has 

just delivered in a way that surpasses all of our 

expectations. And so I really have to shout out 
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to the ABA and to the banking industry for 

responding so strongly to that part of the 

equation.

The next part of the equation has 

several heroes as well. You know, we have about 

90 coalitions, local and state coalitions around 

the country, who are laboring to make the kind of 

bankable moment opportunities available to bring 

in their local community banks and credit unions 

into the certified family as well.

Those coalitions are, this is their 

day job. And they've been working really hard 

to do that. And I think that over the last few 

years the quality and dedication of those efforts 

have had resounding successes. And so it's 

really great to see that part of the partnership.

Third part of the, another part of 

this equation, I've lost count, is what the FDIC 

and the IRS did around the stimulus payments. 

Boy, we could talk about this stuff forever. We 

could talk about our aspirations, we could talk 
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about the inequities, we could talk about our 

goals, we could talk about our plans, we could 

talk about our pilots. These folks did it.

You know, they created and used this 

moment to say, while they were pushing money out 

to people who desperately needed it, this is when 

you need an account, you're going to get your 

money faster and safer, you're going to be able 

to use it inexpensively, and they, incredibly, 

trusted the Bank On certification and the 

collective belief that the Bank On certified 

standard represented a safe account.

An account safe enough that even the 

IRS --

(Laughter.)

MEMBER MINTZ: -- that even the IRS 

was comfortable sending the message to America, 

if you open up one of these accounts you're in 

good shape.

And having that equation work and 

having the FDIC's #GetBanked Campaign midwife all 
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of this to, I'm fond of the metaphor, you know, 

midwife all of this energy and opportunity into 

the kind of success that we saw reflected in the 

study, again, none of that happens by accident.

And so what I would say is, yes, it's 

nice to have a moment of a victory lap, but much 

more importantly, this kind of validation supercharges all of our efforts, not just in the room 

but in our coalition partners across the country, 

super-charges our efforts to really lean in to 

other bankable moments that exist at scale.

And whether it's summer youth 

employment programs, like we talked about with 

Brandee and Margaret, whether it's unemployment 

insurance payments, like we've already started to 

see in the State of Maryland. Other workforce 

programs, other opportunities, foster care, et 

cetera, et cetera, other opportunities where 

money is being pushed out in a regular way through 

systems, now we know and can prove. And the FDIC 

put its stamp of approval on the idea that this 
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is how you get it done.

The last piece I want to say real 

quickly is, that there is another part of the CFE 

fund. We love Bank On, but there are some other 

programs that we do.

And one of the other programs is 

another delivery method part of this equation for 

us, which is the Financial Empowerment Centers. 

So the Financial Empowerment Center movement is 

this idea that began in the Bloomberg 

Administration that one-on-one professional 

financial counseling should be a free public 

service.

Thanks to Bloomberg, there is a lot of 

other funders, that movement has now spread to 30 

operating Financial Empowerment Centers, cities 

and counties, with another 14 in the works 

heading toward their launch.

These Financial Empowerment Centers 

are real trusted intermediaries for people who 

are dealing with financial distress points. And 
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while most of our clients, whoever called you 

before is now calling me by the way, whoever of 

our clients come in, they don't tend to come into 

these Financial Empowerment Centers to open a 

bank account.

But what we have learned, and I saw 

this all the time, being “banked” just isn't an 

adjective, it's a fundamental component of making 

progress on the issues that drive people into 

these Financial Empowerment Centers. Working on 

increasing savings on establishing a credit 

score, reducing debt.

Our counselors know that connecting 

people to these safe accounts is also proven as 

a fundamental baseline for their ability to get 

ahead. People who become banked in the course 

of a professional financial counseling experience 

are eight times more successful at the other 

efforts that they have with those counselors 

particularly to build savings.

So it's a critical part of the 
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equation. It's also, and this is a little, maybe 

preview for our next session, it's also a really 

important opportunity where we've been able to 

help push out messages about the difference 

between a real bank account and a nonbank sort of 

fake account, and why those differences matter.

The trusted intermediaries, like our 

Financial Empowerment Center counselor partners, 

and so many other programs, including those 

represented around the room, can help spread that 

word and make those connections. Even though 

it's one-on-one, through systems that allow us to 

do it at scale. So thank you.

MS. ORTIZ: Okay, Jennifer, take us 

home.

(Laughter.)

MEMBER TESCHER: I kind of was going 

to suggest that Jonathan and I switch places 

because I feel like he should get the last word 

given the, you know, validation and vindication 

of the survey and of the work of the, of CFE and 
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Jonathan and his team. So really it's, it really 

incredible to be here in this moment.

I'm going to share a couple of 

thoughts. One is, I mentioned earlier that for 

the last five years we have been serving 

Americans to understand the state of financial 

health in this country. And our results, we 

published them just a couple months ago.

And to the conversation about what 

lies ahead, while I don't think we can say with 

certainty that financial health is a leading 

indicator. As we're now having five years’ worth 

of data, we are starting to think that it could 

be.

And I say that in part because this is 

the first time in five years where we've seen 

financial health decline. And essentially 

erased most of the gains that we saw during the 

course of the pandemic.

Key drivers of the deterioration were 

a six percentage point increase in the share of 
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individuals whose household spending exceeded 

their income. And a three percentage point 

increase in the share of individuals whose 

households have less than three months of 

savings.

Now, financial health in 2022 is still 

better than it was in 2018. But as I mentioned, 

we've seen the gains of the last couple of years 

be erased. And if I had to guess at what it will 

look like next year, it's hard to imagine a 

rebound given where things are at the moment.

I also want to point out that we ask 

a number of demographic questions and we really, 

when we think about equity, we look at four 

categories. There are many, but we look at four. 

Race, gender, ability and sexual orientation and 

identity.

And the financial health gaps, the 

inequities between those groups and their 

counterparts, theirs is always lower. But the 

one that I really want to point out is that the 
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gap between Black people and White people is 20 

points. So only 15 percent of Americans, 15 

percent of Black individuals in America are 

financially healthy as compared with 35 percent 

of their White counterparts.

And while the decline in financial 

health was across the board, it was of course 

greater among Black individuals. And it's just 

unconscionable.

I mentioned earlier that we now have 

five years of longitudinal data from the same 

people taking the survey. About 3,000 of them. 

And we're just digging into it now.

Our data is also available, not on a 

fancy website, but we are willing to make 

available our data to researchers who may want to 

take their own slice at it. So I'm happy to 

direct you to other, my other colleagues if 

that's of interest to you.

So, we also put out a couple of other 

pieces of research this year. And they tie, in
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a way, into the comments that Brandee made.

Brandee talked about needing to 

breakdown silos across issues. And in fact, at 

the reception last night when Mike was giving me 

a little bit of a preview of what he was going to 

share just now, there was some consternation 

about, well, aside from being just incredibly 

disappointing, where and how much can banks do 

something about that.

And I think the point is, everyone 

needs to do something about that, not just banks. 

And I think that's true with inclusion. I think 

that's particularly true with financial health.

So as an example, we did a particular 

deep dive into women's financial health. Even 

after controlling for age, race, marital status 

and income, there is still a five percentage 

point gap between men and women's, the share that 

are financially healthy.

Women lag men on all indicators. But 

when we looked at the causes there were two in 
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particular that stood out. Again, these won't 

be shocking, right?

The impact that dependent care 

responsibilities have on women, more than half of 

women with children under the age of 12 who aren't 

working, or are working part-time, said that 

their choices were driven by the lack of 

affordable child care. And the second reason 

was, the lack of retirement savings.

Over one third of women ages 55 to 64 

reported having no personal retirement savings. 

That's a scary number.

So when we think about who else needs 

to be at the table in moving the needle on 

financial health and well-being, well, we need to 

be thinking about care providers and the care 

economy, as an example.

Similarly we did a study on low wage 

workers. We defined that as folks earning less 

than $17 an hour. Seventy percent of these 

workers are the primary wage earners in their 
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family.

And of course we know that they are 

financially struggling more than folks who make 

more money. And of course, it's more true for 

people of color than for Whites. More true for 

women than for men.

But what's interesting is the most 

frequently cited causes of financial stress, one 

might think the answers would be childcare or 

healthcare. They weren't. Insufficient 

emergency savings and insufficient retirement 

savings were the most frequently cited causes of 

financial stress for workers making less than $17 

an hour.

Here's another scary statistic. 

Among low age workers age 50 or older, almost a 

third had no retirement savings. And roughly 

another third had less than $10,000 in retirement 

savings.

And for those of us at the table whose 

parents are still with us, we've all watched 
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what's happened with the stock market and the 

impact that that has on older Americans and their 

retirement savings. If to the degree those who 

have any it still exists.

So I'm sorry to end on a down note, 

except to say that while I really enjoy these 

conversations and the diversity of voices at this 

table, it's still not diverse enough. If we're 

really going to make a difference here, I

believe, truly, that banks have an incredibly 

important role, many, many roles to play 

actually, across their enterprises. But they 

can't do it alone. They're not the only answer.

And I am convinced that they are 

willing and ready to be partners with others 

across industries. And I think there is a real 

interesting opportunity for the FDIC and for 

other parts of the government to help be

conveners.

Because at the end of the day, like, 

you know, your student is, his employee is her 
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tenant, is his patient. It's all the same 

person.

Like, we just kind of, this is how we 

operate silos because this is how we make sense 

of a complicated world. But that's not how 

people live their lives. You know, it's not like 

today is a doctor day and tomorrow is a work day. 

So I look forward to finding ways to continue to 

expand the table.

MS. ORTIZ: Thanks, Jennifer. And 

thank you, everyone. Despite what you may 

believe, I am always very excited when the panel 

takes the full amount of time. And as it did 

today, even runs over a little bit because it 

relieves me of having to trying and say something 

insightful --

(Laughter.)

MS. ORTIZ: -- or provocative or as 

inspiring as the things that I've just heard from 

all of you. So I think the only thing for me to 

say is, thank you very much everyone.
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We have time for a very short break. 

So please run outside, get a little coffee and 

come right on back because we're actually ready 

to go with the next panel. So go out and come 

back quickly. See you soon.

(Whereupon, the above-entitled matter 

went off the record at 2:49 p.m. and resumed at 

2:58 p.m.)

MS. ORTIZ: All right. This is the 

last panel of the day, so it is my pleasure to 

introduce my colleague, Luke Brown.

MR. BROWN: Good afternoon, 

everybody. It's great to be here. The last time 

I had this conversation with you I did it through 

a screen.

(Laughter.)

MR. BROWN: Well actually I'm doing 

it through a mask unfortunately.

But I've sat in the back of the room 

for this conversation since this morning. And I 

witnessed the amazing work of my FDIC colleagues, 
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and then the roundtable. And it's clear to me 

that one of the major themes of the conversation 

today is trust.

Trust in banks. And to the extent 

that trust impacts the unbanked and underbanked 

in their financial decisions.

As you heard earlier, the new FDIC 

household survey shows progress in reducing the 

unbanked and underbanked populations. But trust 

in banks continues to be a barrier to full 

participation in the banking system. 

Particularly for communities of color.

The primary mission of the FDIC 

includes promoting and maintaining public 

confidence in the banking system, and the FDIC's 

deposit insurance fund. The FDIC will be 

entering its 90th year in 2023. However, 

increasingly, consumers are presented with an 

array of banking product options, not just in 

their communities, but also online.

These options can provide a number of 
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benefits. But as consumers have substantially 

increased reliance on internet and mobile 

channels to access banking and financial 

services, consumers today may not fully 

understand if they are doing business with a 

bank, or when their funds are protected with 

FDIC's deposit insurance.

In addition, the FDIC continues to see 

misrepresentations by nonbanks regarding FDIC 

deposit insurance coverage and numerous forms. 

These types of misrepresentations can cause 

confusion and create uncertainty which erodes 

consumer's confidence in banks and in protections 

afforded by the FDIC.

Consumers, including unbanked and 

underbanked, can benefit from safe, secure and 

affordable financial services from insured 

institutions. It is vital for them to have an 

ability to make informed choices.

All consumers should clearly 

understand when they are dealing with a bank and 
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where there funds are protected by the FDIC's 

deposit insurance coverage.

So I'd like to now turn and introduce 

this panel of talented FDIC Staff. Meron 

Wondwosen is to my right. She is acting section 

chief in the Division of Depositor and Consumer 

Protection.

To her right is Edward Hof, who is the 

senior policy analyst, who is also in the 

Division of Depositor and Consumer Protection.

And Michael Farrell, who is counsel in 

our Legal Division, bringing up the rear and 

supporting us in this conversation.

Our panel today will describe the 

FDIC's mission and authority, the kinds of 

potential misrepresentations the FDIC has seen. 

How misrepresentations can confuse consumers and 

cause consumer harm. And how the FDIC has 

responded to these risks.

After that we will provide an overview 

of some of the public information that we've made 
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available so that consumers can better understand 

deposit insurance. And then of course, after our 

formal presentation concludes we're happy to have 

a conversation and take your questions.

So with that, we'll get started. 

Meron.

MS. WONDWOSEN: Thanks, Luke. Good 

afternoon, everyone.

Our presentation today focuses on an 

issue which impacts the ability to maintain

public confidence in our banking system and in

FDIC deposit insurance. The FDIC is aware of 

instances where consumers are unclear about 

whether they're dealing with an insured 

institution or an uninsured, or a nonbank 

offering an uninsured financial product.

Today consumers have numerous options 

with respect to their banking decisions. With 

the flexibility to deposit funds and open 

accounts from their laptops, from their mobile 

phones, sorry, from their laptops and their 
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mobile devices and from practically anywhere in 

the world, no longer tethered to a brick-andmortar bank.

In the same vein, consumers face 

increased risk from fraudulent entities who 

misrepresent FDIC deposit insurance coverage as 

well as legitimate entities that may misuse FDIC 

associated terms or FDIC associated images. Some 

entities, or persons, fraudulently induce 

consumers to not only send their hard-earned 

funds never to be recovered, but to also provide 

their personally identifiable information 

causing, at times, irreparable consumer harm.

Other legitimate nonbank entities 

may, at times, inadvertently misrepresent deposit 

insurance leading consumers to believe they're 

dealing with an insured financial institution. 

These developments are particularly concerning if 

they impact the trust consumers have in banks, 

such as unbanked or underbanked consumers, that 

would benefit from access to safe, secure banking 
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services offered by insured banks.

The FDIC has a long history. Almost 

a century of protecting consumers by maintaining 

public confidence in our financial system. More 

specifically, the FDIC fulfills its mission by 

ensuring deposits, examining and supervising 

financial institutions for safety and fairness in 

consumer protection, making large complex 

financial institutions resolvable in managing 

receiverships.

The FDIC has promoted public 

confidence in our nation's banks and their 

consumers through several crises, including the 

COVID-19 pandemic. And prior to that, the 2008 

financial crisis.

The FDIC deposit insurance program is 

key to the mission of supporting public 

confidence in our banking system. Since its 

founding in 1933, the FDIC has protected 

depositors against the loss of their insured 

deposits in the event of the failure of an insured 
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financial institution. As a result, in the long 

history of the FDIC, no depositor has ever lost 

a single penny of insured funds.

The FDIC also works to ensure 

consumers are not confused or harmed by nonbank 

entities, or even fraudulent entities, misusing 

the FDIC's name, seal or logo. Other entities 

erroneously or fraudulently using terms such as 

“FDIC-insured” or “Member FDIC,” can cause 

consumer harm in terms of lost funds and 

compromised personally identifiable information.

In the long-term it can also erode 

public trust in the FDIC and in deposit 

insurance. The FDIC sign and advertising 

statement requirements for insured institutions, 

which we are discussing today, date back to the 

Banking Act of 1935.

I'll now turn it over to my colleague, 

Mike.

MR. FARRELL: Thank you, Meron. As 

an introduction to start, to help understand the 
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importance of deposit insurance and the way 

misrepresentations that we're seeing about 

deposit insurance may confuse consumers, it's 

helpful to quickly review some of the basic 

parameters of FDIC deposit insurance.

First, FDIC deposit insurance fully 

ensures deposits held at insured banks and 

savings associations up to $250,000 per account 

category.

But it's important to differentiate 

between insured deposits and uninsured financial 

products. Examples of insured deposits are 

things we're all familiar with. They're things 

like checking accounts, savings accounts and CDs.

But some examples of uninsured 

financial products include things like stocks, 

bonds, mutual funds and crypto-assets. FDIC 

insurance does not cover losses related to these 

kind of products.

The second important note is that FDIC 

deposit insurance only applies to losses that are 
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caused by a failure of an insured bank or savings 

institution. It does not apply to the loss, any 

losses caused by failures of nonbank institutions 

or other causes.

To prevent confusion, the Federal 

Deposit Insurance Act provides that a prohibition 

against any person, including a nonbank, for 

misusing the FDIC's name or logo, engaging in 

false advertising related to deposit insurance or 

making knowing misrepresentations about deposit 

insurance.

Earlier this year the FDIC promulgated 

a final rule implementing this statutory 

prohibitions, which became effective on July 5th 

of this year. The final rule has several parts, 

but in general it describes how the FDIC will 

investigate and identify potential 

misrepresentations, the standards the FDIC will 

use to evaluate potential misrepresentations and 

the procedures the FDIC will use to enforce these 

prohibitions when necessary.
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One specific provision of the rule 

that should be highlighted is a provision that 

requires anyone other than an insured bank who 

advertises deposit insurance, to identify the 

insured bank, or banks, that will actually 

provide that deposit insurance. This is coming 

up more and more frequently.

It comes up in situations where a 

nonbank financial company works with an insured 

bank to offer deposit insurance to its customers. 

And in those circumstances the rules expressly 

requires the nonbank to identify the insured 

bank, or banks, that are providing the deposit 

insurance.

I'm going to turn a bit to some of our 

enforcement authority. When the FDIC becomes 

aware of potential misrepresentations about 

deposit insurance, it has several formal and 

informal options. Normally the first step that 

the FDIC will take will be to send the party, 

send a letter to the party making the apparent 
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misrepresentations.

These letters inform the recipient of 

the FDIC's concerns, and request that the correct 

any misrepresentations. They also provide the 

recipient with an opportunity to provide the FDIC 

with any information that they believe 

demonstrates that the representations at issue 

are in fact accurate.

However, the FDIC also has substantial 

authority to take formal actions against 

misrepresentations. Generally as I said, the 

FDIC has first step attempts to resolve potential 

misrepresentations informally. However, it's 

not required to do so if it believes the consumers 

or insured banks may suffer harm because of 

misrepresentations.

If formal action is necessary, the 

FDIC has several options for pursing remedies. 

The first one is, obviously, we can pursue 

injunctive relief through cease and desist orders 

that can require both cessation of conduct and 
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affirmative conduct to correct 

misrepresentations. And this authority does 

also include orders that would have immediate 

effect.

The second arrow in the quiver is that 

we can assess civil money penalties against 

violators. And lastly, in cases where someone 

is unjustly enriched or where they've acted in 

reckless disregard of the law, we can seek 

restitution to anyone who was harmed.

In short, the FDIC has a number of 

tools at its disposal and is committed to taking 

all appropriate action to address potential 

misrepresentations.

Now I'm going to turn the presentation 

over to Ed to discuss some specifics about 

misrepresentations we're seeing.

MR. HOF: Great. Thank you, Mike. 

So as noted earlier, the FDIC has continued to 

see misrepresentations by nonbanks regarding FDIC 

deposit insurance in numerous forms, which can 
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cause confusion and create uncertainty.

For example, for over a decade the 

FDIC has been aware of scammers and fraudsters 

who setup websites to intentionally look and feel 

like an insured bank's website, but they aren't. 

The scammers claim to be Member FDIC, but they're 

not.

In other cases there are legitimate 

nonbank entities that have relationships with 

insured banks. And they advertise insured 

deposit products on their websites. However, the 

way they advertise the products can make it seem, 

even if unintentionally, as if the nonbank is 

FDIC-insured.

And more recently, there have been 

some entities that have suggested that cryptoassets are FDIC-insured. Or that cryptocompanies are FDIC-insured.

In the case of fraudulent nonbanks, 

we'll go through a couple of examples to 

illustrate what consumers see, but essentially 
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they tend to see websites that claim to be Member 

FDIC, offer competitive interest rates and look 

like bank websites. Some of these fraudulent 

nonbank websites are not too sophisticated. But 

others do a better job at mimicking legitimate 

bank websites. And as a result, consumers may 

mistakenly believe they are protected by FDIC 

insurance.

For example, what you are looking at 

here is a portion of a fraudulent website. In 

this particular case the scammer basically copied 

and pasted a website used by a legitimate FDICinsured bank. So it looked like a real bank 

website, but it was a scam.

On the right side of the slide here is 

a portion of the website where we zoomed in. And 

you can see here a misleading signal of safety. 

The gold “Member FDIC” advertising statement in 

the bottom right-hand corner.

For some consumers, just seeing the 

FDIC logo is enough to trick them. To give them 
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a false sense of security. And here by the logo 

there is some familiar links to financial 

calculators, credit cards, business loans and so 

on.

It may not surprise you to hear that 

some consumers up open accounts, share personal 

information, and in some cases, wire money to 

these scammers who setup these websites.

Now I'll pass it to Meron.

MS. WONDWOSEN: Thanks, Ed. On this 

slide here is another example. Which is really 

intended to emphasize how scammers rely on the 

FDIC member logo to mislead consumers.

In addition to misusing the FDIC 

advertising statement, “Member FDIC” that you see 

here, some fraudulent entities post fake 

credentials in an apparent attempt to convince 

consumers that they are reliable. Here on the 

slide, the claim is that this fraudulent entity 

has been in business for over 150 years and 

operates world-wide.
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These statements are an attempt to 

convey a certain level of reliability to some as 

over 150 years of continuous operations notes a 

level of stability. Especially if this statement 

is posted near the FDIC logo.

MR. FARRELL: Thank you, Meron. This 

example we're looking at is slightly different. 

The previous two examples were taken from fake 

bank websites. The places that people would 

find, a consumer would find, while surfing the 

web. Those really act as the lure to try and 

pull the consumer in.

This example is different. What we 

have here is this is taken from someone who has 

frankly already gone the first step of being 

pulled in. This is an email from a fraudster to 

a consumer who believes they've already opened an 

account and are now a customer of the fake bank. 

And at this point the consumer has probably 

already shared some amount of personal 

information.
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But you can see from this that that's 

not where we'll see fraudsters stop. Here 

they'll send emails to follow up, which can 

include instructions to the customer of actions 

to take next. These can include, most notably, 

wiring money.

But even if the consumer doesn't do 

anything further once they've reached this point, 

they're already at the point where they've shared 

personal information with the fraudster, and that 

can put them at risk of identity theft. And in 

this example, as in examples earlier, the scammer 

uses the “Member FDIC” ad statement.

As Ed mentioned earlier, and then 

Meron, just the inclusion of that can really 

generate a lot of trust for many consumers and 

create a false sense of security.

Now the FDIC does provide resources 

consumers can use to try and verify they're 

dealing with an actual bank. They can call or 

email the FDIC's Information and Support Center, 
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who will help them try to make that 

determination. Or they can use our online 

database bank find to figure out if the website 

and the entity they're looking at is a legitimate 

bank.

Unfortunately in some cases we do hear 

of consumers wiring funds. Sometimes 

significant amounts to these type of scammers. 

And I'll turn this back to Ed.

MR. HOF: All right, thank you, Mike. 

So we're going to switch gears a little bit here 

away from scammers and towards legitimate 

nonbanks. So these are third-party nonbanks, 

some of which are financial technology firms, or 

fintechs, that work with banks and advertise 

FDIC-insured deposit products.

In some cases, however, the 

advertisements or the marketing can make it seem 

that nonbank is FDIC-insured. For example, a 

nonbank website may emphasize FDIC deposit 

insurance, almost as if the nonbank is a bank.
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So on this slide what we have are some 

phrases that often confuse consumers looking at 

these nonbank websites, some of whom may 

mistakenly think that they're looking at an 

insured bank website. So you can see “FDICinsured,” “Member FDIC,” “automatically FDICinsured.”

So in some cases these nonbank 

websites help consumers to, what Mike was 

speaking about earlier, they identify the bank 

that they are working with. And that little 

detail is helpful for consumers.

Unfortunately, however, some nonbanks 

fail to identify the bank that they're working 

with. That makes it very difficult for a 

consumer or the FDIC to verify which bank is 

involved.

One of the significant improvements in 

the recent regulation on misrepresentations, 

which became effective July 5th, 2022, is that a 

nonbank in this situation may violate the misrep 
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rule if it fails to identify the insured bank 

that's involved in the transaction and that may 

hold consumer funds. This should help consumers 

who are trying to figure out if they're dealing 

with a legitimate entity and which bank may be 

holding their money.

So let's go to the next slide. And 

I'll hand it back to Mike.

MR. FARRELL: Thank you, Ed. And as 

Ed mentioned earlier, one of the recent issues 

we're seeing is, the FDIC has recently become 

aware of potential misrep, misrepresentations, 

related to crypto-assets.

These have generally involved 

representations about the crypto-assets 

themselves or the platforms that consumers use to 

trade and hold the crypto-assets. The two most 

common forms of misrepresentations that the FDIC 

has observed in the crypto-space are 

representations that state or imply either that 

a nonbank, crypto-platform is insured by the FDIC 
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or that the failure of a nonbank platform would 

trigger FDIC insurance coverage.

Or, secondly, we've seen 

representations that nondeposit products, 

specifically crypto-assets, are FDIC-insured. 

As I said earlier, FDIC insurance only covers 

deposit products and only those held at insured 

banks and savings associations.

And it only applies to losses caused 

by the failure of those insured banks or savings 

associations. It doesn't cover nondeposit 

products and it doesn't apply to losses caused by 

failure of nonbank entities.

Statement implying that the deposit 

insurance covers other products or implies in 

other situations are inaccurate and can cause 

consumer confusion about deposit insurance and 

expose consumer to potential harm.

These are particularly confusing in 

some places in the crypto-space as some platforms 

both allow consumers to hold uninsured non-
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deposit products, like crypto-assets, while also, 

as Ed was discussing earlier, working with banks 

to provide them insured depository accounts at 

actual insured savings accounts. Or banks and 

savings associations.

Which can really blur the line for 

some consumers about what part of their holdings 

are insured and what parts aren't. And what 

circumstance that insurance will provide coverage 

in.

Now, switching gears a little bit. 

Back to the resources available to consumers. 

One important resource in connection with the new 

rule on misrepresentations was that the FDIC

added a new portal to the FDIC's support and 

information website that I mentioned earlier.

And that portal is for the specific 

purpose of allowing consumers, or any member of 

the public, to report potential deposit insurance 

misrepresentations to the FDIC. The portal 

allows consumers the choice to submit information 
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anonymously, or to provide contact information if 

they would like a response and follow-up from the 

FDIC.

That portal went live on July 5th, the 

same day our final rule became effective. And 

since its launch in July, the FDIC has received 

more than 300 submissions through that portal. 

And it has sent six cease and desist letters to 

various entities demanding that they cease and 

desist from making certain misrepresentations. 

And the FDIC is continuing to evaluate new 

submissions as they come in.

And now I'll turn it back to Ed to 

discuss the recent request for information.

MR. HOF: Thank you, Mike. So in 

February of 2020, and also April of 2021, the 

FDIC published requests for information in the 

federal register to seek public comment regarding 

potential modernization of the official sign and 

advertising rules to reflect how deposit taking 

has changed. Not only in physical branches, but 
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also through digital banking channels.

And some of the comments we received 

really noted the need for updating the FDIC sign 

and advertising rule, in response to changes in 

the industry. And the increasingly significant 

role that digital banking has played. And also 

that consumers assume that products that are 

offered through banks are insured.

There is an emphasis on the importance 

of enabling consumers to identify uninsured 

products and understand the role of third-parties 

who offer products.

MS. WONDWOSEN: Thanks, Ed. Finally 

on this slide we will mention some more resources 

and tools that are available to consumers to 

address some of the issues that we discussed this 

afternoon.

As Mike mentioned at the beginning of 

the presentation, earlier this year the FDIC 

issued a final rule to address misrepresentation 

and misuse of the FDIC name and logo. The FDIC 
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has also published resources, including a fact 

sheet, about deposit insurance coverage and 

crypto- companies. Which is intended to address 

some common misconceptions about the scope of 

deposit insurance coverage and whether deposit 

insurance applies to funds that consumers provide 

to crypto- companies.

In additionally, specifically for 

insured institutions, the FDIC issued an advisory 

regarding their dealings with crypto-asset 

companies reminding insured banks that they need 

to be aware of how deposit insurance operates and 

the need to assess, manage and control risks 

arising from third-party relationships, 

including those with crypto-companies.

The FDIC is also engaged in some 

public education efforts by publishing articles 

about the basics of deposit insurance, 

reiterating what products are insured by the FDIC 

and which products are not insured.

Finally, we want to emphasize a few 
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other tools which are available to the public. 

The first, as Mike mentioned, is the FDIC's 

BankFind tool.

A database which consumers can use to 

determine whether the entity they're dealing with 

is insured bank. BankFind can also help 

consumers find a particular bank branch or 

determine if the bank is using a trade name, or 

a name different from the bank's official name 

for their deposit taking website.

With over 80,000 views by consumers in 

the last month alone, the FDIC's BankFind tool 

continues to be a trusted source of information.

As you can see on this slide we've 

also identified several avenues to which the 

public can contact the FDIC. Consumers with 

questions on deposit insurance generally or 

deposit insurance misrepresentations can contact 

the FDIC via the 1-877-ASK-FDIC or through the 

misrepresentation portal that Mike mentioned 

earlier in his presentation.
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And more information on FDIC, on how 

the FDIC is responding to these challenges and 

continuing to instill public confidence is always 

available on our website. Thank you for your 

time this afternoon.

MR. BROWN: Okay, thank you folks. I 

just want to underline a couple of things. So 

these were real life examples. Of course we 

filtered them to maybe protect the guilty.

But we filtered them just for 

conversation purpose, to give you all an 

illustration of the things that we've seen. 

Technology is fantastic.

And hopefully it expands access to 

banking. But there can be challenges. We talked 

about these blurred lines that we've been seeing 

on websites, and it gets more and more complex.

So for example, when these thirdparties have partnerships with banks, sometimes 

online, when you're engaging in a transaction, 

the bank is the face of the transaction. You're 
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aware there is a bank. But other times it's the 

third-party nonbank that's the face.

And so a consumer might not have any 

idea whether there is a bank behind them or not. 

So that's confusing.

But also, we've seen examples where 

banks themselves have websites that look like 

they aren't banks. That look like they're a 

fintech. Maybe their marketing and trying to 

attract business from certain demographics. So 

these lines get blurred. And it gets more and 

more complex.

But thanks, everybody, for your formal

presentations. With that we'll open it up for 

dialogue and conversation. To the extent that 

you all have feedback or questions of us. 

Jonathan?

MEMBER MINTZ: So, it's been a long 

day but I'm coming in hot on this because --

(Laughter.)

MEMBER MINTZ: -- I think, I'm so 
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happy to hear this. And as an old consumer 

protection regulator, my blood is boiling.

A few comments, other than I'm so glad 

you're working on this so hard. Talking about 

the non-fraud folks. The sort of third-party 

confusing in the middle type folks.

So I -- one of the other components 

that we've been seeing in our work is not just 

confusion about, is this third-party really a 

bank and do they have FDIC insurance, or is there 

a bank behind them or not that does have FDIC 

insurance?

But I think I'm getting this right, 

which is, what's the structure of the 

relationship between the third-party and the 

bank?

Do they have a single account that 

only has $250,000 worth of insurance or are there 

individual accounts?

And I think that that's a huge area 

of, I think, a huge area of misrepresentation as 
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well where people assume, maybe correctly, maybe 

a little confused, about the role of third-party. 

Well there is FDIC insurance in the background, 

but if something goes wrong, it's only a single 

account.

So I think that nuance matters a lot 

to our population and something we've been paying 

a lot of attention to. And it's one of the ways 

that we've been trying to scare folks that think 

it doesn't matter.

The second thing I want to say real 

quickly is that I think that the confusion in 

this space sadly isn't just consumer confusion. 

I think it's a lot of regulator and program head 

folks who have really, in my opinion, undervalued 

how much this issue makes a difference.

And I think when you look at a lot of 

messages from, in some cases mayors pushing 

cryptocurrency as a way to solve low-income 

finance issues, program heads with guaranteedincome programs that aren't using banks to push 
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money out. I mean, there are lots and lots of 

well meaning, important program type folks that 

need this information, not just consumers.

And I think the more that you can help 

spread the word to those kinds of audiences about 

what the significance is of the difference, not 

just people trying to take advantage of the 

difference but that there is actual significance 

of the difference, I think that would really help 

a lot of our efforts out there as well.

The last thing I want to say, and I'm 

a little embarrassed, I feel like I didn't see 

your, and it's completely on me, I don't think I 

saw your request for proposals on the labeling 

stuff. I feel terrible about that.

But let me just say this. I wonder 

whether you all should consider, and maybe you 

are, a require, a disclosure requirements of 

those that aren't, not just rules about those 

that are insured by FDIC.

I think that I would suggest that 
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financial service providers in the middle ought 

to have a duty to disclose that they're not a 

financial institution. That they, themselves, 

don't have the FDIC insurance, et cetera, et 

cetera. I hope it's appropriate to say that 

because you had a comment period thing --

MR. BROWN: Sure.

MEMBER MINTZ: -- but I --

MR. BROWN: Our ears are always open.

MEMBER MINTZ: Okay, great.

MR. BROWN: That's very helpful.

MEMBER MINTZ: Thank you. Thank you 

for doing this, it's really, really important.

MR. BROWN: Yes, thank you, Jonathan. 

Those are all very helpful comments that are on 

point.

And as you say, it's really important 

as to how the bank account is structured and 

whether you know you can connect the funds with 

specific people in order to get deposit 

insurance. Very important. Jennifer.
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MEMBER TESCHER: I'll echo Jonathan's 

comments about how important this is. I like 

very much the idea of requiring nonbanks that are 

in a relationship with an FDIC-insured, Member 

FDIC bank, to not only follow the rules around 

using the right language to explain it, but going 

a step further to add another sentence that will 

explain whether it's in a way that is 

understandable to the average person.

Whether there is indeed pass-through 

insurance because it's an individual account 

versus a pooled account model. I'm curious if 

you have done any research to identify, among the 

major players in this space, what is the 

predominant structure at this point versus the 

scammers or the sort of fly by night folks?

So I'm thinking about the Chimes of 

the world, the Netspends of the world, the, you 

know, the big established folks in this world who 

have a bank behind them legitimately. Do you 

have a sense of whether most have now moved to a 
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single account structure or not?

MR. BROWN: So we don't have sort of 

overall data, but we have engaged in a series of 

conversations with folks in the industry. And 

also people come in and talk to us. And we asked 

those questions.

Which it's really important for us to 

understand the structure. There is a lot of 

structures out there. There is a lot of ways 

that companies are structuring the accounts and 

the relationship themselves.

And so we have been collecting those 

models to understand and inform our thinking in 

terms of, do we need to provide more information 

to make it clear what FDIC's expectations are for 

example.

MEMBER TESCHER: Yes.

MR. BROWN: So that has been front in 

mind for us for a few years actually.

MEMBER TESCHER: That's great. And 

one other question. Let's pretend nonbank, real 
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bank behind, structured in a way where the 

individual, there is a real account for the 

individual. Can you identify a scenario in which 

company itself could fail, could go out of 

business, and yet FDIC insurance somehow wouldn't 

apply or somehow someone's funds might not be 

where they're supposed to be?

MR. BROWN: Oh yes. There are a 

number of ways that could occur. The bottom line 

is, if the funds are, and we have very specific 

guidance about operationally what needs to occur 

or you have a, it's insurable but actually when 

the bank fails there is a number of steps for the 

pass-through insurance to apply.

And you have to sort of get into the 

institution, look at the accounts and look at the 

names and have all that information whether it's 

actually the case. So we would call it insurable 

until the bank, the entity actually fails.

MEMBER TESCHER: I see.

MR. BROWN: But the bottom line is, 
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if the funds are at the bank and you can connect 

it with individual consumers, and there are other 

requirements for pass-through, they're insured 

regardless of whether that third-party failed.

MEMBER TESCHER: Right. And in that 

case, in a way, it's not even about whether 

they're insured because the bank in question, 

let's pretend the bank in question is still a 

going concern, it sounds like you're having to 

pay out of the fund, but the money is in the bank.

MR. BROWN: Yes.

MEMBER TESCHER: It's making sure 

that person is able to then access those funds -

-

MR. BROWN: That's right.

MEMBER TESCHER: -- essentially?

MR. BROWN: And if the bank itself 

fails --

MEMBER TESCHER: Yes, that's it.

MR. BROWN: -- they get the funds.

MEMBER MINTZ: Well I think that's a 
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really, I'm sorry, real quick, I think that's a 

really important point because I think that 

people conflate insurance if a bank fails with, 

I'll get access to my money generally. And I 

think if the middle third-party fails and there 

is this long gap between trying to figure out, 

well where the hell is the money and what's the 

underlying bank and how do I reach them and all 

of that, I think that, I think it's another risk 

area of confusion around the FDIC brand. I think 

people assume.

I'm sure that, I'm making it up, but 

I'm positive --

(Laughter.)

MEMBER MINTZ: -- that if these thirdparties, that's a thing in data.

(Laughter.)

MEMBER MINTZ: That if, you know, when 

these third-party financial service providers 

fail and there is legitimately an FDIC logo in 

there because of the underlying bank, people are 
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absolutely going to look to you with 

disappointment, right, because suddenly who are 

they supposed to call.

MR. BROWN: Right. You're not making 

anything up.

MEMBER MINTZ: Okay.

MR. BROWN: That's exactly right. 

And one of our significant concerns is, whether 

they see the bank, whether they see the thirdparty, what language is being communicated to 

them from a disclosure perspective about the 

coverage.

And so sometimes you see examples 

where the language is extremely definitive that 

they are insured, but they're not. Or maybe 

they're insured. So that's something we're 

thinking deeply about as well.

MEMBER MINTZ: I wonder whether some 

of these third-parties could be consider somehow 

brokers of the insurance in some way. I wonder 

whether there isn't a way to require some kind of 
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connection between them and you all. Just 

throwing that out there.

Like there is something about the way 

they do it that makes them have to somehow be 

able to have some recourse for the consumers when 

they disappear. Not for the money, that's the 

bank, but for the connectivity at least to where 

their funds are. I don't know. I might be going 

too far.

MEMBER TESCHER: Do you have any 

restrictions on who can use the logo itself 

versus the words?

MR. FARRELL: That's a great 

question. So, there is a, the FDIC Act provides 

us with authority with respect to our logo, FDICassociated terms and images. And legally one 

cannot use one of our imagines to imply that there 

is deposit insurance. Or certainly cannot 

falsely state or say that there is deposit 

insurance.

So we have broad authority in that 
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space. Our lawyer is here so I shouldn't speak 

too much more than that.

But we have broad authority when 

someone is misusing our logo, making false 

statements with respect to deposit insurance.

MEMBER TESCHER: I ask because it 

seems to me that words matter. People have got 

to get the words and the representation right. 

But that there is a lot of power in the actual, 

just the image, right. And people take it as a 

sign, and maybe don't necessary then read the 

finer print.

You know, I wonder if you thought 

about restricting use of the logo only to the web 

properties of, or mobile properties, of your 

insured institutions.

MR. BROWN: Well, as I mentioned, 

we've been doing a lot of analysis and thinking 

about all the various things that we're seeing 

and considering opportunities at the staff level 

of anything that would make sense going forward.
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And as Michael said and as Ed said, we 

did issue an updated rule earlier this year 

because of concerns. But we continue to see 

things and we continue to think about it.

MEMBER TESCHER: Yes. Because, like 

I just pulled up one of the largest nonbank 

providers who has got two banks behind it, right. 

No logo. Very prominent, not from a, it's their 

top market thing, but prominent in terms that the 

customer would be able to see it. Your funds are 

FDIC-insured up to $250,000 through the, this 

bank and bank, Members FDIC, all just words. No 

logo.

Assuming the structure is kosher, I'm 

guessing that meets the test. I won't make you 

say that out loud, right, because --

MR. BROWN: Well, I'll say we don't 

know what the structure is.

MEMBER TESCHER: Right.

MR. BROWN: We don't know what the 

facts are behind that so that --
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MEMBER TESCHER: Right. But I'm just 

saying, assuming --

MR. BROWN: Yes. Assuming that --

MEMBER TESCHER: -- they were, right?

MR. BROWN: -- sure.

MEMBER TESCHER: You know, there is 

no logo here. But, you know, it would be 

interesting to do some focus group work with 

consumers, right, to understand what do they take 

from seeing this, right?

MR. BROWN: Absolutely.

MEMBER TESCHER: What does it mean to 

them? I don't think we, maybe you've already 

done research like that, but I haven't seen any. 

It would be interesting to know.

MR. BROWN: And our, well, our 

research colleague is here. One thing we have 

talked about a little bit is, what are the magic 

words?

MEMBER TESCHER: Right.

MR. BROWN: You know, what would 
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resonate with the consumers, how can you 

communicate information about deposit insurance 

in ways that they get it and they feel safe and 

protected? And we're having conversations about 

that with our research colleagues in fact.

MEMBER TESCHER: Awesome.

MEMBER MINTZ: I promise this is the 

last thing I'll say --

MR. BROWN: Sure.

MEMBER MINTZ: -- but just to clarify 

what I was trying to say before in regard to this 

conversation. I wonder whether using any version 

of those words and/or the logo, even if 

legitimately, could trigger, I'm looking at the 

lawyer, could trigger some kind of responsibility 

on the part of those who choose to use those words 

that could somehow help achieve some of the goals 

that we talked about?

I'm just wondering. That's sort of 

what I meant about this broker idea, that somehow 

by invoking it they then have responsibilities 
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that come with the invocation.

MR. FARRELL: Well, and I can't 

comment on any specific cases, but to your point, 

that is sort of, that's the aim of the section of 

the law of the statute that prohibits this, and 

that is the aim of the rule. You can't use the 

FDIC's name, you can't use any similar worlds, 

you can't use deposit insurance, federal deposit 

insurance, deposit insurance corporation. You 

can't use our logo, you can't use similar looking 

things to imply or suggest that things that are 

not insured, are insured.

So, you know, to your question, can 

using those words --

MEMBER MINTZ: I see what you're 

saying.

MR. FARRELL: -- in part, in 

responsibility. And you clearly can. It's a 

very case-by-case analysis.

You know, we try to look at it through 

what is the impression being created by how 
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you've done that. But certainly that's, I mean, 

that's really the heart of the statute in the 

rule.

MEMBER MINTZ: Okay.

MR. BROWN: This is the right side 

now.

ACTING CHAIRMAN GRUENBERG: I'm 

sorry.

(Laughter.)

MEMBER CAMPER: The strong side I 

think.

(Off microphone comment.)

MEMBER CAMPER: I want to, and this 

will be very brief, an observation on the scam 

side. So this is the sort of spoofers.

And first I'll say, we feel your pain 

if you were here for the Member roundtable, it 

is, launch this banks never ask that campaign, 

because there are so many instances of customers 

thinking their bank is calling them, urging them 

to do something, and they're not. You are 
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encountering FDIC purporting to provide 

protection or say anything.

And I think for the industry one of 

the conundrums is, you know, who is responsible 

when a consumer who is targeted by spoofers and 

scammers believes it and takes action. You know, 

presumably if a consumer takes action it's a very 

complex thing.

But one of the things that we've 

observed is, there may be opportunities for 

collaboration with other government entities who 

are responsible, whether it's spoofing. So, FCC, 

is there a constructive role that they can play 

when somebody is allowed to spoof a bank name. 

Or perhaps, I don't know if anybody is calling 

and pretending to be you.

I will say, I don't know who regulates 

the internet. Is the internet regulated? I 

don't know if it's an FCC.

But when there is a misuse of your 

logo, you know, is there some other cavalry that 
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can come in and provide. So I think we're 

experiencing similarly troubling 

misrepresentation of brands of trust where 

customers take an action based on what they 

believe is you or us.

So I think we have sort of parallel 

challenges here. And there may be other players 

who can help us collectively address the issues. 

So that's --

MR. BROWN: That's helpful. Thank 

you.

MEMBER CAMPER: Yes. Ken, I'm sorry, 

I didn't mean to --

MEMBER KELLY: Sure. My question 

goes to the, since July 2022 it says there have 

been 300 complaints. Is that all centered on one 

institution or is that 300 separate institutions? 

Can you give me some context for that?

MR. FARRELL: It's certainly not one 

institution. There have been some repeats of, 

we've gotten multiple complaints about certain 
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things, but it's a wide variety of potential 

parties that are responsible.

MEMBER KELLY: Okay, great. Thanks.

MR. BROWN: And obviously that was an 

important, I don't know if I should use the word 

innovation, but change to the FDIC given that 

it's the whole internet. And so to the extent 

that people need to know where to go, rather than 

just calling us, which they have done over the 

years, it's a great resource for us.

MEMBER KELLY: Thanks.

MR. BROWN: Yes, sir. Michael.

MEMBER CALHOUN: So I am particularly 

concerned how this plays out in the already 

fraught world of crypto. From the research we've 

done it seems to be an explicit strategy of the 

crypto- industry to increase their sales by 

reassuring consumers that they are regulated.

And if you go on some deleting 

exchanged, I won't name them, they prominently 

advertise US-based and regulated. They don't 
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talk about how limited that particular form of 

regulation is.

They clearly, I think, implied that 

there are safety incentive regulations regarding 

the crypto-assets themselves as well. And I 

think questions are, I mean, I assume from what 

you're saying, crypto, if the bank is holding 

crypto, that it's just like the bank selling 

mutual funds. That they are not guaranteed. The 

asset itself is not guaranteed at all.

I don't think that comes through at 

all. I mean, yes. The same exchange prominently 

advertises that this is a good safe hold asset. 

This is one of the largest players in the field 

and describe it as "digital gold to hedge you 

against volatility in the market."

And there are two leading polls out 

there on crypto. Annual polls. There is 

Greystone, one of the mutual fund of cryptos. 

They do poll. And then Motley Fool does a poll.

And when you read the responses, there 
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are questions like, how much do you know about 

crypto. And little or nothing is just shy of 50 

percent. And would you invest your retirement 

assets in crypto. And not quite, but nearly 50 

percent.

But again, the overt strategy of the 

industry now is to get the patina of regulation 

so that they can now say these are officially 

safe products now. In particularly with some of 

the two X Black participation in the market. I 

mean, we are very concerned about the impacts of 

this.

And I would urge you to do everything 

you can to not let, they will try and leverage 

that it is being held by a regulated insured 

institution into a misimpression by consumers 

that the underlying asset is thoroughly 

regulated. And may be vetted, including by the 

FDIC.

MR. BROWN: Sure. So you can 

imagine, given the presentation we gave earlier, 
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you could imagine a crypto-asset company 

associating with an FDIC term and looking to 

show, or signal some sort of stability as 

something that would be concerning. And we keep 

our eye on that kind of issue.

More broadly on crypto-activity and 

banks. We've issued guidance from safety and 

soundness perspective, and a consumer protection 

perspective to banks, as well to consumers and 

consumer advisories. So generally we're 

thinking about that.

But to the extent that there is any 

sort of product that is new and where there is 

uncertainty or potentially volatility, that is 

even more concerning from a depositor insurance 

perspective. And if there is blurred lines and 

consumers are not clear whether it's deposited, 

whether even if it's insured, that's concerning. 

And so certainly that's something we're focused 

on as well.

MEMBER CALHOUN: I mean, if you go to 
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the Greystone poll, one of the questions they 

ask, crypto, existing crypto-investors, would you 

be more likely to invest additional, or if 

they're not, they have some that are not cryptoinvestors, if crypto were regulated. And of 

course most people say, of course, I'd be more 

likely to invest. By a fairly substantial 

margin.

So that is their game plan right now. 

And we are deeply concerned in terms of wealth 

building and wealth equity perspective.

MR. BROWN: Thank you for raising that 

issue. Questions from others? Liz, I think it 

might be all yours.

MS. ORTIZ: Mr. Chairman?

ACTING CHAIRMAN GRUENBERG: Well 

thank you. And thank you all for this 

presentation, which is very helpful and very much 

on point with the subject on the issue of concern 

for this Committee.

And if the public credibility of 
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deposit insurance is undermined, why would 

unbanked individuals or households open a bank 

account. I mean, it really goes to the very 

heart of what the FDIC is about and to the very 

heart of the issue that this Committee is 

concerned with.

And so in light of the increase in 

the, let's call it the activity in this area, 

across a multiple of players I might add, we all 

share an interest, as a regulator, as an 

industry, as a consumer, in the accuracy of this 

information and that the damage that can be done 

by misrepresentation. So it really is a, for our 

standpoint, a core issue for all us.

And very much appreciate both your 

support and your thoughts on this. And let me 

thank you both for the feedback you gave us this 

morning on the survey, as well as the very 

thoughtful and informative comments during the 

roundtable.

I am struck by the diversity of 
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perspectives on this Committee. I mean, you all 

do represent a diverse range of interests, 

background, perspectives that really inform us in 

terms of policy making in this area.

And we spent a couple of years in 

consultation with this Committee developing the 

safe account template. Which, you know, by 

focusing on an account-based debit card with 

lower no minimum balances and no overdraft fees, 

you know, we really tried to come up with a model 

that would lower the hurdle for access to the 

system in a way that would really serve the 

interests of those who were outside of the 

system.

And also be a model that, from a 

business standpoint, would be attractive and 

workable for the industry. And that was really 

what we were aiming for.

And to a remarkable degree, if I might 

say, we sort of threaded the needle. And the 

proof has been the uptake of the model by the 
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industry with the, I will say the industry was 

receptive from the outset. And I do think the 

leadership of Cities for Financial Empowerment 

and the Bank On movement is really a vehicle to 

promote. Has really made an impact.

And I think, you know, can't take all 

the credit for the numbers in the survey, but I 

think contribute to it. And even if we have a 

shift in the economic environment, I do think the 

impact here of the work has been real.

And, you know, I was trying to think, 

well, what's the next thing for us to do. And I 

guess the conclusion I've come to is, you know, 

you only get to come up with so many paradigms 

and we're not going to come up another single big 

paradigm. But when you come up with a paradigm, 

what you can do is build off of it.

And that really, to me, is sort of the 

forwarding looking agenda for us, and perhaps for 

this Committee as well. Because I think as the 

discussion this morning suggested, and the 
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roundtable discussion, there's a really huge 

upside opportunity here for us to build on. And 

that seems to me what we need to focus on from 

the strategic standpoint and think about how we 

can utilize the resources available to us.

Which are really pretty substantial, 

if you look at around the people at this table, 

and I think others, that we can bring in as 

partners to advance this effort. So we will give

that some thought. And I would encourage you all 

to give it further thought.

And you've already shared with us some 

very valuable comments, but if you have any 

thoughts that you'd like to share with us in 

writing, we really would welcome them. We'll 

give it some thought. And maybe the next time 

we get together we can advance the conversation 

here.

So listen, thank you all, it's been a 

terrific day. And we thank you. And we'll see 

you next time in-person. Thank you all.
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And thanks to the Staff. For this 

presentation, for the whole day and the work that 

you all did.

(Whereupon, the above-entitled matter 

went off the record at 3:55 p.m.