1 

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FEDERAL DEPOSIT INSURANCE CORPORATION

+ + + + +

ADVISORY COMMITTEE ON ECONOMIC INCLUSION

+ + + + +

MEETING

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WEDNESDAY,

MAY 24, 2023

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The Advisory Committee convened at 

9:00 a.m. EDT in the Federal Deposit Insurance 

Corporation Board Room at 550 17th Street N.W., 

Washington, D.C., Martin J. Gruenberg, Chairman, 

presiding.

PRESENT: 

STEVEN ANTONAKES, Executive Vice President for

Enterprise Risk Management, Eastern Bank

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 Corporation and First

Independence Bank

MARGARET LIBBY, CEO and Founder, MyPath

BRANDEE McHALE, Head of Community Investing and

Development, Citi

JONATHAN MINTZ, President and CEO, Cities for
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Financial Empowerment Fund

JENNIFER TESCHER, President and CEO, Financial

Health Network

SUSAN WEINSTOCK, President and CEO, Consumer

Federation of America

ALSO PRESENT: 

MARTIN J. GRUENBERG, Director, Federal Deposit

Insurance Corporation, Chairman

TRAVIS HILL, Director, Federal Deposit Insurance

Corporation, Vice Chairman

JONATHAN McKERNAN, Director, Federal Deposit

Insurance Corporation

ROHIT CHOPRA, Director, Consumer Financial

Protection Bureau

JAYME BROWN, Director of Community and Supportive

Services Division, U.S. Department of

Housing and Urban Development (HUD)

LINDA CHERO, Chief Disbursing Officer and

Assistant Commissioner, Bureau of the Fiscal

Service, U.S. Department of the Treasury

GARY CLAYTON, Senior Examination Specialist,

Division of Depositor and Consumer 

Protection, FDIC

GABE DEL RIO, President & CEO, Homeownership

Council of America

PAOLA DIAZ, Senior Community Affairs Specialist,

Division of Depositor and Consumer

Protection, FDIC

DONALD DILL, Senior Tax Analyst, National

Partnerships, Stakeholder Partnerships,

Education and Communication (SPEC), Internal

Revenue Service, U.S. Department of the

Treasury

ANDIA DINESEN, EVP of Communications and

Operations, Association of Military Banks of

America

CHAD GOURLEY, Manager, Retail Lending Products,

Zions Bank

MICHELLE HAMMONDS, Director, Office of Financial

Empowerment and Education (OFFE), D.C.

Department of Insurance, Securities and

Banking
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LISA HINTON, Assistant Vice President, Industrial

Bank

BILJANA JESIC, Director of Community Services,

Home Forward B Housing Authority of

Portland, OR

SUE ROGAN, Director of Strategic Partnerships,

CASH Campaign of Maryland

MIA SOWELL, Senior Community Affairs Specialist,

Division of Depositor and Consumer

Protection, FDIC

KENNETH WORTHEY, Senior Community Affairs

Specialist, Division of Depositor and

Consumer Protection, FDIC
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TABLE OF CONTENTS

PAGE

Opening Remarks 5 

Identifying Bankable Moments - Sharing

Successful Applications 16

Setting the Stage for Financial Success 95

Members Roundtable 174

Establishing Special Purpose Credit

Programs (SPCP) 259

Closing Remarks 310
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1 P-R-O-C-E-E-D-I-N-G-S

2 (9:05 a.m.)

3 CHAIRMAN GRUENBERG: Good morning, 

4 everybody, and welcome to this meeting of the 

5 FDIC’s Committee on Economic Inclusion. There is 

6 no more -- there is no group I enjoy more meeting 

7 with, if I may say so. Thank you all for being 

8 here, and we really value your willingness to 

9 serve on this Committee.

10 Liz, since we have three of our Board 

11 members currently participating, I think you need 

12 to read the Sunshine Act notice?

13 MS. ORTIZ: Yes, I do, Mr. Chairman.

14 So today we expect to be joined by at 

15 least three members of the FDIC Board of 

16 Directors. The government and the Sunshine Act 

17 imposes notice and access requirements whenever a 

18 quorum of the FDIC’s Board of Directors meets to 

19 conduct or determine agency business. This 

20 meeting is not held for such purposes and does 

21 not constitute a meeting under the Act. 

22 The Board members present will only 
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1 engage in general or preliminary discussions that 

2 do not relate to specific proposals for action 

3 pending before the FDIC. Any specific issues for 

4 official Board resolution will remain open for 

5 full consideration by the Board following the 

6 conclusion of this meeting.

7 If you have any questions, the general 

8 counsel or I will be glad to answer them. Thank 

9 you.

10 CHAIRMAN GRUENBERG: Thank you, Liz.

11 And I would note that Vice Chairman 

12 Hill and Director McKernan are also participating 

13 in the meeting this morning. And at the end of 

14 my brief opening remarks, I will offer them the

15 opportunity to say a few words as well.

16 So let me begin again by thanking you 

17 all for being here. As you may know, the FDIC 

18 established this Committee back in November of 

19 2006 to provide us with advice and 

20 recommendations in expanding access to the 

21 banking system in the United States.

22 I would note that it’s timely that 
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1 this meeting is occurring the day after the 

2 BankOn Movement held its national conference here 

3 in Washington, hosted by the Cities for Financial 

4 Empowerment, and of course they are represented 

5 on this Committee by their CEO, Jonathan Mintz.

6 I would note that much has been 

7 accomplished since 2015 when the initial BankOn

8 national account standards were released. Those 

9 standards were based upon the FDIC’s own safe 

10 account template developed in collaboration with 

11 this Committee. 

12 And that template provided a framework 

13 for an accessible, transparent, and low-cost bank 

14 account designed to meet the needs of low and 

15 moderate income households in the subsequent work 

16 of the BankOn coalitions to increase availability 

17 and utilization of those accounts.

18 I think it’s fair to say it has been 

19 impressive. That launch event back in 2015 

20 featured four banks with accounts certified as 

21 meeting the standards. As of this month, about 

22 300 banks in the United -- 400 banks in the 
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1 United States offer a certified account. Or 

2 maybe these estimates I am about to read are 

3 woes. Let me --

4 (Laughter.)

5 CHAIRMAN GRUENBERG: FDIC analysts 

6 estimate those banks hold more than 61 percent of 

7 all domestic deposits. And according to the 

8 Federal Reserve Bank of St. Louis, just looking 

9 at 28 reporting financial institutions, 

10 14 million BankOn certified accounts have been 

11 opened since the end of 2021. By any estimate, 

12 that’s a pretty impressive number.

13 So nice to see you all today. I think 

14 we have a lot to talk about. Let me note that we 

15 are live streaming this meeting, so that 

16 interested members of the public can listen in on 

17 the discussion, benefit from the information 

18 that’s shared, and hear the comments from our 

19 Committee members.

20 And let me also take the opportunity, 

21 looking around the table here, to welcome our 

22 newest member of the Committee, Susan Weinstock, 
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1 who’s the President and CEO of the Consumer 

2 Federation of America. Susan brings over 

3 20 years of experience in advocacy, 

4 communications research, grassroots and 

5 legislative work, to protect consumers.

6 Susan, we are privileged that you are 

7 willing to take part in this Committee.

8 We have a full day. Let me briefly 

9 outline the agenda for today’s program. We will 

10 begin with a panel discussion on identifying 

11 bankable moments. That’s a big thing for us now. 

12 The panel will continue the conversation begun 

13 at our last meeting when we discussed the results 

14 of the FDIC’s most recent household survey.

15 You will remember that the survey 

16 results showed that a significant proportion of 

17 households that had already established a banking 

18 relationship reported that they were motivated to 

19 open an account in order to receive an economic 

20 impact payment during the pandemic or other 

21 public benefit such as expanded employment 

22 insurance.
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1 We will hear from today’s panel about 

2 successful federal and state programs that are 

3 implementing this approach and the potential for 

4 further collaborations.

5 Our second panel today will offer the 

6 Committee a chance to hear about two programs 

7 that leverage account access. One explores the 

8 benefits of providing transaction accounts for 

9 young people, and the other is an employment and 

10 savings program for families in federally 

11 subsidized housing.

12 Our members’ roundtable will take 

13 place after lunch, and we’ll ask each member 

14 briefly to share their perspectives on current 

15 circumstances and opportunities that they are 

16 seeing in regard to economic inclusion.

17 And the final panel for the day will 

18 offer us a chance to hear more about establishing 

19 special purpose credit programs made possible 

20 under the Equal Credit Opportunity Act. 

21 So I think we’ll have a pretty full 

22 day of discussion. Again, thank you all for 
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1 being here. And before I turn the program over 

2 to Liz Ortiz, who will serve as a moderator, let 

3 me turn to Vice Chairman Hill and to Director 

4 McKernan, if they might have any further comments 

5 to make.

6 Travis, was there anything you wanted 

7 to add?

8 VICE CHAIRMAN HILL: Yeah. I just 

9 quickly want to welcome all of the Committee 

10 members today. Apologize for not being present 

11 in person. 

12 I have had the opportunity to observe 

13 this Committee on several occasions over the 

14 years and have found it to be a productive venue 

15 for discussion of some important issues around 

16 economic and financial inclusion. 

17 So I appreciate everyone’s engagement, 

18 appreciate people taking the time to participate 

19 and provide input, and look forward to hearing 

20 from everyone today.

21 CHAIRMAN GRUENBERG: Great. Thank 

22 you, Travis.
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1 Jonathan? 

2 DIRECTOR McKERNAN: Yes. Thank you, 

3 Mr. Chairman. Just a few words from me also 

4 expressing my appreciation for today’s event, for 

5 everyone’s work on this.

6 Thank you all for being part of the 

7 Committee and attending today’s meeting. Very 

8 much look forward to engaging with you all on 

9 this very important topic.

10 Banks are of course a vital component 

11 of our economy and have a critical role to play 

12 in expanding banking services to the unbanked and 

13 the underbanked. You know, while much progress 

14 has been made in incorporating our unbanked

15 households into the banking system, as the 

16 Chairman noted, obviously, much work remains to 

17 be done.

18 In addition to hearing about the 

19 lessons learned from your all’s efforts that we 

20 will be discussing today, I look forward to also 

21 hearing your perspectives on how the recent bank 

22 failures and changes in economic conditions since 
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1 March might have impacted our most vulnerable 

2 communities, their perceptions of the banking 

3 system, and their access to banking services.

4 So thank you again for all of your 

5 work, and I look forward to today’s conversation.

6 CHAIRMAN GRUENBERG: Great. Thank 

7 you.

8 And I will mention we have been joined 

9 by a third member of our Board, Director Chopra 

10 of the Consumer Financial Protection Bureau. 

11 So, Rohit, if you have a comment?

12 DIRECTOR CHOPRA: Great. Well, 

13 thanks. It’s good to see everybody here in 

14 person.

15 Let me just mention a couple of things 

16 about the reflections that many of us had had 

17 about the FDIC’s recent survey on underbanked. I 

18 think you see a number of drivers of why people 

19 are not necessarily in an insured bank or credit 

20 union.

21 One of them that was I think of great 

22 discussion to many in the community was citations 
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1 around fees or minimum balances or related issues 

2 or others that they were formally in the banking 

3 system but are no longer. One of the things 

4 we’ve done is a series of reports about people’s 

5 experiences, and today we’re actually releasing 

6 another analysis of bank call report data to show 

7 differences in the usage of 

8 overdraft/non-sufficient fund fees. 

9 And what we find is that there has 

10 been significant changes in the banking industry. 

11 Many have made major policy shifts. The 

12 regulators have also been much more clear about 

13 the type of practices that are unlawful.

14 So what we find is that on an 

15 annualized basis there is roughly $5.5 billion 

16 less of those fees being assessed on deposit 

17 accounts compared to prior to the pandemic. 

18 That’s based on the latest quarterly estimates. 

19 We have -- we continue to see institutions really 

20 gut check how they are assessing fees, when they 

21 are doing it. 

22 The other thing we really are 
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1 releasing is a little bit more information about 

2 specific populations, how they are experiencing 

3 it. We have done some research with consumers 

4 that suggests that many times when they are 

5 charged some of these fees they think they don’t 

6 have overdraft service or protection. So there 

7 is clearly some misunderstandings in the process.

8 We have also done some work -- and we 

9 presented this at the Treasury Financial Literacy 

10 and Education Commission -- about the unique 

11 issues facing justice-involved individuals, those 

12 returning, and what are some of the issues they 

13 face. It has involved a look at, what are all of 

14 the issues that they are facing, and what are the 

15 barriers? And we are seeing movement of more 

16 people thinking about those individual 

17 communities and how they enter the mainstream.

18 So I think there is a lot going on in 

19 terms of research, both at the FDIC, the CFPB, 

20 and others, and I think one of the things we want 

21 to continually push this group is let’s not think 

22 of consumers a monoliths. Let’s actually look at 
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1 some of their individual experiences, so that we 

2 can have the right set of interventions.

3 So, really, thank you again for 

4 convening this, Mr. Chairman.

5 CHAIRMAN GRUENBERG: Thank you, Rohit.

6 And let me now turn the program over 

7 to Liz Ortiz, who is the Deputy Director of the 

8 FDIC’s Division of Depositor and Consumer 

9 Protection. I think Liz is going to serve as our 

10 moderator this morning. 

11 MS. ORTIZ: Thank you very much, 

12 Mr. Chairman. 

13 My pleasure to turn the program over 

14 to our first panel and Jackie Steller, who is our 

15 panel’s moderator.

16 Jackie?

17 MS. STELLER: Thank you, Liz.

18 Good morning, Mr. Chairman, members of 

19 the Board, and members of the Committee. I am 

20 delighted to join you today.

21 At the last ComE-In meeting, we 

22 discussed the results of the 2021 National Survey 
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1 Unbanked and Underbanked Households. We learned 

2 that over one-third of newly banked households 

3 that received a government payment said that 

4 these payments contributed to their decision to 

5 open an insured bank or a credit union account.

6 And we all agreed that collaborative 

7 efforts amongst the private and public sectors 

8 helped drive this position outcome, which we call 

9 a bankable moment.

10 So today’s panel, we will pick up 

11 where we left off. There will be two parts to 

12 the discussion. First, we will hear from our 

13 federal government partners on their roles in 

14 facilitating account access during the COVID-19 

15 pandemic.

16 We are joined by Mia Sowell from the 

17 FDIC, Donald Dill from the IRS, Linda Chero from 

18 Treasury’s Bureau of Fiscal Service. And at this 

19 point, we will then pivot to the second part of 

20 the discussion, where we will be focused now on 

21 how trusted intermediaries facilitate account 

22 access at the local level and how the U.S. 
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1 Department of Veterans Affairs, working with the 

2 non-profit organization, has been successful in 

3 getting veterans banked.

4 You will hear presentations by Sue 

5 Rogan from CASH Campaign of Maryland and from 

6 Andia Dinesen from the Association of Military 

7 Banks of America, or AMBA.

8 We will share lessons learned and 

9 discuss next steps, and I encourage you for your 

10 thoughts on where do we go from here, but also 

11 for your questions during the discussion portion 

12 of the panel.

13 So let’s get started. To my federal 

14 colleagues, looking back to April 2020 when the 

15 first round of economic impact payments were sent 

16 out, what role did your agency play, and why was 

17 ensuring account access important to your agency?

18 Mia, let’s start with you.

19 MS. SOWELL: Thank you, Jackie.

20 So when we think about the timing of 

21 the pandemic of March 2020, it was really at the 

22 onset of the entire country processing the news 
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1 about a national health pandemic and sheltering 

2 in place, which for many households meant there 

3 was no opportunity to earn income.

4 And shortly after that, the CARES Act 

5 was signed, meaning that millions of households 

6 were eligible to receive their economic impact 

7 payments, or EIPs, so they needed a way to access 

8 those EIPs quickly in order to pay their bills 

9 and pay for essentials like food and toiletries.

10 So the FDIC wanted to make sure that 

11 U.S. households, particularly those in low and 

12 moderate income communities, who were hardest 

13 hit, could access their government resources to 

14 help sustain their households during the 

15 pandemic. So we at the FDIC informed them about 

16 how to open a bank account online in order to 

17 facilitate the safe and timely distribution of 

18 those payments through direct deposit. And we 

19 did that by launching an EIP web page in April of 

20 2020.

21 And with this web page we had a few 

22 goals, which were to increase consumer awareness 
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1 of secure and affordable bank accounts by 

2 providing consumers with the resources to learn 

3 more about the benefits of having a bank account 

4 and why they should have one.

5 We also wanted to help consumers 

6 navigate to resources where they can safely open 

7 a bank account that was the right fit for their 

8 needs. In particular, we wanted to highlight 

9 accounts that may offer an affordable account 

10 option, including those that may be open online, 

11 since people were encouraged to stay home and 

12 stay safe during the pandemic, and also many 

13 banks were not offering in-person services for 

14 those same health and safety reasons.

15 And, lastly, we wanted to maximize our 

16 engagement with local community partners who work 

17 directly with L&MI communities and populations, 

18 so that they know about these resources and could 

19 refer their stakeholders to them.

20 And we know from our years of 

21 experience in community affairs that 

22 relationships with our collaborative partners are 
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1 really key in helping us reach that broader 

2 audience. So the FDIC collaborated with a 

3 variety of partners, including government 

4 agencies, bank trade associations like the 

5 American Bankers Association, and also the 

6 Independent Community Bankers of America, and 

7 intermediaries such as the Cities for Financial 

8 Empowerment Fund’s BankOn team.

9 The government agency that we reached 

10 out to first was the Department of Treasury, 

11 specifically the IRS at that time, to message the 

12 importance of having a bank account by including 

13 links on their web page that would direct 

14 consumers to FDIC’s resources about how to open a 

15 bank account remotely online, and why that is 

16 important.

17 Now, once the IRS added a link to the 

18 FDIC’s EIP web page, the impact was felt almost 

19 immediately on our end. Our page went live 

20 around April 19, 2020, and IRS included our link 

21 on their page about three days later. And with 

22 this cross-promotion, the FDIC’s EIP page saw 
22

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1 nearly 8,000 views on the day the IRS added the 

2 link. And of those views, 7,000 came from the 

3 IRS, and 70 percent of the week’s total views 

4 came from the IRS on the first day they included 

5 our link.

6 So that impact there really shows the 

7 opportunities that we have to reach people and 

8 serve them when we join forces with our peers in 

9 federal government and beyond. And we continued 

10 to collaborate with IRS shortly after that by 

11 co-hosting a national webinar that encouraged 

12 intermediary organizations to assist individuals 

13 who hadn’t yet received their EIPs in order to do 

14 that before the initial filing deadline, and we 

15 highlighted opportunities for them to receive 

16 their EIP via direct deposit.

17 So collaborative efforts such as these 

18 also allowed us to learn more about Treasury’s 

19 Bureau of Fiscal Services role in actually 

20 disbursing those payments, both via direct 

21 deposit and through paper mailed checks. And we 

22 knew that we wanted to identify ways we could 
23

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1 collaborate with them in the future to reach even 

2 more households about the importance of having a 

3 bank account.

4 So I think now this is a good time for 

5 me to pass it over to Don Dill at the IRS to 

6 discuss their role in this effort. Don? 

7 MR. DILL: Very good. Thank you, Mia.

8 First, thank you for the opportunity 

9 to join you. It’s a privilege to speak with all 

10 of you. I wanted to offer my special thanks to 

11 our partners here at the FDIC, and we appreciate 

12 their collaboration. It has been very 

13 successful, and we look forward to more.

14 As I was thinking of this time, 

15 bankable moments, although the IRS is not in the 

16 business of getting people bank accounts, it is 

17 critically important to us and our ability to 

18 operate more efficiently and get people their tax 

19 refunds in the most efficient and effective 

20 manner.

21 And tax time is critically important 

22 not only to our taxpayers but to our external 
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1 stakeholders who we partner with as quite simply 

2 the -- tax time is the -- will be the single most 

3 largest payment that low to moderate income 

4 taxpayers will receive in any given year. So 

5 it’s critically important for us to work hard to 

6 get people banked and have the ability to get 

7 their money fast and safe and without fees.

8 When the COVID pandemic disrupted the 

9 whole world, and, unfortunately, in the midst of 

10 our 2020 tax filing season, we were in a panic, 

11 and then we were charged with implementing the 

12 economic impact payments fast. And of course 

13 direct deposit then became a critical need in 

14 order to distribute these EIPs in an effective 

15 and safe manner.

16 We realized, as all of you around the 

17 table, if we didn’t distribute these EIPs through 

18 direct deposit and did it by checks, it would 

19 cost us not only significant amounts of money, 

20 but more importantly it would put our taxpayers 

21 in the position of having a long delay in 

22 receiving their money, losing their money, or 
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1 never receiving it.

2 And so as we had the ability at that 

3 time, obviously, to access bank information for 

4 those who filed, and we were able to partner with 

5 our colleagues at the VA and the SSA to get 

6 information from them, we were still left with a 

7 significant gap of individuals who didn’t use 

8 direct deposit initially on their bank 

9 transaction -- or their tax transactions, excuse 

10 me -- and more importantly, a gap with those who 

11 have no legal filing requirement who fall into 

12 that low and moderate income target audience.

13 So we realized that we were going to 

14 have to act differently than we had before, and 

15 so one of our first steps was to create a portal, 

16 which we are starting to use in other formats, 

17 like Get Your Refund, and they were very 

18 successful. So we realized that was going to be 

19 one of our effective ways to get people into the 

20 system more effectively.

21 But more than that, we realized that 

22 getting people to use any of those formats was 
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1 not going to be easily done if the message came 

2 from us. 

3 I have to say, working for the IRS for 

4 35-plus years, we all realize that we’re not the

5 most trusted organization when we talk about low

6 to moderate income taxpayers. There is a

7 tremendous fear, and of course they have

8 inexperience of working with us.

9 So we needed to pivot quickly to work 

10 with external stakeholders to get the message 

11 out. And so as Mia mentioned in her 

12 conversation, we quickly realized there were much 

13 better resources to access banking information 

14 than we had. And so that was how we pivoted to 

15 using -- a leveraged model is what we like to 

16 call it, that we use trusted organizations to get 

17 the information out.

18 And we were lucky to not only partner 

19 with the FDIC but other partners here today, the 

20 National Credit Union Association and the 

21 Veterans Benefits Banking Project. And there all 

22 of the information we suggested about bank 
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1 information was to go to their sites.

2 So using trusted organizations to 

3 leverage their ability to reach audiences in a 

4 trusted and effective manner was one of our key 

5 takeaways. And then, to be honest with you, as 

6 we continue into 2023, we continue to use that 

7 model in everything we try to do to get trusted 

8 organizations between us and the taxpayers we are 

9 trying to serve.

10 So with that, Linda, I will turn it 

11 over to you.

12 MS. CHERO: Okay. All right. Thank 

13 you. And thank you for an opportunity today to 

14 share our experiences, our challenges, and our 

15 successes during the pandemic. 

16 Again, my name is Linda Chero. I work 

17 for the Bureau of the Fiscal Service. We are one 

18 of nine organizations that falls under Department 

19 of Treasury. Everyone knows IRS. Not everyone 

20 is familiar with Fiscal Service. So if I may 

21 just share briefly what it is that we do at 

22 Fiscal Service.
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1 We do promote the financial integrity 

2 and operational efficiency of the federal

3 government, and we do that as we are responsible 

4 for the financial infrastructure of the federal 

5 government. We finance government operations by 

6 offering Treasury securities. We operate the 

7 federal government’s collections and deposit 

8 systems. 

9 We provide payment services to the 

10 American public. I am the chief disbursing 

11 officer of the federal government. And we also 

12 offer shared services in the areas of financial 

13 management, human resources, information 

14 technology, travel, and procurement. But today I 

15 am really here to talk about my role as, again, 

16 the chief disbursing officer of the federal 

17 government and the experiences that I endured 

18 throughout the pandemic.

19 So Fiscal Services does disburse 

20 nearly 90 percent of all federal payments, and 

21 with this responsibility comes a deep commitment 

22 -- a commitment to those that are receiving 
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1 payments, whether a Social Security recipient, a 

2 veteran, or even a small business.

3 We take a lot of pride in our work, 

4 and we see it as it’s our responsibility to set a 

5 good example that fosters trust in the 

6 government. And we saw that especially during 

7 the pandemic. Our role was to show others that, 

8 yes, you have faith in the government, and we 

9 will explain why.

10 Our response to the pandemic was 

11 important because we knew we had 120 million 

12 families and individuals relying on us to get 

13 their economic impact payment quickly, 

14 accurately, and securely. And we weren’t called 

15 upon to do this once but three times over, and 

16 then of course to issue the advanced child tax 

17 credit.

18 So challenges. What challenges were 

19 we enduring during this time? Number 1, 

20 everybody else was required to work from home. 

21 We were not. 

22 (Laughter.)
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1 MS. CHERO: So we -- unfortunately, 

2 there were a lot of things we could enable from 

3 home, but there were some things we could not.

4 A, printing U.S. Treasury checks. Our 

5 employees do not have the equipment to print U.S. 

6 Treasury checks in their homes or in their--

7 (Laughter.)

8 MS. CHERO: So, unfortunately, we had 

9 to ask them to come to work.

10 We also have--

11 CHAIRMAN GRUENBERG: Good to know. 

12 Good to know.

13 (Laughter.)

14 MS. CHERO: That is good to know.

15 We also have a mailroom that takes in 

16 returned U.S. Treasury checks. This is very 

17 important. So as we mail millions and millions 

18 of checks every year, they come back. So 

19 pre-pandemic, we would see about less than a 

20 million U.S. Treasury checks returned to our 

21 mailroom in Philadelphia. 

22 So it was very important for us that 
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1 we enhance our safety protocols, so not only the 

2 150 employees that were required to come into the 

3 office felt comfortable coming into the office, 

4 but also the service technicians that had to come 

5 in to make sure our machines were running 

6 smoothly. And they were coming from out of 

7 state, and there was all of these rules about, if 

8 you’re coming from out of state, and A, B, C.

9 In any regard, we had set all types of 

10 procedures and policies in place, so everybody 

11 felt comfortable coming in to do what we needed 

12 to do to continue to get the checks printed, 

13 enclosed, and mailed.

14 We also had capacity constraints. So 

15 we knew -- we know we can print about four 

16 million checks in a given week. With the 

17 pandemic, there was going to be an influx where 

18 we were expecting at a minimum double, if not 

19 triple, that volume. And of course that caused a 

20 concern.

21 So what we did was we offered to our 

22 employees – ”offered” is, you know, being kind. 
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1 ”Mandated” may be the correct word.

2 (Laughter.)

3 MS. CHERO: Employees to work six --

4 seven days a week during this time and to work 

5 10 hours -- of course they were compensated -- in 

6 order for us to keep up with the capacity.

7 We also had age check equipment, age 

8 production equipment, and we were already on 

9 schedule to have that equipment replaced. We had 

10 to expedite that, because we knew with this 

11 additional volume of checks to be printed we were 

12 going to max out these machines.

13 Bottom line, through extraordinary 

14 efforts, I consider what we did was we didn’t 

15 lose any faith. I think folks, at the end of the 

16 day, were thrilled. For those that did receive 

17 their payments electronically, received it in 

18 days.

19 I think two weeks after the CARES Act 

20 was enacted the first payments went out, and we 

21 actually had historic moments where folks --

22 where we processed over 82 million tax refund and 
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1 economic impact payments, nearly $150 billion in 

2 a single day. So it was a moment in history 

3 there.

4 But let me talk about our role to 

5 promote bank account access, because we did a 

6 little bit more than everything I shared right 

7 now.

8 Number 1, we couldn’t have done it 

9 without the IRS. So IRS’s role was basically to 

10 determine who was to receive an economic impact 

11 payment and how much. And then they were also 

12 going to, obviously, in a payment file tell us, 

13 should we pay them electronically or by check? 

14 So of course I call IRS, and I say, ”How many 

15 checks are you sending our way?” 

16 ”What’s the request?” 

17 And the number was a number that we 

18 knew there was no way we could keep up and 

19 continue with our commitment that the President 

20 had asked, which was to get these payments out as 

21 quickly as possible.

22 So we worked with the IRS to 
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1 determine, is there a way that we can minimize 

2 the volume of checks? And what we came up with -

3 - and we had to work with lawmakers -- is to

4 include in the CARES Act for Treasury to have the

5 ability to use the bank accounts that we had on

6 file, that we could share with the IRS, that they

7 could include on their payment file, certify it

8 back to us.

9 At the end of the day, we were able to 

10 convert over 70 million payments. So that means 

11 instead of printing 70 million -- and, remember, 

12 I can only print four million a week, so the math 

13 alone can tell you just what a great success this 

14 was.

15 So we prevented 70 million from going 

16 -- instead of check, it went electronically, and 

17 we saved the federal government $33 million. And 

18 that is just including the cost of printing the 

19 check. That’s not the cost of the labor. So we 

20 were very, very excited about that.

21 The second thing we did is we worked 

22 with the IRS again. Don mentioned the IRS 
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1 portal. Well, as you can imagine, when we asked 

2 the American public “Come in and share your 

3 account numbers,” well, we are going to have some 

4 bad actors that are going to say, ”I’ve got a 

5 great idea. Send it to my bank account instead.” 

6 So we knew that we had to really be 

7 diligent about the information that was coming 

8 into the IRS portal. So, again, they partnered 

9 with us. We have an account verification 

10 service. We just literally initiated a pilot, so 

11 we had to expedite the pilot and make it more of 

12 a formal program where everything that came in 

13 through that portal was run through the account 

14 verification service, so, again, we could prevent 

15 millions and millions of improper payments.

16 And, finally, I’ll end it with the 

17 returned mail. As I mentioned, we were receiving 

18 about less than a million returned checks 

19 pre-pandemic. During the pandemic, we went up to 

20 eight million returned checks. And this was a 

21 time where folks were not coming into the 

22 building. We had 150 employees, so I had to ask 
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1 for volunteers. And believe it or not, we opened 

2 up eight million envelopes, processed the return 

3 back to the IRS, so IRS could determine next 

4 steps of how to make the individuals whole.

5 So, all in all, I think we were 

6 successful, again, stayed very committed to the 

7 American public, and of course ensuring that we 

8 fostered goodwill and just basic -- that folks 

9 can trust -- they can trust the federal 

10 government.

11 Thank you.

12 MS. STELLER: Great. Well, first of 

13 all, thank you so much to our federal colleagues 

14 for setting the stage. 

15 We are now going to transition to 

16 part 2 of our discussion. So during the pandemic 

17 states also faced quick decision-making, 

18 especially given the high levels of unemployment 

19 and households requiring assistance to meet basic 

20 needs.

21 Sue, can you please tell us about your 

22 organization and how you collaborated with the 
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1 state government agency to assist Maryland 

2 residents during the pandemic?

3 MS. ROGAN: Absolutely. Thank you for 

4 that introduction.

5 Good morning, everyone. I am Sue 

6 Rogan. I’m the Director of Strategic 

7 Partnerships with the CASH Campaign of Maryland. 

8 I am real excited to be here today with you to 

9 talk about our partnership with Maryland’s 

10 Department of Labor, the Division of Unemployment 

11 Insurance. 

12 In case you don’t know us, CASH stands 

13 for Creating Assets, Savings, and Hope. We are a 

14 statewide non-profit that works to promote the 

15 economic advancement of low to moderate income 

16 individuals in Baltimore and across Maryland. We 

17 do that by providing different programs and 

18 services, such as our free tax preparation 

19 service, in partnership with the IRS, the VIDA 

20 Program. We provide financial education, 

21 financial coaching, benefits screening, and of 

22 course the BankOn Maryland Program, which we are 
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1 really grateful to have the leadership and 

2 support of the Cities for Financial Empowerment 

3 to bring this program to Maryland.

4 So our partnership with the Division 

5 of Unemployment Insurance began in February of 

6 2021 in the midst of the pandemic when the 

7 Department of Labor announced it was going to 

8 change the options that individuals would have 

9 for payment for their unemployment benefits.

10 They previously used a prepaid card or 

11 a paper check. They were switching to direct 

12 deposit or a paper check. Naturally, that raised 

13 some concerns for us because we knew how many 

14 people did not have access to a financial 

15 institution. Therefore, direct deposit would not 

16 be an option. And we knew the challenges 

17 involved in trying to get benefits from a paper 

18 check.

19 As everybody at this table knows, it’s 

20 expensive to not have a relationship with a 

21 financial institution. The CFE has found that 

22 over a person’s lifetime to pay their bills, or 
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1 to manage their goods and buy things, they can 

2 spend upwards of $40,000. We also knew that in 

3 Maryland 21 percent of them are unbanked or 

4 underbanked.

5 So we had concerns. Now what do we 

6 do? Well, the first thing was to call CFE. 

7 Shout out to David. Thank you very much for 

8 working with us from beginning to end of this 

9 partnership. We met and asked for Department of 

10 Labor leadership, their Director of 

11 Communications and senior leadership, to meet 

12 with us.

13 Now let me just level set this scene 

14 for the Department. Similar to the Bureau of 

15 Fiscal Services, this Department had a lot going 

16 on. In 2019, they processed a little over 

17 214,000 claims for unemployment benefits. During 

18 the pandemic and during this time, they would 

19 have weeks where they would be getting 100,000 

20 claims for benefits, and they were understaffed. 

21 So they were completely overwhelmed, and we 

22 weren’t quite sure when we asked to meet with 
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1 them how this would be received.

2 Fortunately, it was received very 

3 well. They met with us. We talked about our 

4 concerns about the paper checks and how the 

5 struggles of the Postal Service at the time and 

6 getting mail to people effectively was a big 

7 challenge. We also talked to them about the 

8 situation that people were facing with the 

9 economic hardship of the pandemic, and they were 

10 having to move around frequently. So whenever it 

11 is that they would get their check, they would 

12 also have to pay fees to cash it even from the 

13 financial institution that was issuing the 

14 checks.

15 We talked about BankOn Program. We 

16 really convinced them that they would not be 

17 promoting or recommending a particular bank or 

18 credit union; that consumers had choice. We had 

19 at least 12 different institutions in Maryland at 

20 the time that were offering these accounts.

21 So, fortunately, after many 

22 conversations, they agreed to do an outreach 
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1 campaign with us to make sure we could promote 

2 these accounts, so people could get enrolled in 

3 them and get their benefits by direct deposit.

4 We create staff training materials 

5 because we knew that we were the subject matter 

6 expert on BankOn accounts, that they were not, 

7 and they would be facing questions from people 

8 who were claiming unemployment benefits. So we 

9 created staff training materials, including 

10 talking points, we created messaging that all of 

11 the claimants would be receiving about their 

12 options for the paper check or direct deposit and 

13 BankOn accounts, and then we developed marketing 

14 materials for the Department of Labor to use and 

15 to market.

16 So the outreach campaign involved 

17 emailing everyone who was receiving unemployment 

18 benefits with a notice that changing payment 

19 terms were happening and recommending or talking 

20 about the BankOn Program. They updated the 

21 frequently asked questions to include BankOn, did 

22 social media posts, added content to their 
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1 unemployment guide, did a press release, and 

2 changed their website to include our non-profit 

3 in the program.

4 So this is an example of the 

5 frequently asked questions where they updated 

6 everything and put the information in. Social 

7 media posts went out. The guide changed, to 

8 include links to the CASH campaign and to the 

9 BankOn Maryland Program. They issued a press 

10 release that resulted in earned media, both on TV 

11 here with WMAR, as well as print.

12 And then after they launched -- and I 

13 want to note that this all happened in two 

14 months. And I am a previous government employee, 

15 so I feel like I can comfortably say that is 

16 pretty fast.

17 (Laughter.)

18 MS. ROGAN: For an agency to do this, 

19 to make the decision, do the outreach campaign, 

20 and after -- this was a press release that was 

21 announced -- there’s two weeks left before the 

22 deadline that people had to make their choice on 
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1 how to receive their payments. And you can see 

2 that 147,000 people had enrolled and selected 

3 direct deposit.

4 It’s not enrolled necessarily all in 

5 BankOn accounts, but they had selected bank --

6 different products that they could do direct 

7 deposit with.

8 So with that, I just wanted to make 

9 sure I explained that. I am open for questions 

10 at some point.

11 MS. STELLER: Sue, thank you for 

12 providing that local perspective.

13 Now I would like to share another 

14 fruitful collaboration, one that began prior to 

15 the pandemic, which focuses on assisting the U.S. 

16 Department of Veterans Affairs meet the needs of 

17 unbanked veterans. 

18 Andia, can you tell us about your 

19 organization and your ongoing partnership with 

20 the VA to help veterans get banked and manage 

21 their money?

22 MS. DINESEN: Yes. I’d be happy to.
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1 (Laughter.) 

2 MS. DINESEN: Thank you. I’m Andia 

3 with the VA, and good morning, everybody. Good 

4 morning. Thank you for having me here. To 

5 members of the Committee, I appreciate you 

6 listening to my story and the information this 

7 morning about the Veterans Benefits Banking 

8 Program, or as I affectionately call the VBBP.

9 And I just want you all to know that I 

10 have had a three-and-a-half-year head start. I 

11 can say VBBP very easily. No one else can. It’s 

12 totally fine.

13 So just quickly, I want to share --

14 I’m going to share a little bit about who AMBA 

15 is. So we are a really small organization, so 

16 not a lot of people know who we are, and then a 

17 little bit about the VBBP itself.

18 So AMBA has been around since 1959, so 

19 before I was in existence, and I have been with 

20 the organization for 10 years. And we are a 

21 banking trade organization that represents banks 

22 that serve military and veteran communities. So 
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1 this can range all the way from a family-owned 

2 bank with one branch on one installation all the 

3 way up to the biggest multi-national banks like 

4 Bank of America, Wells Fargo, et cetera.

5 So we kind of -- we represent banks 

6 that are located on military installations as 

7 well as those that are off the installation that 

8 are serving these communities. And we spun off 

9 of the American Bankers Association actually in 

10 the 1950s, and we have a very close working 

11 relationship with them and ICBA as well.

12 And when I say we’re a small 

13 organization, we have three employees. So that 

14 just lets you know how much we do on the 

15 collaboration and partnership side of the house. 

16 So I’m the Executive Vice President, and I do a 

17 lot with communications and operations, which 

18 basically means like I do a multitude of things 

19 all the time.

20 But, in 2019, the VA actually came to 

21 us and they said, “We have a problem. We have a 

22 large cohort of veterans that we are considering 
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1 under or unbanked that are receiving their 

2 monthly monetary benefits on either a paper check 

3 or a prepaid card, and we would like to get them 

4 banked. We want to get them enrolled in direct 

5 deposit.” 

6 And after cold calling some of the 

7 largest banks in the world, they said, “We can’t 

8 seem to do this by ourselves.” So they came to 

9 us and we partnered together with them. Again, 

10 in about two months we launched this program, 

11 which was amazing, if you’ve ever worked with the 

12 federal government, to have somebody that is able 

13 to make those decisions that quickly.

14 And we launched with four banks, and 

15 at that time that was in December of 2019. So 

16 this was all pre-pandemic. This was all 

17 information we had before the pandemic. And 

18 those banks and now -- and in January of that 

19 year, so just right after we launched, we 

20 actually brought credit unions into it, and they 

21 -- the financial institutions have two 

22 commitments that they need to make to be a part 
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1 of the VBBP.

2 The first one is is they will -- they 

3 will offer an account to a veteran bringing their 

4 direct deposit, their monthly monetary deposit, 

5 and they will have no minimum balance and no 

6 fees. So free checking.

7 The second one is that if the veteran 

8 or beneficiary comes in and says -- and the bank 

9 says, you know, you’re not maybe able to open an 

10 account today because you have some legal issues, 

11 or whatever those might be, from charge-offs from 

12 another bank, et cetera, that they will work with 

13 that veteran, that they will not just say, “I’m 

14 so sorry. We can’t help you.” But they will 

15 work with them.

16 And we leave that up to the 

17 institution, whether that’s a second chance 

18 program they have inside their institution or 

19 whether that is a community-based program or 

20 partnership that they have.

21 So why do the VA want veterans banked? 

22 Well, we already talked a little bit about this, 
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1 but this was -- some of the big things that they 

2 talk about. 

3 So, you know, 22 -- checks are 

4 22 times more likely to arrive late or not at 

5 all. And when we speak about specific groups of 

6 veterans, too, we have a lot of veterans that 

7 live overseas, and this is a huge problem, 

8 especially in the Philippines, which is actually 

9 something we are still trying to figure out a way 

10 to take care of those specific veterans, right? 

11 So you’re looking at very specific populations.

12 And then I think the biggest one for 

13 me is the 11 million payments that are not 

14 disbursed or cashed at all, which I am sure, 

15 Linda, you are very familiar with.

16 MS. CHERO: Yes, I am.

17 MS. DINESEN: And then --

18 MS. CHERO: We cancel them after a 

19 year.

20 MS. DINESEN: -- which Sue already 

21 brought up, which is $40 million or, I’m sorry, 

22 $40,000 in check cashing fees over a lifetime. 
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1 So this is just the cost of being under and 

2 unbanked.

3 And so then, of course, there is a 

4 legal requirement for EFT as well, which is 

5 another great reason we want them on direct 

6 deposit. 

7 So this is just some of the current 

8 status. So we’ve -- there are still about 

9 154,000 veterans that are still under or 

10 unbanked, and this was just in April. You can 

11 see the states that this is -- this should be no 

12 surprise to anyone. These are not only large 

13 states but large states with military and veteran 

14 populations, so California, Texas, Florida, 

15 Georgia, and Ohio.

16 And then one of the things that I -- I 

17 did want to briefly talk about is eligibility. 

18 And for those of you that maybe don’t know, the 

19 VA just updated their mission statement to 

20 include caregivers. And this was a really big 

21 step for the VA, and so we also wanted to make 

22 sure that we were including them as part of our 
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1 program to getting those caregivers banked as 

2 well.

3 So now we are calling them VA 

4 beneficiaries on a very holistic sense, so these 

5 are veterans, VA beneficiaries, which usually 

6 includes survivors, and then veteran caregivers 

7 as well. And they are actually a specific 

8 population that is being paid by the VA, so not a 

9 benefit per se, but they are actually getting a 

10 stipend from the military -- or from the federal 

11 government.

12 So all of the VBBP participants are 

13 FDIC insured banks or NCUA insured credit unions. 

14 And as I said before, these are low to no-cost 

15 accounts. The reason I say ”low to no cost” is 

16 that credit unions, for those of you that I’m 

17 sure are very familiar, they either -- most of 

18 them have either a small membership fee or a 

19 share amount that you have to put into an 

20 account. And so that’s why we say the low to no 

21 fee, but there is no minimum balance.

22 And this is the -- this is tied to 
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1 that idea of bringing the direct deposit. So as 

2 we talk about the differences between VBBP and 

3 BankOn, those are probably the biggest 

4 differences. We also do not require the bank or 

5 credit union to say they cannot have overdraft, 

6 because that is up to the customer, as it is 

7 opt-in.

8 So you can find out more about all of 

9 our institutions on our website. So it’s 

10 veteransbenefitsbanking.org, and each one has a 

11 description and -- because some of them do have a 

12 little bit different requirements, but we ask 

13 them to disclose that.

14 And so, briefly, I want to talk about 

15 the VBBP 2.0, which was launched about a year 

16 ago. And this was started because we were 

17 hearing from veterans that it was great that we 

18 were getting them banked, but they needed a 

19 little more help, especially those that were sort 

20 of on this fiscal edge of life, their benefit 

21 being the only thing that was maybe coming in or 

22 that and a mix of Social Security, and they 
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1 needed help with credit. That was one of the big 

2 things that bubbled up to the top was they needed 

3 credit and debt help.

4 And so we ended up partnering with two 

5 organizations -- the Association for Financial 

6 Counseling and Planning Education, or AFCPE, and 

7 the National Foundation of Credit Counseling, or 

8 NFCC. And through those agencies we are now 

9 offering one free session of either financial or 

10 credit counseling to any veteran -- any -- not 

11 just unbanked and underbanked, any veteran that 

12 would like this service.

13 The VA has so far sent out over one 

14 million letters to veterans letting them know 

15 that this exists. And we have had a huge overlay 

16 you can see on the data of when they send out 

17 those letters. And because they send them by age 

18 group, so we can see who is accessing then that 

19 financial and credit counseling. And we are 

20 working toward partnering with other large, you 

21 know, organizations like Wounded Warrior Project 

22 to really get this out and in front of the 
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1 veterans.

2 And then we also have some financial 

3 education stuff, like Veteran Saves, which is run 

4 by the Consumer Federation of America, under the 

5 America Saves umbrella, which just launched. And 

6 AMBA is really excited to be a part of that. I 

7 have a special relationship with Military Saves 

8 because I used to run the program at CFA years 

9 ago.

10 And then also Vet Cents, which is a 

11 financial education platform, which is going to 

12 see a facelift. So get ready for that in 

13 November of this year.

14 And then this is sort of where the 

15 program is at, so we’re really, really excited to 

16 say that since December of 2019 we have 

17 successfully banked 245,000 veterans and 

18 counting. Yeah. It’s very exciting. They have 

19 changed to direct deposit.

20 This slide also says that there are 

21 66 veteran-friendly financial institutions. 

22 There are actually 70. So since I made this and 
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1 sent it to Jackie, which was I think two weeks 

2 ago, we have actually on-boarded four new credit 

3 unions -- three credit unions and one bank.

4 And these are pictures here from the 

5 VSO conventions that we attended last summer. 

6 You can see me in blue on the right on the bottom 

7 picture, if you wanted to know where I was, and 

8 that was actually at the American Legion -- or, 

9 I’m sorry, the VFW convention. And then the one 

10 up on the -- in the -- on the right top corner 

11 was at the American Legion.

12 And we do plan to visit those again 

13 this year, along with the VA, and their fraud 

14 department is going to be there as well, so we 

15 can help with outreach about fraud, because as 

16 you can imagine, fraud and financial education 

17 and banking is all tied together.

18 And I already mentioned a lot of other 

19 things on this page, like the letters that went 

20 out. And then the check inserts and also the 

21 transition assistance program guide, which for 

22 those of you that don’t know, the military is 
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1 required to go through TAP when they are 

2 transitioning out of the military. And it was 

3 really exciting because my husband is actually 

4 going to leave active duty this year, so he just 

5 went through TAP. And we are both really excited 

6 to see that the VBBP was part of the TAP 

7 presentation that he was given.

8 So this is my information on the 

9 bottom, and then Patrick Phillips, who runs the 

10 program at the VA.

11 And I will stop there, and I know that 

12 I have -- I will definitely take questions later.

13 Thank you so much.

14 MS. STELLER: Thank you. Andia, thank 

15 you for walking us through the Veterans Benefits 

16 Banking Program and how it came to exist.

17 So we have heard at this point from 

18 two trusted intermediaries on how their 

19 partnership helped maximize the impact of 

20 government efforts, whether it took two months to 

21 do something or a small staff, and how agile this 

22 experience has been.
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1 I now want to move us into our lessons 

2 learned portion, and I’m going to invite our IRS 

3 and CASH colleagues to please share, you know, 

4 one to two takeaways -- you each have about two 

5 or three minutes -- that you would like to share 

6 with the group.

7 MR. DILL: I’ll go first. Thank you.

8 I have three, so I hope that’s okay. 

9 But one -- as I mentioned in my earlier 

10 discussion, one is we have realized and we are 

11 going to double down on using leveraged 

12 communications through trusted organizations.

13 As Sue said, we have worked with the 

14 CASH Campaign as an example for years within our 

15 volunteer Income Tax Assistance Program. And 

16 getting a trusted organization in the community 

17 to get a message out, whether it’s about getting 

18 banked or using direct deposit, is just so much 

19 more successful than putting it in an IRS news 

20 release, which not many low to moderate income 

21 taxpayers subscribe to. So we will continue to 

22 do that. 
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1 We have also realized that working 

2 with our wonderful federal partners is also a 

3 wonderful way to increase our productivity. So 

4 we’ll continue to work with FDIC and all of our 

5 other federal partners.

6 Second, we have used -- we realize 

7 that using customer-friendly access points, such 

8 as our portal, for the banking information that 

9 Linda talked about, and also if you recall, we 

10 created one for the advanced child tax credit, 

11 are going to be wildly successful. 

12 But what we have to find a way is to 

13 make them more accessible, particularly to low to 

14 moderate income taxpayers. Quite frankly, it’s 

15 hard to verify their ID. It’s hard for them, 

16 it’s hard for us, and so we have to find a middle 

17 ground, a place where we’re comfortable their ID 

18 is correct and they can access it. So we’ll 

19 continue to use those in the future.

20 And then, last but not least, we have 

21 realized throughout this whole process that we 

22 have to double down our efforts on folks using 
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1 direct deposit. Our numbers have, quite frankly, 

2 not inched up much over the years. 

3 One of the numbers -- I was talking 

4 with our partners yesterday, the ARP Foundation 

5 Tax Aide, who served primarily low to moderate 

6 income taxpayers over 50 years old, and last year 

7 during the filing season only 66 percent of their 

8 taxpayers used direct deposit when they got a 

9 refund.

10 Now, the reality is almost all of them 

11 were either on Social Security or getting some 

12 type of federal benefits that they are required 

13 to use a bank account. So it’s not that they 

14 don’t have a bank account; they are just refusing 

15 for that fear I mentioned earlier. So we are 

16 going to continue to work on trying to increase 

17 the access to using direct deposit and continuing 

18 to communicate.

19 And of course that leads us to 

20 particularly in our low to moderate income under 

21 50, we need to continue to work with partners to 

22 get them access to mainstream financial 
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1 institutions.

2 So a lot of work to do, but a lot of 

3 success so far, and we’ll continue to work on 

4 that.

5 Sue?

6 MS. ROGAN: Thank you. Yes. And 

7 several things came up for us. One thing I 

8 really want to publicly do is to thank the 

9 government agencies that are here, and the 

10 materials that you make. The materials of the 

11 CFPB, the IRS, the FDIC, the Federal Trade 

12 Commission are a lifeline to our non-profit 

13 partners. We can’t create these materials 

14 ourselves. So being able to point to unbiased 

15 materials, which is really what we based all of 

16 our programming on, is really very helpful. So 

17 that partnership is incredibly important.

18 But in terms of the Unemployment 

19 Insurance Division, it was really helpful for the 

20 collaboration to happen, that we were willing to 

21 put in the work to write the materials, to -- and 

22 have them approved obviously, you know, by the 
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1 government officials and everything, because we 

2 knew the material to write. They didn’t know, 

3 and it would have taken a lot longer for them to 

4 create it.

5 We also really recognize that 

6 government has to be neutral. Again, they cannot 

7 be promoting a particular bank or credit union, 

8 so having consumer choice is really key for them.

9 And one thing that we are going to do 

10 I think going forward in changing some of our 

11 marketing is to really point out or to highlight 

12 one of the aspects of the BankOn Program that is 

13 one of my favorites, is that if someone is listed 

14 in ChexSystems negatively, they can still open a 

15 BankOn account unless it is outright fraud. 

16 And we see an awful lot of people who 

17 are listed in ChexSystems. And when they see the 

18 BankOn account, if they don’t really see that 

19 highlighted, they may not think to move forward 

20 with it. So it’s one thing that we’re going to 

21 work on in the future.

22 Thank you.
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1 MS. STELLER: Thank you. 

2 So now we are going to move into 

3 replicating success. Where do we go from here? 

4 I want to invite our FDIC, BFS, and AMBA 

5 colleagues to please share next steps that your 

6 office is looking to do that can help advance 

7 account access and establishing a banking 

8 relationship. You each have three minutes.

9 MS. SOWELL: If someone could go to 

10 the next slide, I’ll touch on a couple of things. 

11 So since the pandemic, the FDIC transitioned our 

12 EIP web page to what is now our 

13 fdic.gov/getbanked web page, which offers 

14 additional resources such as digital and 

15 printable flyers and checklists for community 

16 organizations to share with consumers that they 

17 are working with.

18 And so with that website, we 

19 definitely invite government agencies, community 

20 organizations, and financial institutions to join 

21 our #getbanked movement. We ask that 

22 organizations consider providing a link to our 
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1 GetBanked web page on their website. The web 

2 page is available in English and Spanish. 

3 And also, they can create -- the web 

4 page visitors can create their own social media 

5 posts, which use some of the digital assets that 

6 you see on this slide that come from our 

7 GetBanked social media toolkit. And those are 

8 also images that were used during our public 

9 awareness advertising campaign, which we had two 

10 pilots throughout 2021 and 2022 in metropolitan 

11 areas that were really successful in driving 

12 people to our web page.

13 Second, we really encourage --

14 continue to hear the theme today -- encouraging 

15 community organizations and government agencies 

16 to form partnerships and to also expand those 

17 partnerships with banks who offer affordable bank 

18 accounts.

19 And, third, we really still want to 

20 encourage more banks to explore offering 

21 affordable and sustainable bank accounts. And 

22 when considering this, banks can visit the FDIC’s 
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1 affordable accounts page on our banker resource 

2 center to get more information about how to offer 

3 an affordable account and how establishing those 

4 accounts can cultivate and grow successful 

5 customer relationships with unbanked households.

6 Also, as we talk about what’s next, we 

7 are excited to mention that FDIC inserts will be 

8 included with some of those mailed Treasury 

9 checks that Linda was discussing earlier. We 

10 anticipate that these inserts will be included 

11 likely during the month -- during the month of 

12 June, and many individuals who receive their 

13 government payments via paper check will also 

14 receive an insert that looks like this.

15 It indicates the importance of opening 

16 a bank account and notes that direct deposit into 

17 an account is the fastest and safest way to 

18 receive payments from the government. And it 

19 encourages them to visit our GetBanked web page 

20 to find an account and learn more. 

21 So it’s double-sided, and on that 

22 second side you will see the QR code. So if they 
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1 scan it with their mobile device, they will be 

2 directed to our GetBanked web page. There is one 

3 for English and Spanish. So it’s just another 

4 way that we continue to reach more unbanked 

5 households with our federal partners.

6 MS. STELLER: Thank you.

7 MS. CHERO: Our next steps include 

8 looking at two opportunities that we have, an 

9 opportunity where we address payees who do not 

10 have a bank account and also payees who have a 

11 bank account but opt to receive a check. And Don 

12 mentioned that earlier.

13 So what are we doing about it? Well, 

14 the first thing we are doing is we have an agency 

15 priority goal to disburse 99 percent electrically 

16 by year 2030. So at the height of pandemic, we 

17 were printing about 128 million U.S. Treasury 

18 checks. Getting to 99 percent means I have to 

19 get that down to about 12 million, which I’m 

20 still figuring that out.

21 (Laughter.)

22 MS. CHERO: But I will tell you what 
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1 that is going to take is partnerships, and today 

2 is a good example. We have to work together, 

3 come together, to really understand, how do we 

4 get that volume so that 99 percent of payees are 

5 receiving their funds electronically.

6 I know we heard this stat earlier 

7 today. I am also responsible for payment 

8 integrity, constantly looking at, is a payment 

9 going to the right person, at the right place, at 

10 the right time. Checks do -- unfortunately, 

11 60 times more likely to create a payment 

12 exception where it doesn’t make it to the right 

13 person at the right time for the right reasons.

14 So we are constantly looking at how it 

15 is that we can minimize the volume. There are 

16 two proposed legislations that we actually 

17 successfully have included in the FY24 

18 President’s budget. We are thrilled because I 

19 think we have tried for four years in a row, so 

20 finally success.

21 So the two proposed legislations that 

22 have made it into the budget include offering 
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1 account verification. And, again, this goes back 

2 to developing that trust, fostering trust within 

3 the government, right? 

4 So if we know if we are going to get a 

5 payment electronically and it actually lands in 

6 the correct account with the correct owner, it 

7 builds trust. If it doesn’t, because we have 

8 many bad actors out there, it goes in the 

9 opposite direction. So we think account 

10 verification is key, again, to foster that trust.

11 The second piece of legislation that 

12 made it into the budget is conducting bank 

13 matching. So this goes to the point of those 

14 that have a bank account but opt for U.S. 

15 Treasury check. 

16 And I hate to say this, Don, but IRS 

17 is really where we have our challenges. 

18 Taxpayers, for whatever reason, are opting for 

19 that check versus into their bank account when I 

20 know that I am sitting on a bank account for that 

21 individual because we pay their Social Security 

22 benefits.
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1 We pay their veterans benefits, we pay 

2 their railroad retirement, and so forth. So the 

3 proposed legislation is to allow Treasury to use 

4 this information and to convert what would be a 

5 check into an electronic payment.

6 We also promote on the Hill, which is 

7 how I think we are gaining traction with the 

8 proposed legislation. It is how we were able to 

9 do this via the CARES Act, by developing 

10 relationships and explaining to them the power of 

11 doing bank matching, and of course account 

12 verification.

13 And then, finally, our partnerships. 

14 I know we already talked about it, but adding the 

15 GetBanked website on our Go Direct website, 

16 including the inserts in the month of June and 

17 maybe in July to get the word out there. The 

18 more we can get the word out there, get the folks 

19 educated, and then gaining that trust. I can’t 

20 express enough just really what that is about.

21 The input that we get is, “Well, we 

22 don’t trust the government. How do I know it’s 
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1 going to land in my account?” 

2 So, again, hoping between the account 

3 verification and the bank account matching that 

4 we can do our part to ensure that folks are 

5 banked and having a successful relationship with 

6 their banks.

7 MS. STELLER: Thank you.

8 Andia?

9 MS. DINESEN: Great. Thank you.

10 So I just want to point out a couple 

11 of things. First of all, I did mention, you 

12 know, that we are small, and that we do work with 

13 the unbanked team at VBA, so through the Veterans 

14 Benefits Administration. But I think one of the 

15 things that made us so successful is, obviously, 

16 the public-private partnership that exists 

17 through -- with the VA and our organization.

18 And because of where AMBA sort of sits 

19 in this community as well, we are really able to 

20 touch a lot of folks that are on the ground 

21 working with military and veterans. And I think 

22 that that is super important because that helps 
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1 with the messaging. 

2 But having VA as our partner in this, 

3 because they are a trusted source of carrying 

4 these messages, was so very important.

5 Also, one of the things obviously, 

6 because they are the VA, they have very rich data 

7 about their veterans and who they are paying. 

8 And like I had suggested before about the 

9 veterans that are specifically in the 

10 Philippines, they are also able to drill down, 

11 and they are working on programs for the homeless 

12 veteran population as well.

13 And one of the things that we were 

14 successful in was getting memos from the FDIC and 

15 from the OCC both that enabled a homeless veteran 

16 to use a caregiver or a VA -- their VA case 

17 manager or their VA office, the regional office, 

18 to utilize those addresses to open an account. 

19 And that has been very successful, kind of in 

20 one-off situations where you actually have a 

21 veteran that is homeless that wants to open an 

22 account, because that’s not necessarily always 
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1 the case, but they have been successful. 

2 We have a few stories out of Oklahoma 

3 and also Hawaii, and the one in Hawaii was 

4 actually very interesting because that -- the 

5 homeless man had actually been pulling out all of 

6 his cash from his direct express card and then 

7 was subsequently being robbed every single month.

8 And so instead he now has a safe 

9 account working with -- and they actually -- the 

10 Bank of Hawaii was the bank that did that, and 

11 they actually worked along with the Armed 

12 Services YMCA on the ground there.

13 So, really, again, how important all 

14 of these relationships are, all of these 

15 public-private partnerships, as we can work 

16 together.

17 And then the last thing I’ll say is 

18 that, you know, because we brought on the 

19 financial and credit counseling -- that has been 

20 so important -- we have really worked with those 

21 counselors and those two agencies to communicate 

22 how important it is that these folks that they 
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1 are working with have a banking relationship, 

2 whether with their bank or with their credit 

3 union, and really deepening that relationship. 

4 So it’s not just on the surface, great, they have 

5 direct deposit, but how they can other -- utilize 

6 other products and services at that institution 

7 that would be right for them.

8 So I will leave it at that for now.

9 MS. STELLER: Great, thank you to our 

10 panelists for sharing how their agencies, and 

11 organizations continue to advance economic 

12 inclusion in the banking system by promoting 

13 account access, and collaborating across sectors. 

14 I will now open the floor to questions. We will 

15 start with our members of the board, and then 

16 members of the committee. Thank you.

17 CHAIRMAN GRUENBERG: Well, let me 

18 thank the panel, I think you've done terrific, 

19 and I've learned a lot just from the discussion, 

20 and your commitment here is self-evident, and the 

21 opportunity for using government checks as a 

22 vehicle for opening accounts is clear. Because 
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1 the benefit is so tangible, and direct, and 

2 explicit for the individual.

3 I wasn't trading -- really want to 

4 open it up to our committee members, because we 

5 get a chance to do this all the time quite 

6 frankly, but the notion that we have a 

7 substantial number of tax payers that have 

8 accounts that still prefer to receive their tax 

9 refunds by check probably drives you a little bit 

10 crazy.

11 And how do you deal with that? 

12 Because clearly in their interest to consider 

13 receiving it through direct deposit.

14 MR. DILL: Yes, that's a great 

15 position, and Sue used a great phrase, that the 

16 IRS is in a neutral position, right? We're happy 

17 to recommend, but we can't require. And so, I'm 

18 not going to comment on Linda's things, but they 

19 sound good to me on working with the government. 

20 Because we don't legislate, we just enact, but it 

21 is one that's a challenge to us.

22 As I said, we work very hard with 
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1 these trusted partners, I've talked to a meeting 

2 with our friends from the AARP Foundation Tax 

3 Aid, and then partners like the Cash Campaign. 

4 They are in their communities working with fellow 

5 citizens, trusted organizations, we have to rely 

6 on them. But it goes to show you how ingrained 

7 this fear of the IRS is. 

8 How ingrained that -- I've had people 

9 tell me well, If I give them my direct deposit 

10 information, then they could some time take money 

11 out. And again, particularly with low to 

12 moderate income tax payers who don't have much 

13 experience with the financial institutions, don't 

14 have a lot of background in financial wellbeing, 

15 that's a hard myth to overcome.

16 But again, as I've mentioned several 

17 times, the only way we can do it is working with 

18 leveraging these trusted partners, but 

19 legislation would probably be good. Because as 

20 you said, the fear of loss, and all of the 

21 inabilities to get that money, and the check 

22 cashing fees is just a real hit to those that use 
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1 this -- or I should say fail to use the 

2 opportunity of direct deposit.

3 CHAIRMAN GRUENBERG:: Members of the 

4 committee?

5 MEMBER MINTZ: You don't have to ask 

6 me twice. This is a word I don't use often, the 

7 work inspired, and discussed on this panel is 

8 genuinely inspiring, and I want to include Liz 

9 Ortiz, and not just for the reading of the 

10 Sunshine Act in her role on this board, and I 

11 learned a ton about BFS. I had no idea that you 

12 all were sleeping late, and drinking coffee all 

13 day, and just eating bonbons.

14 No, the work is really incredible. 

15 And the work that you all did in the CASH

16 campaign in Maryland is the cutting edge of the 

17 future with 49 other states, as far as I'm 

18 concerned on unemployment, it's unbelievably 

19 exciting. And the lessons that you learned in 

20 making that happen, we want to soak out of you, 

21 and replicate across the country.

22 And so, actually my questions are for 
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1 the two of you, and maybe Don, you might as well, 

2 which is you talked about trust, and you were 

3 talking about trust of consumers, and American 

4 citizens, and people receiving payments. But the 

5 work that you all did, the partnerships that 

6 created this incredible success involved lateral 

7 trust, right?

8 Trusting other government partners, 

9 getting a nonprofit organization to get a state 

10 agency to take this leap. And I wonder if you 

11 could just tell us a little bit more about the 

12 magic of the equation of how you go from well, 

13 we've got this problem, we have this potential 

14 partner that's offering a solution to this 

15 problem, but how do you make the leap into that 

16 level of kind of bilateral organizational trust?

17 I wonder f you could both sort of talk 

18 about what that tipping point was, so that as we 

19 try to create more of that, we learn from --

20 Linda, could we start with you?

21 MS. CHERO: Yeah, I'll start.

22 MEMBER MINTZ: Thank you.
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1 MS. CHERO: So, for me it was a matter 

2 of creating a common objective. If you can get 

3 to a common objective, the solution is that much 

4 easier. It's when your objective doesn't align 

5 that it's harder to get everybody on the same 

6 page. So, for this scenario, where I knew IRS 

7 was going to request that I print 70 million 

8 checks, and I know I didn't have the capacity to 

9 do so.

10 And as Don had articulated, he didn't 

11 want me to print 70 million checks as much as I 

12 did not want to, and could not do. So, we had 

13 the same objective, and then we realized 

14 empowering our team to really think outside the 

15 box, as many of us have mentioned, we don't tend 

16 to do things very quickly in the federal 

17 government. But we knew we had weeks, we didn't 

18 have years to figure this out.

19 So, we came together collectively, 

20 several agencies in this scenario, Social 

21 Security, IRS, and Fiscal Service, and said let's 

22 start every sentence with what If, what If we did 
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1 it this way, or how about this? And not 

2 entertain any conversations that sounded like 

3 this, but our system can't, but policy states. 

4 My requirement was start every sentence with how 

5 about.

6 So, when somebody at the table said 

7 well, how about all that data we have in our 20 

8 billion records of payments, and then it just 

9 followed from there. Social Security joined in, 

10 IRS joined in, of course Fiscal Service. Then it 

11 was ruled we'll never be able to do it, how are 

12 we going to pass it into law? We have weeks, we 

13 don't have years. I'm like no, no, how about. 

14 I'll figure out the how, you just keep bringing 

15 the ideas.

16 And believe it, or not, within weeks, 

17 we were able to again, socialize it on the hill, 

18 get it included in the CARES Act, get everybody 

19 on board, and create a process. We had to create 

20 a process, we had to create business rules, so we 

21 weren't just saying okay, any account we have in 

22 the 20 billion records, it was a matter of no, it 
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1 had to be a certain age, it had to have more than 

2 one payment to an individual, and so forth.

3 So, I will say common ground, common 

4 objective really empowered the team to think 

5 outside the box, really think about how about, or 

6 how can, as opposed to no, we can't. And we do 

7 tend to do that in the government once in a

8 while. But I will tell you it was a pivotal 

9 point, because from here on out, now we know we 

10 can make a difference in weeks, and not years.

11 And we can create pilots, not take 

12 years, but get it done in months. So, we're 

13 seeing the success replicate. So, certainly 

14 appreciate your support, and your wonderful 

15 comments to us.

16 MS. ROGAN: Thank you. I would say 

17 that I probably drew upon my experience as a 

18 consumer protection investigator with Montgomery 

19 County government. And so, I recognize that 

20 government again, has to be neutral, and needs 

21 some help because they're overwhelmed. And so, 

22 coming to common ground, and being able to say 
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1 what we really both want out of this is for 

2 people to get their insurance benefits via direct 

3 deposit, not a paper check.

4 And I remember when I started this 

5 work at the Cash Campaign, I would go to 

6 different government agencies, and say let's 

7 partner, let's do this financial education 

8 together, or let me do coaching for the people 

9 that you're seeing in social services, and there 

10 was a lot of resistance from government agencies.

11 And my first thought was I'm not 

12 selling used cars. Not against those who do, but 

13 as a consumer protection investigator, there was 

14 some concerns there. This is a viable nonprofit 

15 program that you want to work with, and so trying 

16 to convince them as to why this was important to 

17 partner with us, because we had this program that 

18 would allow people access to these accounts, it 

19 really came together in a nice partnership.

20 MEMBER MINTZ: I would just add super, 

21 super quickly what you did was amazing, the way 

22 you did it was fascinating. And now everyone 
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1 gets to use what you folks have done as proof 

2 points next time. It doesn't have to be an 

3 emergency, it doesn't have to be a panicky 

4 pandemic, it's proof of concept, thanks to you 

5 all. Thank you.

6 MS. CHERO: What I failed to mention 

7 is our success rate. So, when we used 70 million 

8 records, our success rate was 99.6 percent, we 

9 got it right.

10 MEMBER MINTZ: That's amazing.

11 MS. CHERO: Yeah, so again, to your 

12 point, we have proven that it's effective, and it 

13 works.

14 MS. STELLER: Brandee?

15 MEMBER MCHALE: So, I want to build 

16 off of this a little bit, and say first of all, I 

17 think what is so inspiring is that we've figured 

18 out a recipe for scale, and that pilots are 

19 important to test, and learn. But if they don't 

20 evolve, and translate into scale, then they're 

21 nice to do. So, I appreciate, and really am also 

22 excited about the potential for scale.
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1 I have a concern though, that I want 

2 to put on the table for all of us, that we need 

3 to think about in this process. I've heard 

4 incredible game changer is a mindset shift, 

5 having the trusted community intermediary is also 

6 a game changer. However, I don't know that we've 

7 built out a sustainable, and scalable financial 

8 model for this work.

9 And I'm concerned that we worked 

10 during extraordinary times, and we had some 

11 amazing community change agents, and 

12 organizations. I was blown away when you said 

13 three people, the organization. And so, what is 

14 it that you need in order to financially sustain 

15 this work? Because it's not being fully funded 

16 by the public sector.

17 It's not being fully funded by the 

18 private philanthropic sector, and as someone who 

19 sits at the intersection of both I'm in a bank 

20 foundation, maybe there's a way for us to think 

21 about bringing an additional innovation, and 

22 thinking about how the role of banks, not just as 
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1 account providers, but also in investing, and 

2 supporting this work. So, how did you fund this 

3 work? 

4 MS. ROGAN: Well, I guess that comes 

5 to the nonprofit.

6 MS. DINESEN: So, that is a really 

7 great question, and when we started out, AMBA 

8 really soaked up all of the cost of launching, 

9 and operating the VBBP website. So, like when I 

10 said we just on boarded four new credit unions, 

11 and banks, that was all me. It's one of my many, 

12 many hats that I wear during the day, which is 

13 website developer.

14 So, we were able to sort of do that in 

15 our everyday work. Again, when we originally 

16 setup the relationships with AFCPE, and NFCC, we 

17 bore the brunt of setting those programs up, and 

18 then on the back side, they worked with their 

19 funders that they had gone to before previously. 

20 Now, with all that being said, as we move now to 

21 VBBP 2.5, is what I'm calling it, we decided to 

22 work alongside.
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1 Because the same funders that we're 

2 working with, NFCC, and AFCPE, was the Wells 

3 Fargo Foundation. And so in our conversations 

4 with them, we started to realize as we wanted to 

5 move into this next .5 phase, that maybe it would 

6 be better to bring all of that under one 

7 umbrella. So, now we're actually working with 

8 the Wells Fargo Foundation alongside the ABA, who 

9 is actually going to be the fiscal agent for that 

10 funding.

11 And so, we're working closely with 

12 them. This is a brand new relationship, it's 

13 just getting off the ground, but that is what we 

14 had to do. Now, our plans in the future are that 

15 this is so successful, the financial, and credit 

16 counseling pieces of this, the financial 

17 education is so successful that at some point 

18 Congress says hey, VA, here's the funding to 

19 sustain financial, and credit counseling for 

20 these veterans.

21 And much like the way that the DOD 

22 does it now, and instead of getting one free 
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1 session, you have access to financial, and credit 

2 counseling. And so, that is our pie in the sky, 

3 maybe a couple of years from now, but that is our 

4 plan. But for now it is being privately, 

5 philanthroply -- I like to make up words, but 

6 yeah, Wells Fargo Foundation is behind most of 

7 this, yes.

8 MS. SOWELL: And I would just add from 

9 a community affairs perspective, I'd be remiss if 

10 I didn't say that especially over these last two 

11 years our team both nationally, and particularly 

12 in the regions, they work at the local level with 

13 financial institutions, community organizations, 

14 government agencies. And so in many of those 

15 events, over the last two years there's been over 

16 85 specifically related to account access.

17 Where, they'll bring them together. 

18 So, whether it is something at a smaller scale, 

19 or one of our alliances for economic inclusion, 

20 there are needs that are identified for specific 

21 communities, and in many of those cases there are 

22 opportunities to identify partnerships that 
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1 happen.

2 And then, they may expand, whether 

3 it's launching a new BankOn coalition, then 

4 there'll be opportunities for financial 

5 institutions to contribute to that funding. 

6 Whether it's directly to the coalition, or 

7 potentially sponsoring certain fellowships. So, 

8 that's another area where we are encouraging at 

9 the community affairs level, and facilitating 

10 those relationships to be built.

11 So, that the needs that are happening 

12 at that local level gets the attention with the 

13 local players in the area. 

14 MS. ROGAN: And that cued me up 

15 perfectly, because I was going to also represent, 

16 and talk about your -- Cynthia Doran's 

17 representative in our area that attends a lot of 

18 different events, and really promotes the banking 

19 options, and the reasons for it. As all 

20 nonprofits, we are funded through many different 

21 grants, and streams. 

22 We certainly received funding through 
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1 CFE to launch the BankOn Maryland program, we had 

2 a program manager who managed this, but as 

3 typical with our work, whether it's a guaranteed 

4 income project we launch, or a partner network 

5 that we're launching, all of our staff just jump 

6 in. When something is happening this fast, and 

7 this quickly, all of us jumped in.

8 CFE, you did the videos for us, so 

9 it's like leveraging different partnerships as 

10 well. We've created coalitions across Maryland 

11 that are addressing needs in their specific 

12 community, so we can leverage them at any 

13 particular time. So, it's a lot of putting 

14 things together, puzzle pieces.

15 MEMBER MCHALE: I raise it, because I 

16 just want us to be clear that the entrepreneurial 

17 mindset that you bring to this still has a real 

18 financial cost, and we want to continue to 

19 sustain this when we move out of a crisis 

20 situation where it is an all in type thing, and 

21 say how do we do this in a way that is 

22 economically viable, and financially viable on a 
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1 long term basis.

2 I think that there's an opportunity 

3 for us to convene on the funding side, and say 

4 how do we make this actually easier for you. 

5 MEMBER CAMPER: Hi, thank you all. I 

6 echo the being inspired piece, and I just, Sue, I 

7 wanted to thank you for one point that you made, 

8 and just lift it up, which is, and again in the 

9 spirit of how we're going to replicate this with 

10 other government payments, potentially to scale 

11 it. One of the hurdles that we had heard 

12 originally, of sort of pointing to here's a set 

13 of account standards that a government agency can 

14 point to.

15 There had always been a concern about 

16 steering towards a particular financial 

17 institution, and now that we're closing in on 400 

18 certified accounts offered by banks, and credit 

19 unions, I would hope that that puts to rest any 

20 concern that If you say here's a link to the 

21 BankOn certified accounts that are available to 

22 consumers, that that crosses the threshold of 
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1 endorsing any particular bank, or credit union.

2 And obviously the account standards, 

3 which are based on the FDIC's template hopefully 

4 puts to rest any concern about fees, and it's 

5 appropriate for all consumers. So, thank you for 

6 that, Sue.

7 DIRECTOR CHOPRA: Let me just say a 

8 few things. So, I also want to echo something 

9 Sue mentioned, and make sure we all kind of 

10 really think about it, is the role of check 

11 systems. Which is used by nearly every financial 

12 institution to check, it's a kind of credit 

13 bureau. And many people who did have an account, 

14 don't have an account, and can't get an account 

15 because they're blacklisted.

16 And so, I think you're right, there's 

17 things that we have to think about very 

18 surgically about them about reentry, and who is 

19 going to offer them, and what are the 

20 expectations we have of banks, and credit unions 

21 on that front? The other thing that I wanted to 

22 share is there is a lot of thinking going on 
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1 about the future of the payment system, and new 

2 rails being created both government side, and 

3 bank side.

4 I would encourage all of us to think 

5 about the design of that, and how that will aid 

6 in some of those efforts. The one product that I 

7 did not hear us mention, but was hugely 

8 important, and was a big footprint in the state 

9 UI system, was pre-paid cards. And then 

10 obviously Direct Express has a huge footprint as 

11 well.

12 So, I guess I was wondering if there's 

13 anything unique that we felt we learn from those 

14 pre-paid card recipients, do we know anything 

15 about where they’re reloading it, where they’re

16 transferring it? Because there was really 

17 millions, and millions of pre-paid cards that 

18 were issued by states across the country.

19 So, I don't know if you had a view 

20 from Maryland on that, or from -- I think you run 

21 Direct Express too, right? 

22 MS. CHERO: I do run Direct Express in 
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1 my free time. So, I failed to mention we did 

2 issue about 15 million debit cards, in a way to 

3 keep up with the capacity for the economic impact 

4 payments, a total of 15 million. I wouldn't say 

5 it was as well received as our bank account 

6 matching was. So, folks were somewhat confused, 

7 even though literature went out about what do I 

8 do with this card?

9 Some of them threw it away. So, that 

10 may have been an example of we had some lessons 

11 learned. But at the end of the day, our Direct 

12 Express program, we just got our satisfaction 

13 survey, we did get a 91 percent score, but 

14 they're not reloadable cards. So, it really is a 

15 mechanism for that are -- those that are not 

16 familiar with Direct Express.

17 So, for those that are unbanked, that 

18 don't have a bank account, but don't want to 

19 receive a check, they can opt to have their 

20 monthly benefit automatically loaded to their 

21 Direct Express card. And again, it's a very 

22 valuable, important step that we think before 
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1 they get banked. So, we see it as a stepping 

2 stone to get them acclimated to something besides 

3 just holding cash in their pockets.

4 Although, as we mentioned, sometimes 

5 they pull all the money out, walk around in the 

6 pockets, and then folks unfortunately have their 

7 funds stolen. But we are looking at things of 

8 the future, peer to peer payments. Young folks 

9 today, they prefer Venmo, they prefer Cash App, 

10 and PayPal. I know IRS did a study on the 

11 demographics of those that are getting a check 

12 from IRS as opposed to an electronic account.

13 And believe it, or not, a large 

14 portion of them were young. I was surprised, 

15 because I was thinking there was going to be a 

16 certain demographic, but there was a large 

17 portion that were from the younger generation 

18 that frankly, they don't know what a check is. 

19 My son does not know what a check is. They 

20 prefer peer to peer, Cash App, everything via 

21 their phone.

22 So, we are constantly looking at what 
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1 are the payment rails of tomorrow to make sure 

2 that we work with the agencies, and to provide 

3 that choice to Americans. How would you like to 

4 receive your federal payment? Is it a check, is 

5 it a Direct Express card, is it a peer to peer 

6 type of scenario? But very good points, and very 

7 timely, because it's part of our conversations 

8 today.

9 MEMBER MINTZ: I'm so sorry, please, 

10 yeah, please.

11 MS. ROGAN: Just in terms of the pre12 paid card for Maryland, we asked for data from 

13 the Department of Labor to be able to ask those 

14 kind of questions, or data on how many people get 

15 these kinds of accounts, that's where the line in 

16 the sand got drawn, and it was like we're not 

17 giving you that. So, they were unable to give us 

18 data on where people were using the cards.

19 Again, my understanding the reason 

20 that they changed though, is because of the fraud 

21 that they were experiencing with the pre-paid 

22 cards. That was really the impetus to going to 
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1 direct deposit versus the pre-paid card because 

2 of the fraud.

3 MEMBER MINTZ: Rohit, I just want to 

4 say I'm really glad that you brought this topic 

5 up. I think back to an early program, we were 

6 trying to get provisional summer workers in the 

7 Parks Department in New York City government 

8 banked, and we had this whole huge program, and 

9 we got everybody excited, and they went to open 

10 the accounts, and 80 percent of them were turned 

11 down.

12 So, that was my lesson learned through 

13 flames around the blacklist that you talk about. 

14 And I think that there has been some interesting 

15 movement in regard to reducing some of those 

16 barriers that we're certainly paying a lot of 

17 attention to. For example yesterday, acting 

18 controller Sue talked a little bit about, and 

19 these are my words, not exactly his.

20 Sort of right sizing know your 

21 customer requirements for accounts like BankOn

22 certified accounts where the risk factor is so 
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1 much lower than other types of accounts. I think 

2 that could go a long way toward reducing some of 

3 those barriers If we could move in that 

4 direction. And then in addition, we've actually 

5 been working directly with FIS' check system.

6 That has created for us what they call 

7 a BankOn bundle, where they're about to start 

8 pushing to their customers an expanded entryway 

9 into BankOn certified accounts with the exception 

10 of, as Sue mentioned, fraud. So, I think we've 

11 got some movement there, and I think it's worth a 

12 lot of partnering to get that done.

13 MS. STELLER: Thank you very much. If 

14 there is no more questions, I will pass it on to 

15 Liz.

16 MS. ORTIZ: Thanks, Jackie, thank you 

17 everyone. In addition to my role in reading the 

18 Sunshine Act Notice, I get to do things like say 

19 take a break. All right, so please come on back 

20 at 10:45, and we'll have the next panel, thanks 

21 everybody.

22 (Whereupon, the above-entitled matter 
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1 went off the record at 10:35 a.m. and resumed at 

2 10:50 a.m.) 

3 MS. ORTIZ: All right. Well, welcome 

4 back everybody, I appreciate everybody returning 

5 from the break for our second panel, which is 

6 setting the stage for financial success. I'm 

7 going to hand the microphone over to the 

8 moderator, my colleague Ken Worthey.

9 MR. WORTHEY: Thank you Liz, good 

10 morning, Mr. Chairman, board members, members of 

11 the committee. This panel will build on the 

12 themes presented in the prior panel by 

13 highlighting some additional applications of the 

14 bankable moment. We will explore two opportunity 

15 areas that leverage account access, and financial 

16 education as key milestones on the path to 

17 financial wellbeing, ultimately setting the stage 

18 for financial success.

19 The panel will be in two parts. Part 

20 one will focus on the on ramp to the financial 

21 system for young people, and leveraging 

22 opportunities like a first job, or first 
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1 paycheck. Part two of the panel will focus on 

2 self-sufficiency programs for those on housing 

3 assistance. Each panelist will start off with 

4 the presentation of their respective program, and 

5 then I'll ask a follow up question, or one, or 

6 two follow up questions.

7 And then at the conclusion of both 

8 parts, we will open it up for questions to the 

9 committee. I'd like to thank our wonderful 

10 experts who are joining us on the panel to 

11 participate in just a moment. Miss Michelle 

12 Hammonds, with the D.C. Department of Insurance 

13 Securities and Banking will kick us off to talk 

14 about the work of BankOn D.C., and supporting the

15 youth.

16 Then Ms. Lisa Hinton with Industrial 

17 Bank will follow up to talk about the local work 

18 her bank is doing with BankOn D.C., and we will 

19 then -- we will also talk about -- Ms. Hinton, 

20 and Ms. Hammonds will also talk about non21 custodial accounts, which was a topic of interest 

22 of this committee at the ComE-In meeting in 
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1 October.

2 After we wrap part one, part two will 

3 welcome Ms. Jayme Brown with the U.S. Department 

4 of Housing and Urban Development, HUD, who will 

5 focus on the selfsufficiency programs in 

6 affordable housing, and Ms. Biljana Jesic with 

7 the local Portland Housing Authority. So, before 

8 Ms. Hammonds starts, I'd like to very quickly 

9 highlight the FDIC's long standing commitment to 

10 financial education, and account access.

11 FDIC's MoneySmart financial education 

12 program has been around for over two decades 

13 serving consumers in communities across the 

14 country, helping them better understand the 

15 banking system, maintain a sustainable banking 

16 relationship, and understand basic personal 

17 finance. And a quick plug, we recently released 

18 MoneySmart for young adults, which is our 

19 curriculum targeted to ages 16 to 24.

20 MoneySmart information is available at 

21 FDIC.gov/moneysmart. And now we'll go to 

22 Ms. Hammonds, who will start off our presentation 
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1 portion of the program. Thank you.

2 MS. HAMMONDS: Good morning everyone. 

3 Again, Michelle Hammonds, I'm the director of 

4 the Office of Financial Empowerment and Education 

5 at the Department of Insurance Securities and 

6 Banking. And the Department of Insurance 

7 Securities and Banking is the District's 

8 regulator for financial services. With that we 

9 look to cultivate a regulatory environment that 

10 protects consumers, and attracts, and retains 

11 financial services firms in the District of 

12 Columbia.

13 Additionally we empower, and educate 

14 residents on financial matters, as well as 

15 provide access to financing for District small 

16 businesses. The Office of Financial Empowerment 

17 and Education was created in 2020, and we partner 

18 with stakeholders to provide innovative 

19 initiatives to safeguard their financial futures 

20 for our Washingtonians.

21 Promote resiliency through financial 

22 education, and provide access to tools, skills, 
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1 and resources. We find that it's very important 

2 to have the resources connected to the tools, 

3 that's when it can become very viable for 

4 somebody to make a decision in their financial 

5 life, and it be helpful for them. Our vision is 

6 truly to educate, and empower, and provide 

7 independence for individuals.

8 With our BankOn D.C. program, this has 

9 been a long standing program of the District of 

10 Columbia. It is a collaborative effort between 

11 district government, financial institutions, and 

12 community organizations to provide access to 

13 affordable financial products, and services, to 

14 unbanked, and under banked individuals in the 

15 district. 

16 We look to improve financial literacy, 

17 help to build credit histories, and overall 

18 financial security, and wellbeing. The BankOn 

19 D.C. program involves providing access to

20 affordable checking, and savings accounts that

21 serves the needs of the unbanked. These accounts

22 generally have no monthly fees, or low monthly
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1 fees.

2 No minimum balances, or very low 

3 minimum balances, as well as no transaction fees. 

4 We also make sure we work with financial 

5 institutions to provide second chance accounts to 

6 those that are accepted through our check system 

7 background checks. Additionally we work to have 

8 access to foreign IDs such as countries from 

9 Ecuador, Mexico, El Salvadorian IDs, because we 

10 have a large population of those residents in the 

11 district.

12 As well as we're working to make sure 

13 we have other identifications that will be 

14 accepted. And then we provide financial 

15 education classes. And so, why does banking 

16 access matter? Specifically for youth workers, 

17 the BankOn D.C. program has been a long standing 

18 partner of the Marion Barry Summer Youth 

19 Employment Program, as well as many other 

20 programs across the country.

21 We have worked together through our 

22 partnership through cities for financial 
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1 empowerment summer jobs connect. We come 

2 together to think about those bankable moments. 

3 So, when we look at the data, having a bank 

4 account with an insured financial institution is 

5 one of the first steps in a successful financial 

6 journey. 

7 Getting youth banked is an undertaking 

8 that we need. Everyone's helped in making sure 

9 that that can happen. We've gone through COVID, 

10 so we've gone through a very virtual environment, 

11 and now we're coming back to an in person 

12 environment, and we see that our young people are 

13 seeking guidance in how to manage their finances, 

14 especially at these important times in their 

15 lives.

16 According to an FDIC survey of the 

17 unbanked, and under banked, about 29 percent of 

18 D.C. households were unbanked. 29 percent are

19 either unbanked, or under banked, of that, 8

20 percent are unbanked, and 21 are under banked. I

21 think this group knows what those terms mean, but

22 for those that may be watching, unbanked, they do
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1 not have a bank account.

2 Underbanked, they may be using costly 

3 second chance opportunities, or non-traditional 

4 financial products, and services. While this 

5 FDIC data represents a good number of what we see 

6 in the district, we have also found that even 

7 through our partners such as junior achievement, 

8 about 34 percent of teens don't have a bank 

9 account.

10 While this survey didn't specifically 

11 highlight D.C., it did show us that there is a 

12 need for teens to be banked. Based on the data 

13 we have, the greatest need for banking access in 

14 the district is in wards 8, 7, and 5. These are 

15 considered banking deserts. And since there 

16 isn't much access to traditional financial 

17 institutions, we try to make sure that we plug in 

18 the resources to our participants in our summer 

19 program.

20 We have found being unbanked, or under 

21 banked has a significant impact on individual's 

22 lives. What we have seen in the district, 
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1 residents can spend up to 800 dollars a year just 

2 to access their own money by having to pay for 

3 check cashing fees, and money orders, and other 

4 things to be able to pay for the services that 

5 they're utilizing.

6 Being unbanked can also leave people 

7 out of other financial arenas, and we want to 

8 make sure that we can change that. As you can 

9 see here, why BankOn D.C., when we look at the 

10 district, we do have a significant number of 

11 unbanked individuals. And when we look at the 

12 areas where we are keenly over 50 percent, or 

13 above, is our ward 7, 8, 5, and then also some 

14 parts of ward 1. 

15 So, this is an ecosystem within the 

16 District of Columbia where it's translating over 

17 race, but really when you're looking at the 

18 economic status of individuals, and how do we 

19 start to change that? When we pull this chart 

20 here, this is showing us where are there a 

21 concentration of financial institutions, versus 

22 non-traditional financial institutions.
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1 And those non-traditionals include pay 

2 day lenders, pawn shops, check cashers, or what 

3 have you. And as you can see, if you know the 

4 district well, you can see that these areas are 

5 overlapping with where we have our banking 

6 deserts. And so, how do we start to change that 

7 dynamic? Why do people only see these non8 traditional institutions in their neighborhood? 

9 And this is why we work so hard to try to make 

10 sure that we have access for individuals.

11 In the District of Columbia, this 

12 information is from the 2021 census. I know that 

13 we are at 700000, or so residents in the 

14 district, but that has been changing, especially 

15 because of COVID. But we do see that there are 

16 some key areas that people are impacted by. 

17 Liquid asset poverty, people don't have enough 

18 money saved to live above the poverty line for 

19 three months.

20 They may, or may not have a net worth 

21 above the poverty line for three months. They 

22 don't have a checking, or savings account, 12 
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1 percent, as I noted, and then having a bank 

2 account can still be using check cashing, and pay 

3 day loans. So, how do we start to change that? 

4 And how do we start to change the dynamic for our 

5 young people?

6 And so, first we know that it take a 

7 village to try to make this work happen. The 

8 District of Columbia has been partnering with 

9 cities for financial empowerment through their 

10 summer jobs connect program, and also BankOn to 

11 provide access, as well as integrating financial 

12 education at key points.

13 With the Summer Youth Employment 

14 Program, the BankOn D.C. program does act as the 

15 financial education, and liaison for all things 

16 finance for our young people. We found that this 

17 work has really evolved over the years, and we 

18 continuously have an opportunity to meet young 

19 people where they are at a critical time in their 

20 lives.

21 When individuals are getting their 

22 jobs, bringing access to bank accounts is a key 
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1 place, and a bankable moment for them. I touched 

2 on that. And so, why banking assets matters to 

3 young people. So that we can have a positive 

4 impact on unbanked, and underbanked individuals, 

5 especially youth, and adults. Financial 

6 education is key to why having an account is 

7 important.

8 How to successfully manage your money, 

9 and how to manage your banking account, and steps 

10 to take to have a successful financial future. 

11 Account opening needs to be when, and where it 

12 makes sense for young people. The SYEP program 

13 has done a great job in trying to make sure 

14 account access is available even throughout 

15 COVID, even throughout our virtual versus in 

16 person time frame.

17 We have done many things to connect 

18 young people at the point where they are going 

19 through their certification process, as well as 

20 when they're going through orientation to make 

21 banking access available to them. We have also 

22 found that direct deposit is a great way to make 
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1 sure accounts can stay open, and active.

2 After opening, we encourage each one 

3 of our young people to sign up for direct 

4 deposit, and get their pay from the Summer Youth 

5 Employment Program directly through their bank 

6 accounts. If you're not familiar with the Marion 

7 Barry Summer Youth Employment Program, it was 

8 established in 1979, it serves over 14000 youth 

9 workers in 2022, and we focus on ages of 14 to 

10 24.

11 There are some key financial 

12 empowerment touch points that we think are very 

13 important throughout this program. We've looked 

14 at some key areas. During outreach, during that 

15 application process, when young people have an 

16 opportunity to enroll in the program. 

17 Orientation is when financial education can start 

18 with their payroll, encouraging direct deposit is 

19 our primary goal there.

20 And then providing ongoing financial 

21 training. And so, we've talked a lot about why 

22 banking access matters, but really what does this 
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1 look like? And these are the primary touch 

2 points that we want to make sure that we engage 

3 with for our young people. All right, access to 

4 banking, and financial education. We have found 

5 that financial education is most impactful when 

6 it is started early in life.

7 It's provided when it's needed, and 

8 providing the multiple touch points for education 

9 prior to account opening is also helpful. And 

10 along with access to safe, and affordable banking 

11 accounts, we must education our youth on their 

12 finances as well. They need to have an 

13 understanding of how to manage their accounts, as 

14 well as their financial lives. 

15 Understanding how to manage a bank 

16 account, your money, and your financial life is 

17 important for youth to become financially 

18 successful adults, and this is why we've 

19 incorporated financial education, and integrated 

20 so much into our summer program. During the 

21 summer, BankOn D.C. in partnership with MBSYEP, 

22 and assistance from community partners, much like 
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1 Industrial Bank.

2 We have delivered financial literacy 

3 to all of the Summer Youth Employment Program 

4 participants. And so, as I mentioned, this past 

5 summer we had 14,000 participants, and that has 

6 been the trend for these past years, though it 

7 may vary at some point. The way we provide 

8 financial education varies, and we also want to 

9 meet the young people where they are.

10 Because of COVID, we did have to 

11 create a virtual financial literacy hour for our 

12 participants. And so, the summer program lasts 

13 for 29 days typically, that's over 6 weeks, and 

14 we've created financial education for that hour 

15 every day of that program. We did this by 

16 incorporating a number of items. We created 

17 virtual presentations for them.

18 They were able to utilize EVERFI for 

19 online self-paced learning modules. We've done 

20 Webex, and brand live financial education systems 

21 so the young people can ask questions that were 

22 important to them from industry experts. We 
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1 incorporated games that they were able to access 

2 through computers, tablets, as well as their 

3 phone.

4 And then even connected them through 

5 social media, through our summer jobs connect 

6 social media contest, as well as our MBSYEP 

7 social media contest. So, we make very much an 

8 effort to give young people access to this 

9 information, and the ways that they can receive 

10 it. Additionally, we partner with our MBSYEP 

11 host sites to provide financial education in 

12 person.

13 Either through our young money manager 

14 program, which is a peer to peer financial 

15 education program, where young people talk to 

16 their peers about how to manage their finances, 

17 as well as that online self-paced opportunity. 

18 So, a lot of work has gotten done this summer, 

19 and without our partners, we would not have been 

20 able to complete this work.

21 So, I just want to acknowledge some of 

22 our financial institution partners that have 
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1 engaged with us. Of course we have Industrial 

2 there, but also Chase, D.C. Credit Union, M&T 

3 Bank, PNC Bank, TD Bank, Truist, and Wells Fargo. 

4 And we want to acknowledge, and thank them for 

5 their work. Everyone did a wonderful job in 

6 facilitating financial literacy information, as 

7 well as connecting with our young people in the 

8 District of Columbia.

9 With that, I've wrapped up this 

10 presentation. We do have some links to resources 

11 that are available for our information, and my 

12 contact information is there if there are any 

13 additional questions. Thank you.

14 MR. WORTHEY: Thank you, Michelle. 

15 Lisa?

16 MS. HINTON: Good morning everyone. 

17 First of all, let me say thank you so much for 

18 allowing me to be a part of this very important 

19 topic. This panel, it is certainly a topic that 

20 is very near, and dear to my own heart, and 

21 because it matches my own philosophy that you 

22 certainly must, are mandated even, to help those 
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1 that are in need.

2 I'm Lisa Hinton, I know you saw my 

3 whole name, Arellia Lisa Hinton, haven't seen 

4 that in a while, but my name is Lisa Hinton, and 

5 I am one of the assistant vice presidents at 

6 Industrial Bank. I am here with my colleague 

7 LaKeisha Walker, and we are very proud actually 

8 to represent Industrial Bank. We are going into 

9 89 years strong.

10 And our founder in fact, Jesse H. 

11 Mitchell was there at the inception in terms of 

12 providing those same types of services, and same 

13 types of outreach that Michelle mentioned. 

14 Michelle, and I work very closely together. I'm 

15 so glad that she mentioned all the statistics, so 

16 that way I can go right ahead, and talk about the 

17 rest of it.

18 And our Senior Vice President, 

19 Jacqueline Boles has been a leader in just going 

20 beyond the walls, doing outreach within the 

21 community, and seeing how we can do some non22 traditional banking still staying within our 
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1 compliance, we are federally regulated of course. 

2 But because of the era that we're in right now, 

3 we have to find some creative ways to reach 

4 everyone, and you certainly are a big part of 

5 that.

6 We are a CDFI institution, so we pour 

7 back a large number of our assets back into the 

8 community that we serve. And we see the result 

9 as not just a concept, but we actually see the 

10 results of being able to pour back into the 

11 community. I have met individuals that say to me 

12 I've been here for 50 years, I've been here for 

13 40 years, I started my account when I was in 

14 school.

15 I wasn't there at the beginning, but 

16 I'm so glad that relationship, because banking is 

17 a relationship. Money is very personal, money is 

18 very emotional, and you have to, in a sense, meet 

19 everyone right at that venue. One of our focal 

20 points, and I'll use this to go onto the next 

21 slide here, one of our focal points of course is 

22 to help our young people understand the 
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1 importance of finances.

2 And just to help them develop a 

3 healthy attitude about money, and how to be 

4 successfully financially responsible adults 

5 coming up. And youth that are approaching 

6 adulthood, they're in a critical time. They're 

7 in between, betwixt, and they don't know what to 

8 do with themselves often. They have 

9 responsibility, yet their minds are not exactly 

10 developed to manage what we might -- the monies 

11 that may come into their hands.

12 So, our responsibility is then to 

13 guide them across that threshold as easily as 

14 possible. We talk about the disciplines that 

15 they can grasp right now at this point, that can 

16 set them up for either success, or failure 

17 really. This is that critical period in their 

18 lives where if they make the wrong decision now, 

19 it could derail them for the next ten years.

20 I recall that moment in my life when I 

21 was coming up as a young adult, and suddenly as I 

22 was approaching my college years I started 
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1 getting offers for financial doors, and took 

2 those offers unfortunately. It took me awhile to 

3 get out of that. So, our responsibility then is 

4 to make sure that we can guide them safely across 

5 those thresholds.

6 Industrial Bank offers a working 

7 solution that is successful. I'm very proud to 

8 say that, it is successful. Our intention is to 

9 help them understand, of course the importance of 

10 how to handle their money, how they can control 

11 their own future, and we talk about needs versus 

12 wants. That's a little fuzzy in the minds of a 

13 youth that's approaching adulthood.

14 It's very fuzzy what's needed, what's 

15 wanted, and those gray lines. So, we spend a lot 

16 of time just kind of unraveling that for them. A 

17 lot of customers that I serve at this time do not 

18 come from generational wealth, but if we can help 

19 them see how they can be a trailblazer for their 

20 family, or for the circle that they are a part 

21 of, how powerful that is.

22 And we take that very seriously. Our 
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1 next slide here talks about how we offer the 

2 solutions, and that we offer relationships. It's 

3 not just an account that we are after, it's a 

4 relationship. Banking is a relationship, and if 

5 we can gain the trust of that age group, then 

6 they will -- I think they'll take your advice, 

7 and they'll run with it, and they'll see 

8 themselves following along a path that hopefully 

9 is not paved with a lot of errors, trial, and 

10 error.

11 We can't really afford to do trial, 

12 and error because it's a lot to recover from 

13 trial, and error. So, our hope is to guide them 

14 along, share our mishaps that we've had, our 

15 indiscretions, and hopefully they can take that 

16 upon themselves. We talk about how to handle 

17 money, how to make wise choices, how to reach 

18 goals, how to set goals.

19 These concepts are part of an overall 

20 school curriculum, we understand that, but not in 

21 great detail. I've seen some of the school 

22 curriculums, and they touch on some subjects 
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1 about money, and such, but when we do the 

2 financial literacy that we do with Michelle, and 

3 some of the others, it's almost foreign to them. 

4 What's a check?

5 What's cursive? I mean, those things 

6 that we grew up on, it's really very foreign to 

7 them. Those that are from my era, two 

8 generations back, we learned finances through 

9 that trial, and error. But trial, and error is 

10 not always the best teacher. So, we always want 

11 to make sure that we are pouring, and giving into 

12 this age group.

13 Because they are the generation that's 

14 going to come directly behind us, and sitting in 

15 the seats that we sit in, and what their 

16 foundation is, what their ground work is is going 

17 to make a difference on how we live going 

18 forward. So, it's so important. And we do have 

19 certainly multiple access points, let me go back 

20 to the other side there.

21 We talk about having non-custodial 

22 accounts for youth 16 years, and at least 6 
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1 months. Most of the time they're very anxious to 

2 drive, so they have acquired at least a driver's 

3 permit, or a learner's permit in a sense. And if 

4 not that, a state issued ID is what we can 

5 accept. It is 25 dollars to open an account, 

6 because we want them to see the value of this.

7 We don't want it to be so easy that 

8 it's not considered to be valuable. So, yes, 25 

9 dollars, we need that from your account, from 

10 your stash, and to get the account started. And 

11 then direct deposits, and ACH deposits is what we 

12 talk about. Electronic statements where there 

13 are no fees involved. What we're trying to do is 

14 set them up so that they aren't acquiring a lot 

15 of fees, and a lot of things that they didn't 

16 know about. 

17 Things that they may not have 

18 understood as long people. So, if we can 

19 convince them -- they're not unhappy about that 

20 at all, because they're full of electronics, and 

21 they want to do everything by access, and by 

22 mobile, and by tapping a button, and by speaking 
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1 into a device. So, it's not hard to get them 

2 into these devices. 

3 There is no monthly maintenance fee 

4 for the accounts that we do offer them. Multiple 

5 access, they can visit any branch, there are no 

6 limits, there's online banking, 24-hour banking, 

7 certainly we have the debit cards, and such. But 

8 we tried to let them know that this is -- you're 

9 about to embark upon a huge responsibility.

10 And we don't want to see you -- I kind 

11 of take a mother role at that point, we don't 

12 want to see you standing at an ATM every other 

13 day. That is not the idea of this. And we 

14 remove -- the oversight for the success is that 

15 we have accounts that are -- these accounts are 

16 not eligible for overdraft privileges. So, they 

17 do not go into that dreaded dark hole that we're 

18 all very familiar with of overdrawing --

19 MR. WORTHEY: Ms. Hinton, we're at 

20 time for the first part of the panel. I'm just 

21 going to ask a quick follow up question --

22 MS. HINTON: That's fine.
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1 MR. WORTHEY: And then we'll go to the 

2 second part. So, let's stick with the access 

3 point, and the account features. Can you both 

4 talk a little bit more about the importance of 

5 access points? We know there's a lot of options 

6 out there for young people, and the ease of 

7 access is important. Let's start with Ms. 

8 Hammonds.

9 Can you talk about the way your 

10 program looks at access points for young people? 

11 And then Ms. Hinton, if you can talk about how 

12 you use the non-custodial, how do you engage the 

13 household, and how maybe parents, and care givers 

14 are involved in that process?

15 MS. HAMMONDS: Certainly, thank you so 

16 much. And I would be remiss if I did not 

17 acknowledge Jasmine Hicks on my team is our 

18 BankOn program analyst. He's the one that's on 

19 the ground making this happen. And so, when 

20 we're thinking about access points, those access 

21 points are really meeting those young people 

22 where they are. 
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1 For the summer youth employment 

2 program, we make very intentional opportunities. 

3 They have a certification process where we will 

4 bring financial institutions to those events, so 

5 that young people can talk to those financial 

6 institutions directly, and be able to open 

7 accounts, many of them remotely. If not 

8 remotely, it may be in person, where they setup 

9 an appointment with the financial institution, or 

10 be able to open those up online.

11 And so, we want to make sure that we 

12 can access -- they have the opportunity to access 

13 those resources where they are. They also have 

14 an opportunity to either use something -- get an 

15 account with their parent, which is custodial, or 

16 these non-custodial accounts. We have found that 

17 there is a need for non-custodial accounts, 

18 especially in the D.C. area.

19 And for many areas, depending on what 

20 the situation is for the young person. And so, 

21 these are very intentional places. Again, we 

22 also, as we go through our summer program, and 
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1 through many of our other programs, when young 

2 people are getting paid, their orientation 

3 process, that is also another access point for 

4 them to be able to hear this information, and to 

5 reiterate it multiple times.

6 So, these are some of the access 

7 points that we focus on in engaging young people.

8 MS. HINTON: We certainly follow, as 

9 Michelle said, along those same access points. 

10 We encourage that young person to involve their 

11 family. Sometimes it can be challenging based on 

12 the home background. Because we have parents who 

13 want to be involved, who should be involved, 

14 sometimes that's not always easy. But we offer 

15 the financial literacy to back that young person.

16 And speak with their parents as well, 

17 we offer the financial literacy to the parents, 

18 because often times we find that sometimes the 

19 situation is that the parents are in need of the 

20 financial literacy. So, we do that with grace, 

21 we do that with integrity, and we make it a 

22 family affair, a family event. We'll come out to 
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1 your home, we'll meet you at one of the local 

2 centers, whatever it is that it takes to make 

3 sure that all of us come up together.

4 MR. WORTHEY: Thank you both very 

5 much. We'll now move onto part two of this panel. 

6 HUD's Family Self Sufficiency Grant Program 

7 promotes wealth building, economic inclusion, and 

8 financial education for residents of HUD housing 

9 by helping participants obtain employment that 

10 will enable them to achieve economic 

11 independence, and reduce dependency on welfare 

12 assistance, and rental subsidies.

13 FSS as it's called, requires 

14 participants to maintain an escrow account, and 

15 upon graduation from the program, the participant 

16 often uses their escrow savings for a down 

17 payment on a home, business startup costs, 

18 automobile purchase, or other expenses related to 

19 the person achieving self-sufficiency. So, now 

20 we'll start off with Ms. Brown.

21 MS. BROWN: Great, thank you, Ken, for 

22 that introduction. And thank you to the 
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1 committee, and board members for allowing me to 

2 represent HUD today, and the Family Self 

3 Sufficiency Program. We are so proud of our 

4 Family Self Sufficiency Program, it has been 

5 growing over the past couple years, because I 

6 think the good news has been getting out.

7 It is the largest asset building 

8 program for low income Americans across the 

9 country. This began in 1992, and it was 

10 reauthorized in 2018. This is a voluntary 

11 program which really encourages families to 

12 increase their earnings, and set goals while 

13 offering them the opportunity to build assets, 

14 and work towards program completion.

15 So, here you'll see a resident 

16 actually receiving 29,000 dollars that they saved 

17 over the course of the program. So, next slide I 

18 just want to give you a sense of the scope of the 

19 program, because I always think that's important

20 for context setting. So, here on the map you'll 

21 see, it's a map of the United States with all of 

22 the bullet points of where our family self-
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1 sufficiency programs exist.

2 In our program, we serve about over 

3 800 sites, and I'll get a little bit more into 

4 detail about the number of coordinators that is. 

5 But just for scope, about 800 of that is in 

6 public, and voucher housing. Those sites, but 

7 for scope about 3800 housing authorities exist 

8 across the nation. So, we only serve a fraction 

9 of the population that could be served.

10 Additionally, in multi-family, we just 

11 expanded this program to multi-family owners 

12 which are private contract owners for low income 

13 assisted housing. There's about 17,000 multi14 family owners across the country, and currently 

15 we're only funding about 38. So, again, just for 

16 the scope. We are appropriated 125 million 

17 dollars each year, and I'll talk a little bit 

18 about what that buys in a second.

19 So, Ken talked a little bit about FSS, 

20 and kind of overarching, but I wanted to go a 

21 little bit more into detail. So, the family 

22 self-sufficiency program helps assisted housing 
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1 residents increase their earnings, and make 

2 progress towards economic self-sufficiency. And 

3 we do this via two key features.

4 The first is a financial incentive to 

5 help residents grow their escrow accounts, and 

6 this is really critical because in HUD assisted 

7 housing, we require residents to pay 30 percent 

8 of their earnings towards their rent. So, as you 

9 can imagine, this may be a disincentive for 

10 increasing your earnings, right? As your 

11 earnings go up, you have to pay more.

12 And so, this allows families to create 

13 this savings account, as they earn more, they're 

14 able to put that money into an escrow account 

15 that they will be able to get later based on some 

16 program conditions. So, the second feature of 

17 FSS, and I think one of the most key features, is 

18 the coaching, or case management. And this 

19 really is designed to help folks address barriers 

20 they may have as they are trying to enter the job 

21 market.

22 Or they're under employed, and trying 
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1 to get the education, or resources necessary to 

2 increase their earnings. Often times that exists 

3 in the form of barriers. And so, these case 

4 managers really work with our residents to ensure 

5 that they're getting the resources, and supports

6 they need to ensure their progress. 

7 They do this via something we call a 

8 contract of participation. So, this is a 

9 contractual program, not only for the residents, 

10 but also for the housing authority. They setup a 

11 contract, and via this contract they set goals. 

12 We are over the next five years, sometimes it 

13 exists a little bit longer than five years.

14 But over the next five years they'll 

15 create an individual services, and training plan 

16 in which they're supposed to be working toward 

17 the meeting of their goals. If they do meet 

18 those goals, they are able to graduate with any 

19 of the savings that they have accumulated in 

20 their escrow account. And one of the new key 

21 features of the programs, often times in HUD we 

22 engage with the head of household.
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1 But this program now, the contract is 

2 able to be setup by any member of the household, 

3 not just the head of household. So, just really 

4 quickly, I wanted to go into program operations. 

5 So, I'll talk a little bit about national 

6 implementation, and then I'll talk about local 

7 implementation. So, the family self-sufficiency 

8 program is a one year grant program.

9 As I mentioned, we're appropriated 

10 about 125 million dollars each year, and which 

11 the program serves just under 60,000 participants 

12 via about 1,300 coordinators across the country. 

13 And the breakdown for that is about 20 percent 

14 is public housing, 80 percent is voucher housing, 

15 and then as you can see, less than one percent is 

16 multi-family housing.

17 I want to drill in a little bit on 

18 local implementation, but I won't go too far into 

19 that because we have our partner here, who is 

20 going to talk about the great work they're doing 

21 in Portland, Oregon. But the local 

22 implementation for this program really starts 
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1 with the development of a program coordinating 

2 committee.

3 So, this committee is both public, and 

4 private local actors that come together, and work 

5 to steer the program. As I mentioned, the 

6 service coordinators come together, and they work 

7 with residents to establish contracts, and work 

8 through the individual training, and services 

9 plan. Also locally, they're required to report 

10 to us, surprise, surprise. As government, we 

11 want some metrics.

12 So, we ask that they track program 

13 requirements, and reporting requirements, but 

14 also just motivate residents. So, I wanted to

15 drill down just a touch on the program 

16 coordinating committee, because I do think that 

17 that is a point of potential alignment. The 

18 program coordinating committee is a group of 

19 folks, service providers.

20 Key actors in the community that come 

21 together, periodically meet, and talk about how 

22 they can drive improved outcomes for the 
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1 residents in the program. So, we have some 

2 required members, of course, so the 

3 representatives of the local housing, as well as 

4 a resident of the local housing.

5 But we also recommend to each one of 

6 our over 800 sites, that they also align 

7 themselves with local government agencies, 

8 employment organizations, and then of course 

9 financial empowerment organizations. So, just 

10 really quickly to give you some of our successes, 

11 and again, keep in mind, this is for just one 

12 year of reporting.

13 So, in 2021 we served nearly 60000 

14 households. Annually we have about 12 percent of 

15 those folks graduate from the program. So, when 

16 they graduate, again, they get that savings 

17 account that they accumulated. So, at the time 

18 of graduation, 100 percent of our graduating 

19 families did not require temporary cash 

20 assistance. So, that is TANF, or welfare, 

21 anything like that.

22 Twenty-five percent of those graduates 
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1 had escrow at the time of graduation. 27 percent 

2 no longer needed rental assistance within one 

3 year of graduating the programs. So, these folks 

4 are moving up, and out. And those who did 

5 graduate with escrow savings averaged about 9,000 

6 dollars in savings, and 11 percent of those 

7 graduates actually went on to purchase homes.

8 So, that is some of our metrics for 

9 2021. I also just really want to highlight the 

10 fact that this is a program that's being 

11 evaluated. We had a recent report identify some 

12 of the top interim goals was credit repair, as 

13 well as debt reduction. But it also found that 

14 residents were really motivated by savings. Not 

15 just the amount of savings, but having a savings 

16 account.

17 That was a major motivator for them, 

18 and so, we know that based on some of our 

19 research. So, with that, I'll leave you with 

20 some resources that you can check out on your 

21 own. The first is a really good marketing video 

22 that talks about the FSS program, and other 
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1 resources there. I have my contact information, 

2 but now I'll turn it over to Biljana, who serves 

3 at Home Forward, and she'll go into her 

4 presentation.

5 MS. JESIC: Good morning, thank you 

6 for having me here today, it's a real pleasure. 

7 I think it's still morning, right? I'm looking 

8 at my computer, and it says 8:30. So, bear with 

9 me please, it is 8:30 in my brain too. So, I am 

10 Biljana Jesic, I am the director of community 

11 services, and I work at Home Forward, which is a 

12 local housing authority in Portland, Oregon. 

13 We are the largest housing authority 

14 in Oregon, although we serve one county in the 

15 city of Portland, Multnomah County. We have 

16 become a national leader in developing innovative 

17 ways to develop affordable housing, and social 

18 services to people in need. Of over 3000 housing 

19 authorities nationwide, Home Forward was one of 

20 the initial 39 housing authorities who received 

21 moving to work authority from HUD.

22 Which means we were essentially 
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1 granted this regulatory flexibility in order to 

2 improve processes to better meet community needs. 

3 Today we serve about 15,000 households, and more 

4 than 33,000 residents who receive a variety of 

5 services through our organization. Today I am 

6 going to talk about the local family self7 sufficiency program.

8 Which, in our jurisdiction we call 

9 GOALS, and we have this interesting way of 

10 shifting, and changing the name, and essentially 

11 ask our residents what would you like to call 

12 this program? And then they said -- we have a 

13 little competition, and they came up with this 

14 name, Greater Opportunities to Advance Learn and 

15 Succeed. 

16 And because we are in a government 

17 world, we have acronyms, so that relates to the 

18 GOALS program, which has been around since mid 

19 '90s. So, as Jayme mentioned, why is this 

20 program so successful? And I really want to 

21 highlight this, because I have heard a theme 

22 today about trust, and developing trust, and 
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1 maybe addressing some of the barriers to access.

2 And understanding just different 

3 behaviors when it comes to banking industry, when 

4 it comes to asset development, coming some of the 

5 wealth gaps that specifically exist in BIPOC 

6 communities as well. So, one of the key 

7 components, maybe of this program as you already 

8 mentioned, it is voluntary. So, people actually 

9 want to be in this program.

10 And it is about goal setting. It's 

11 what I want for myself, and what I want for my 

12 kiddos, and what I want for my family, it's very 

13 important. We don't tell them what to do, they 

14 basically decide what is the best path for them. 

15 And for some folks it's very linear, for others 

16 it's a little bit all over the map until they 

17 find, just as all of us, until they find what is 

18 it that they actually want to do, and accomplish.

19 Another important piece is that this 

20 is a contract that we sign with participants for 

21 five years, so it's a long term partnership, and 

22 relationship. Again, we really get to know these 
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1 families, we work on these goals, they trust us, 

2 they learn that we're there to be their coach, to 

3 be in their corner, and that makes a huge 

4 difference in how folks access services, and why 

5 they become successful.

6 We use different methods of 

7 engagement, it is resident centered, which means 

8 we always include voices of our residents in our 

9 decision making process. Jayme mentioned the 

10 PCC, the program coordinating committee, we 

11 always have residents who also serve on that 

12 committee, people with lived experience who can

13 actually guide our decisions.

14 So, that we're not coming up with 

15 something that we think is the best for folks, 

16 but actually is based on direct feedback from the 

17 community. We're trying to really be mindful 

18 around paternalistic approaches, and really shift 

19 the focus to make sure that it is resident 

20 centered. We use different methods, as I've 

21 listed, they are coaching, trauma informed 

22 practices, motivational interviewing, behavioral 
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1 science models.

2 I just want to highlight the 

3 behavioral science model, which is something that 

4 a lot of folks in financial wellness programs 

5 have utilized over the years, because we're 

6 learning about behaviors. Why do we make certain 

7 decisions the way we do. Why would we choose to 

8 pay this bill, and not this bill, and why do I 

9 not want a banking account when I know that it's 

10 really expensive for me not to have one?

11 What are the reasons behind that? And 

12 then how do we collaborate with folks to shift, 

13 and change behaviors, so that we all achieve 

14 those outcomes. The program is based on 

15 accessing services, and resources, partnerships 

16 are huge. We couldn't do this work without 

17 leveraging each other's expertise. So, 

18 essentially community based organizations are 

19 great partners.

20 Pretty much anyone in the umbrella 

21 around work force development, financial 

22 wellness, education, transportation, anything a 
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1 person can think of as a holistic goal to 

2 supporting their family, we have partners in each 

3 of those sectors, and industries. And so just to 

4 give you a little sense, just in last year, folks 

5 who have graduated from our program have on 

6 average received about 13,000 dollars in their 

7 escrow account. 

8 Averaged earned income for our 

9 graduates is a little bit over 50,000 dollars. 

10 Some of these households had zero earned income 

11 when they joined our program, the average earned 

12 income for most of our households is less than 

13 12,000 dollars. So, they triple, sometimes we 

14 have a 100 percent increase of earned income in 

15 this program, so it's really amazing.

16 We had nine first time home owners 

17 last year. We had 36 people who successfully 

18 graduated, and then every single household who 

19 graduated actually received a managed savings 

20 account at graduation. These are just some of 

21 our beautiful buildings, I have to share the 

22 pictures. So, I want to talk a little bit about, 
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1 as I mentioned earlier, we are one of the moving 

2 to work organizations.

3 So, we always think about innovative 

4 ways of creating efficiencies in our programs. 

5 So, we shifted actually how we look at a 

6 calculation of the escrow account. We also 

7 changed the name from escrow into managed savings 

8 account, because escrow account was a little 

9 activating, and triggering for some of our 

10 participants.

11 They were a little bit confused about 

12 what that actual means, so we changed the name to 

13 managed savings account, it's a little easier 

14 concept to manage. It's very simple, we 

15 basically decided after we did some analysis 

16 about what was that magic number, we decided that 

17 we would have a strike point of 350 dollars.

18 And essentially everything in excess 

19 of 350 dollars that a household pays for their 

20 rent is placed into their managed savings 

21 account. It's very easy for folks to understand. 

22 So, for example if a household's portion of the 
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1 rent is 550 dollars, the strike point is 350, 200 

2 dollars goes into their managed savings account.

3 And so, sometimes we have these 

4 complicated calculations behind the scenes, 

5 income qualifications, and this, and that. And 

6 so again, thinking about behavioral science, and 

7 how you will simplify this, and make it easier 

8 for folks to understand, we decided to shift, and 

9 change the model. And as mentioned, whatever 

10 households accumulate, they receive those 

11 balances at the time of the graduation.

12 Last month we just had someone who 

13 graduated with 50,000 dollars in their managed 

14 savings account. They're going to be purchasing 

15 a house, and so we see a lot of success in this 

16 model. We offer other asset building 

17 opportunities. We are probably one of the few 

18 last states that still offer individual 

19 development account, or IDA program for some of 

20 you who might be familiar with that.

21 So, for each dollar that a participant 

22 saves, there is five dollars in matched funds. 
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1 So, folks can then utilize those funds towards 

2 their asset purchase. Whether that's home 

3 ownership, education, or starting up a small 

4 business. So, now when we start layering all of 

5 these resources from the IDA accounts, to escrow 

6 accounts, we position someone really well to 

7 financially move forward with their future goals.

8 We also highly emphasize the financial 

9 wellness workshops. Since folks access this 

10 managed savings account, we make sure that every 

11 single person who is in our program has at least 

12 a checking account. We talk a lot about 

13 financial coaching, and counseling, we talk a lot 

14 about credit repair, and building. This is one 

15 of the major key components, because we know the 

16 higher the credit score, the more buying power 

17 folks will have.

18 Anything from their access to 

19 utilities, to potential loans, and things like 

20 that. We also rent reporting through our housing 

21 authority. So, essentially we use rent reports, 

22 or rent payments that we receive every month, and 
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1 then essentially report to credit bureaus to help 

2 increase credit scores. And so, that is also 

3 packaged into these opportunities. 

4 And of course home ownership is a 

5 really, really big piece of this program. 

6 Another pretty picture. So, in preparation for 

7 this meeting, I sent an email out to my FSS peers 

8 in the country, and asked can you please tell me 

9 a few things about what you are seeing as some 

10 current trends as you are serving households. 

11 Because I'm trying to be mindful.

12 I come from an urban development, and 

13 urban environment, we have a lot more resources, 

14 and access to different products. So, I wanted 

15 to be mindful around what does that look like for 

16 smaller housing authority, rural, and things like 

17 that, because of course it varies. What I will 

18 say is that what I've heard from my peers, and 

19 this is also true for Home Forward, is a large 

20 percentage of FSS participants have at least a 

21 checking account.

22 However, a very small percentage of 
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1 participants have a savings account. Which is 

2 interesting, because I think there's this managed 

3 savings account that they have through housing 

4 authorities, however at the time of graduation, 

5 we have conversations, have you opened a savings 

6 account? And a very small percentage of folks 

7 report that they do.

8 Very few FSS participants consider 

9 financial investment, or other banking products. 

10 Financial capabilities education is usually 

11 provided by local nonprofit HUD certified 

12 organizations. FSS programs will typically 

13 partner with local credit unions. So, as far as 

14 who are our partners in the community when it 

15 comes to financial wellness, and banking 

16 products, we're typically seeing connections with 

17 local credit unions.

18 And then typically what folks are 

19 investing their escrow funds are reducing that 

20 home ownership, and transportation. I want to 

21 talk a little bit about what I've heard, the 

22 issues of trust between financial institutions, 
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1 and maybe banking products, and low income 

2 households. And we talk a lot about is it 

3 expensive, is it not expensive to have an 

4 account, or not?

5 I just want to share this concept that 

6 we have heard from our participants in the 

7 program, and that is sense of control. And so, 

8 even though -- as a person who maybe accesses 

9 different products, different systems, there's 

10 also a requirement for every single of these 

11 different service providers, you have to do this 

12 type of paperwork, you have to do this type of 

13 paperwork.

14 We're in the business of these low 

15 income households from so many different 

16 perspectives, whether they receive maybe SNAP 

17 benefits, or social security benefits, or 

18 participating in HUD housing. There's this 

19 scarcity of resources, and time capacity, and it 

20 becomes difficult to manage all of that. And 

21 folks often feel like they don't have a sense of 

22 control.
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1 And so, this maybe -- financial 

2 access, or income, or whatever bill paying 

3 becomes one way to have that sense of control. 

4 And so, what I mean by that is when you think 

5 about it for example, if I write a check, and 

6 give it to my landlord, and my landlord takes 

7 time to deposit that check.

8 In the mean time I have made some 

9 purchases that maybe I didn't track, or forgot 

10 about, because now we all have apps, and it's 

11 easy to forget that. When you are on a limited 

12 income, you can easily have overdraft fees, 

13 because now that check is being deposited late. 

14 So, when I actually go into local grocery store, 

15 and I purchase a money order, at least I have 

16 control that I have this money in my hands.

17 And I can go, and hand that over to my 

18 landlord, and I have a sense of control what's 

19 left in my checking account. So, as we think 

20 about some of these concepts, and how much it 

21 costs for overdraft fees versus how much does it 

22 cost for me to just go, and purchase these money 
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1 orders, I have a little more sense around what 

2 the end of the month is going to look like for 

3 me.

4 Those are these behavioral models that 

5 we have to be mindful of. Sort of what is the 

6 behavior that we want, and then how do we get 

7 there? That can also mean policy shifts, and 

8 changes, partnerships, and leveraging each 

9 other's expertise. We develop these trustee 

10 relationships with folks.

11 Let's leverage each other to basically 

12 be the voice of the products, and of the 

13 financial education that we want the folks to 

14 access. I have a success story that I'm just 

15 going to summarize, because there is a lot here. 

16 I also had a video. So, I think, if I'm not 

17 mistaken, that video will be embedded maybe in 

18 your packets that you might have received.

19 I would invite you, if you have --

20 it's three minutes, but super powerful, and 

21 essentially summarizes from the participant's 

22 perspective, everything that Jayme, and I have 
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1 talked about today. There's a link somewhere 

2 there in your packets, I will invite you to take 

3 a look at it. But I've chosen this success 

4 story, because I think it's just so powerful.

5 And I personally met Dorothy, she is a 

6 64 year old African American woman who was a 

7 renter for 44 years. I'm not going to read this 

8 whole story, it's in your packet as well. I'm 

9 just going to summarize that she was very 

10 skeptical when she first met us, and when we 

11 basically shared with her you could become a home 

12 owner.

13 And literally, like she said in her 

14 story, yeah right. Be a home owner at the age of 

15 64, I don't think so. However, the value of the 

16 relationship, and the coach being there for her 

17 to moderate her, and work with her on this sort 

18 of path of goals, and opportunities out there, 

19 just sort of making smaller steps to achieve her 

20 greater goal.

21 Which essentially, Dorothy did become 

22 a home owner. Went through several workshops, 
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1 learned about credits, learned about increasing 

2 credit score, how to work on that, took home 

3 ownership workshops, and classes. We connected 

4 her with local resources. Portland has 

5 experienced a lot of gentrification in our area. 

6 So the local banks, the local 

7 government is quite interested in opening up rent 

8 opportunities in some of these high opportunity 

9 neighborhoods to bring back households into 

10 neighborhoods where they were displaced from. 

11 And so, Dorothy essentially took advantage of all 

12 of those resources, and opportunities, and ended 

13 up purchasing a house for her, and her 

14 granddaughter, she's the main caregiver for her 

15 granddaughter.

16 It was just -- we just had a 

17 graduation, and she was one of our speakers, and 

18 she would have said this in so much better way 

19 than I have, but I just can't say enough, how 

20 motivating it is to hear, and see these stories. 

21 And knowing that this is a possibility for folks 

22 as we think about different programs, different 
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1 products, success stories like this are 

2 definitely a motivator for us.

3 And I hope will be motivators for you 

4 as you also think about ways, how can we partner, 

5 and share some resources together. There is a 

6 link, I believe -- or not. Anyway, thank you for 

7 your time, I appreciate it. And can I go?

8 MR. WORTHEY: Thank you, yes, thank 

9 you very much to the entire panel for all of the 

10 great presentations, and information. Now we'll 

11 open it up to the committee for questions.

12 MEMBER LIBBY: Okay, I will jump in. 

13 I thank you, Liz, for preparing these panels, 

14 they're just always incredible. This has just 

15 been so informative of the work that you all are 

16 doing. And I think earlier people were using the 

17 word inspiring for the kinds of things that are 

18 happening. And I think like the example that you 

19 just shared, it's amazing to hear. 

20 And so helpful to hear some of the 

21 lessons that you're learning. Certainly for me, 

22 it will not be a surprise to anybody that I'm 
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1 going to focus on the youth banking portion of 

2 the panel. And one of the things that I think 

3 somebody mentioned earlier was just even young 

4 people looking at a check to say, “What is this 

5 thing?” 

6 And just to underscore the importance 

7 of what you all are doing, we did have in our 

8 program, a young man who took a check to Safeway, 

9 and went about trying to purchase a sandwich with 

10 it, and had this very embarrassing experience 

11 where the cashier was saying no, don't worry, 

12 don't worry, but just take that check across the 

13 street, and there's a check casher there, you can 

14 get the money out of it.

15 And then you can come back, and I'll 

16 save the sandwich for you, don't worry. So, it 

17 was like, for him, like a caring experience, 

18 because it was an adult that was sort of taking 

19 care of him in this situation. But it sort of, I 

20 think it underscores the financial desert kind of 

21 data that you were sharing, sort of where young 

22 people are growing up, and the kinds of access 
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1 points that they have is part of that story.

2 But I think the other piece is around 

3 If his employment program had these kinds of 

4 supports where it's baked in, and I think that 

5 was one of the points that you made that I wanted 

6 to underscore, is the importance of having those 

7 multiple touch points, and having the account 

8 opening really built into the way the program 

9 works.

10 And making that paperwork process 

11 smooth, and easy for young people. I think the 

12 question that I -- or I have a couple of 

13 questions. One is as you -- you mentioned that 

14 you have a handful of financial institutions, and 

15 that you do offer this sort of standard custodial 

16 account, as well as a non-custodial account. And 

17 I'm curious if you have a sense of sort of what 

18 that pattern looks like.

19 Like how many young people are taking 

20 up the non-custodial versus the other account as 

21 a way of sort of understanding. Because I know 

22 we've seen a large need for the non-custodial 
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1 accounts, so just curious if you have that. I 

2 think the other thing that I wanted to sort of 

3 underscore, and ask around is the peer component, 

4 or the peer education component.

5 I actually remember, I don't know if 

6 it was 10 years ago, talking with Sybongile Cook, 

7 back when you guys were building out that peer 

8 model, and sort of talking about structuring 

9 that, and how these approaches can be powerful, 

10 especially given the trust idea that so many 

11 folks have talked about. So, I'm wondering if 

12 you can talk just a little bit more about what 

13 that looks like.

14 And sort of how you've seen that in 

15 terms of its effectiveness. In terms of I think 

16 fostering the trust, but also getting young 

17 people a little bit more comfortable with the 

18 financial products, and even maybe with the idea 

19 of saving, and goal setting. 

20 MS. HAMMONDS: Well, thank you for the 

21 question --

22 MEMBER LIBBY: I know, I know, I get 
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1 very excited about this stuff, it is true.

2 MS. HAMMONDS: Well, thank you for 

3 that topic -- that question. For the non4 custodial accounts, I don't have the specific 

5 numbers, but I can tell you a general sense. We 

6 have a large number of our young people, 

7 especially the ones that are under 18 that are 

8 really, really looking for those non-custodial 

9 accounts. We did see a large percentage that did 

10 ask for those.

11 So, it was still going towards that 

12 way. So, I'm sorry I don't have that specific 

13 data point, but yes, we did see a significant 

14 amount that were going for the non-custodial 

15 accounts. What we found that was very 

16 interesting is parents are helping them with the 

17 non-custodial account, as opposed to getting them 

18 the custodial account.

19 The parent was still actively engaged, 

20 and we found when the parent was actively 

21 engaged, the young person still had an 

22 opportunity to learn more about how to use those 
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1 accounts. So, non-custodial doesn't always mean 

2 lack of support. It just means an avenue for 

3 individuals to get accounts, and start their 

4 financial journey.

5 As it relates to the peer education 

6 process, which is our young money manager 

7 program, we have celebrated our tenth year. So, 

8 when you were talking to -- it was a decade ago, 

9 it was last summer, we had 10 summers worth of 

10 the young money manager program, and it did start 

11 with my predecessor, Sybongile Cook, and we were 

12 able to continue that program.

13 With that we create an opportunity for 

14 our young people to go through a three week 

15 financial boot camp where we teach them all about 

16 personal finances during that time. As well as 

17 providing professional development for them, and 

18 engaging, and helping them with presentation 

19 skills, and all the other soft skills that are 

20 important to build your personal finance, and

21 creating your career path.

22 With that particular program, we did 
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1 find that the youth voice was very important. 

2 Young people talking to young people, but with 

3 the information that was important, because it 

4 was also vetted, if you will, by adults that were

5 the professionals in this particular space. And 

6 so, we have found it to be very successful, and 

7 engaging.

8 Some anecdotal things that we have 

9 seen is, as I've talked to young people that have 

10 gone through the program, and they've been five 

11 years, six years removed, they still remember the 

12 information that they shared as a young money 

13 manager. Even in their work place, I was talking 

14 to a young lady not too long ago, and she said 

15 she moved to New York, which we know is a very 

16 high cost area.

17 She was able to first be renting a 

18 house, and living in a space where she had 

19 roommates, but because of all of her training for 

20 financial education, she was able to save up, and 

21 be able to get her own apartment. But during 

22 that conversation she actually also was talking
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1 to other interns, because we had this whole model 

2 of peer to peer financial education.

3 So, as she was talking to the other 

4 interns, and then full time employees, she helped 

5 them on their savings path, and created that 

6 information for them. And so, we do see that 

7 it's very powerful, even after they've left the 

8 program, that our young people are still sharing 

9 this information with their communities. So, the 

10 peer to peer model has worked.

11 And we've had a number of cities that 

12 have replicated the program in their own various 

13 ways. We started in D.C., but we have Chicago, 

14 L.A., Miami, a number of other ones, St. Louis,

15 but there's a number of other partners that have

16 also replicated that throughout the country as

17 well.

18 MEMBER MINTZ: One of the most 

19 shocking things about our BankOn conference 

20 yesterday is -- yes, we're back to BankOn. That 

21 our board chair introduced me as somebody who is 

22 humble, and those of you who know me, it's not as 
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1 often a -- it was shocking. That having been 

2 said, Michelle, I have a comment for you, and 

3 then, Jayme, I have that question for you.

4 Because I wanted to really thank you 

5 for -- and there are some heroes here in this 10

6 years of work around summer jobs connect that I 

7 just have to acknowledge, and thank for making 

8 this work. Including the very idea of 

9 integrating banking into the Summer Youth 

10 Employment Programs, which literally came in a 

11 phone call from Brandee when I was in an airport 

12 catching a connection.

13 Who then followed up this great idea 

14 with 10 years, and about 40 million dollars worth 

15 of support from the city foundation. And it has 

16 really, in combination with the expertise of 

17 MyPath, and so many other partners. And I really 

18 want to thank you for making D.C. such a 

19 signature program in the summer jobs connect 

20 constellation.

21 You mentioned we've got dozens of 

22 compatriots around the country that are doing 
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1 that program as well, and you guys have just 

2 been, from the beginning, real stars, and very 

3 forthcoming in sharing your best practices with 

4 things like your peer mentoring program with 

5 others. And I just really want to thank that 

6 level of incredible support.

7 Jayme, my question for you, pivoting 

8 real quickly, is I'm wondering if you could -- I 

9 know this is a complex question, but If you could 

10 zero in on what you think the key factors of 

11 success are in the graduation rate. I think you 

12 said it was about 12 percent annually?

13 MS. BROWN: Yeah.

14 MEMBER MINTZ: So, I'm just, I'm sure 

15 you've learned a lot, I know you're data rich, 

16 and experience rich from partners. But I'm 

17 wondering if you have a sense of what are the 

18 pieces that come together that besides the human 

19 part of the equation, the programmatic, 

20 infrastructural part of the equation. I wonder 

21 if you could talk about where you see the pieces 

22 that build success.
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1 MS. BROWN: Yeah, no, thank you for 

2 that question. I think there are several things 

3 that kind of lead to the graduation. I think the 

4 key factor is the coaching, right? Both the 

5 coaching from the FSS coordinator, and the 

6 partners that they've accumulated on the ground 

7 to support the program.

8 But also we leverage local financial 

9 literacy education to help, and support folks, 

10 and push them towards graduation. As Biljana 

11 mentioned, this is a behavior change program, 

12 we're thinking about intervention. And so, 

13 really working with them to find out what the 

14 successes are, or what the motivation for even 

15 why they joined.

16 And that takes years, because people 

17 don't always open up. Money is such an 

18 uncomfortable conversation. So, it takes them 

19 years to kind of work with a coordinator, develop 

20 that relationship, and really push them towards 

21 that graduating --

22 MEMBER MINTZ: And I'm curious what 
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1 that ethic is, like when we talked about banking, 

2 and Biljana, you mentioned this as well, what's 

3 key to -- we know banking access, what's key is 

4 people's sense of control. What's key, you think 

5 for people willing to try this program, and then 

6 to stick with it? That's really what I'm curious 

7 about.

8 MS. BROWN: Yeah, I think the key is 

9 that they -- I mean it's a lot of self10 motivation, right? Like they find out about the 

11 program, again, it's voluntary, they sign this 

12 contract, which creates a set of responsibilities 

13 not only for them, but the organization that is 

14 managing the program.

15 And I think that there's a sense of 

16 shared responsibility, and investment in success, 

17 right? It's not just I'm out here on my own, but 

18 I have this path forward, it's outlined for me, 

19 it's clear. Every year folks who have escrow 

20 accounts get statements, they know what is going 

21 in, they can see their money growing. So, I 

22 think that that is what's really key.
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1 MEMBER TESCHER: Thank you for 

2 reminding me of the FSS program. It's been 

3 around forever, I've known about it forever, it's 

4 been awhile since I reconnected with it, and I'm 

5 just newly astounded at what it's doing. And I 

6 had just a couple of questions. So, you talked 

7 about an annual appropriation, 125 million.

8 Is it just the amount of dollars that 

9 dictates the reach of the program versus a public 

10 housing authority choosing to sign up to 

11 participate? In other words, why aren't we doing 

12 this everywhere? Is sort of the question I'm 

13 asking. And then for you Biljana, I think you 

14 mentioned on a slide, but you didn't talk about 

15 it, that there's an ability for emergency 

16 withdrawals.

17 I'd love to just hear a little more 

18 about that, because while people are getting a 

19 break -- they're not getting a break on their 

20 rent, but they're essentially getting a financial 

21 incentive, which I have to imagine is an 

22 important part of the motivation, it can be 
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1 difficult when folks are living on the edge to 

2 know that there's this money, and not to be able 

3 to access in the case of an emergency.

4 So, I was glad to hear that. I wasn't 

5 sure if that was universal, or just something 

6 that you've done, but I was curious to hear more 

7 about that.

8 MS. BROWN: Yeah, just really quickly 

9 to respond, that is universal, Biljana will talk 

10 a little bit more about it. But it's universal 

11 for specific things that folks can access it for. 

12 So, things related to their contract, but I'm 

13 sure that Biljana can go into more detail on 

14 that.

15 MS. JESIC: So, that's a great 

16 question, and I'm glad you caught that on the 

17 slide. It's a really amazing component of this 

18 managed savings account. Because again, we know 

19 that living paycheck to paycheck, or social 

20 security benefits to social security benefits, it 

21 can sometimes become difficult to stay on track 

22 of those goals.
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1 And so we typically have a philosophy 

2 to explore all possible resources in the 

3 community before we tap into these accounts. 

4 Because we want to really be kind of 

5 conservative, and save those funds when folks 

6 graduate, and invest in a bigger goal, again, 

7 whether that's -- whatever they choose that is. 

8 But sometimes things happen, like in order for me 

9 to continue going to a job, I may need new tires, 

10 or I may need to replace something in my car, or 

11 I may need to purchase boots, or a uniform for my 

12 job, or there are certain expenses that come up. 

13 And each housing authority aligns essentially a 

14 list of eligible withdrawals.

15 And so families have to work with us 

16 around identifying what those are, and then they 

17 can withdraw funds to help them mitigate some of 

18 these temporary obstacles that come up, so that 

19 they can continue on with their self-sufficiency 

20 path. Because some of those obstacles can be 

21 significant enough for someone to give up.

22 So, as you were maybe mentioning 
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1 something around what are some of the motivators? 

2 This is just another example of how do we 

3 structure the program to have these sort of 

4 solutions when barriers come up, so you keep 

5 going forward. Sometimes when you have so much 

6 going on, a very little obstacle could mean that 

7 I just want to give up, there's not enough for me 

8 to continue to be committed to this program.

9 And so, the support of the coach, and 

10 then some of these infrastructures setup in the 

11 program can go a long way for a lot of folks.

12 MS. BROWN: Just really quickly to 

13 answer your question about scale, like why 

14 haven't we scaled up.

15 MEMBER TESCHER: You have quite a bit 

16 of scale.

17 MS. BROWN: Yes, but it's not 

18 universal at this point, across all of our 

19 housing assistance portfolio. Our appropriations 

20 go to the salary, and fringe of our coordinators, 

21 and organizations, the HAs, or multi-family 

22 owners can voluntarily run an FSS program, they 
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1 can do that. The challenge is the funds to pay 

2 for those coordinators, especially in high cost 

3 areas where they cost a little bit more.

4 So, it really has been the funding 

5 barrier, and there are so many things that a 

6 housing authority does that there isn't always a 

7 surplus of funds to do services, or a program 

8 like the FSS program.

9 MEMBER TESCHER: So, if the government 

10 tomorrow rained more money on you, do you have a 

11 waiting list of public housing authorities that 

12 would sign up, or would you have to go beat the 

13 bushes?

14 MS. BROWN: So, we for the first time 

15 in several years reopened the program last year, 

16 and we had -- we were only able to fund about a 

17 third of the demand that came in, and that wasn't 

18 even -- we didn't beat the bushes at that point, 

19 or we didn't widely publicize.

20 MEMBER TESCHER: Understood, thank you 

21 for helping, I wanted to know what the gap was, 

22 thanks.
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1 MEMBER WEINSTOCK: Can I ask one 

2 question? To Lisa, and to Michelle, Do you see 

3 any intergenerational transfer of the -- so, 

4 you're teaching these young people, here's 

5 financial information, here's how you can manage 

6 your money, build savings, all those wonderful 

7 things. Is there an intergenerational transfer 

8 home? 

9 Or do you also see they go home, and 

10 mom, or dad says I had all these problems with 

11 overdraft, please don't do that. Or something 

12 like that, so I'm just curious, what do you see 

13 in that area?

14 MS. HAMMONDS: We see it all. Quite 

15 honestly, we do see it all. We do see an 

16 opportunity for the family situation, or dynamic 

17 to change, where it can be a positive standpoint, 

18 where the child has now taught the parent some 

19 additional information. But we also see where 

20 sometimes the challenge is what those parents may 

21 have experienced in the household prior for their 

22 own financial situation.
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1 That is not something that we have 

2 necessarily documented, but again, anecdotally 

3 through talking to individuals. But on a 

4 positive note, we do see that there's a transfer 

5 of that information to parents, but also to other 

6 siblings, and their peers. And so, that is where 

7 we do have the opportunity to still influx, and 

8 provide that information in a more targeted way.

9 MEMBER WEINSTOCK: Thank you.

10 MS. HINTON: And when as a young 

11 person I go home with information, that may not 

12 have been available before it does create, it can

13 create a sense of challenge there in the home, 

14 you never want to put the young person in a 

15 position of disrespect in a sense. But we try 

16 through the financial literacy that we provide to 

17 empower them enough that they feel so strongly 

18 about what we've shared that they can't help but 

19 now go home, and say hey mom, did you know, hey 

20 dad, did you know, more on an engaging level. 

21 More on a friendly level, and so the 

22 whole family, as Michelle says, the whole family 
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1 comes up. And we've had young people open their 

2 account, and then maybe in a month, or so, 

3 they'll bring someone else along with them, an 

4 older sibling, sometimes even a parent. They'll 

5 come in, I told them about Industrial Bank, and 

6 you have to come in, and talk to Ms. Lisa.

7 And so we do, we've -- one family we 

8 reached three generations, so it was worth it 

9 all. 

10 MEMBER WEINSTOCK: Congratulations, 

11 that's great.

12 MEMBER CALHOUN: Thank you for this 

13 wonderful panel, and it's great, because you're 

14 looking at family's whole lives. While we talk 

15 about financial services, those are a piece of 

16 people's whole lives. Could you speak to, all of 

17 you, but particular the family support services, 

18 what aspects of financial services tend to be the 

19 biggest obstacles, and the biggest places where 

20 there's potential for advancement?

21 Is it lack of access to credit, bad 

22 products out there, clearly bank accounts are a 
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1 key part of it. But in your experiences, where -

2 - financial services is part of helping these

3 families advance, where does it play the biggest

4 role?

5 MS. BROWN: Yeah, so I'll just say 

6 that I think one of the challenges our families 

7 have in general, and Biljana kind of hit on this, 

8 is not just financial literacy, but bank 

9 literacy, right? People don't know how to build 

10 relationships with their local banks. And as Ms. 

11 Lisa put, you need a relationship with your bank.

12 And often times they'll open an 

13 account, those who are motivated to do so, but 

14 then get frustrated that they can't get an auto 

15 loan, or something to that effect. They haven't 

16 built the bank literacy enough to really 

17 understand how to grow that relationship, right? 

18 And so, I think that that's one of the greatest 

19 challenges that folks -- there's a lot of 

20 literature out there.

21 But literature is not enough, folks 

22 need kind of that one on one, they need the 
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1 coaching to help ask the right questions, to 

2 build the banking relationship.

3 MS. JESIC: If I could maybe just 

4 piggy back on that, and say that we work with a 

5 lot of folks from different cultures as well, so 

6 there is that piece around culturally appropriate 

7 services. There is some cultures that we work 

8 with who just simply don't believe in credit 

9 cards, don't believe in loans, and homeownership 

10 becomes very difficult for them.

11 Because they don't have enough cash to 

12 purchase a house, right? Not many of us have 

13 enough cash to purchase a house, right? And so 

14 it's against either their religion, or their 

15 cultural beliefs to essentially request a loan. 

16 So, how we work with someone who comes from that 

17 kind of background, of course it's different. 

18 And so, I think recognizing that different people 

19 have different needs.

20 And sort of how to meet someone where 

21 they're at, rather than sort of just promote 

22 standardized services, and packages. And so, I 
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1 think with that said, we see a tendency that 

2 folks only access very basic services within 

3 financial opportunities, and when we start having 

4 conversations around investments, and savings, 

5 and how do you grow your wealth.

6 Because we know one path to really 

7 eliminate poverty is to grow wealth, liquid 

8 assets. We know that a lot of people living in 

9 poverty really struggle with liquid assets. And 

10 so, how do we get to that point where we are 

11 thinking mindfully around savings accounts, and 

12 how to make that as an affordable, accessible 

13 product.

14 And a lot of folks have a lot of fear, 

15 they have a lot of intimidation, I don't have 

16 enough income to be able to have a savings 

17 account. I worry I'm going to have some kind of 

18 fees, and penalties, I'm going to get myself even 

19 in bigger trouble. So, as Jayme said, it's sort 

20 of financial literacy, banking literacy.

21 And really, again, all of us coming 

22 together I think as a community to really 
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1 partner, and bridge some of those gaps around 

2 maybe what's perception, what's stigma versus 

3 reality. And really meeting the households where 

4 they're at.

5 MR. WORTHEY: Any final questions from 

6 the committee? Yes.

7 MEMBER CALHOUN: So, thank you so 

8 much, and I know we're late, and it's lunch time, 

9 and all of that. So, I appreciate you indulging 

10 me on my question. I had two comments, and a 

11 question. So, one is just I think a current 

12 theme in both of the panels is the importance of 

13 community champions, and I just wanted to call 

14 out Michelle as someone who worked locally, and 

15 saw her in action.

16 Without the individuals on the panel, 

17 this work just doesn't hit, and have as much 

18 impact as it does with the commitment that they 

19 demonstrate every day. Second of all, I think 

20 something that would be really interesting, and 

21 I'm kind of throwing this out to any researchers 

22 in the room, I think between our generation, and 
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1 saying that kind of loosely, and our adult 

2 children's generation.

3 I don't know that there's ever been 

4 such a different kind of way with money. When I 

5 was young, and I would take cash out of the ATM 

6 when I would go somewhere, and spend it all, 

7 there wasn't anywhere else to go. So, it kind of 

8 built that in that -- in a way it kind of was an 

9 insurance to not overspend, because you were just 

10 operating with cash all the time.

11 And I wonder if there would be the 

12 possibility to kind of study how doing everything 

13 where you're not physically touching money, how 

14 that's affecting, if it's actually -- there are 

15 obviously the ability to track in real time, and 

16 all that I think would be a positive, but I 

17 wonder if people, or young people just without 

18 that tangible concept of money actually passing 

19 hands.

20 So, that's just a curiosity that I --

21 maybe I'll, in my spare time look into. And then 

22 last I just had a question for Biljana around 
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1 rent reporting, because it's a double edged 

2 sword. And I just wonder if you're only 

3 reporting positive rent behavior, or all?

4 MS. JESIC: We are committed to no 

5 harm done, so positive.

6 MEMBER BILONICK: Great, thank you, 

7 that was it. Thank you.

8 MR. WORTHEY: Any other questions? 

9 All righty, thank you panel. Liz, back over to 

10 you.

11 MS. ORTIZ: Thank you everybody. I 

12 really enjoyed the morning, and I'm really 

13 grateful to all the panelists for sharing their 

14 experiences with us today. We've talked 

15 certainly over the last several meetings, and 

16 it's not just an account, right? Having an 

17 account is important, having the right account is 

18 essential.

19 But it's how that account relationship 

20 sets you up for a positive financial future. I 

21 wish everybody was lucky enough to have Lisa 

22 Hinton as their branch manager, and know they're
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1 going to go in, and have a great experience. 

2 That's certainly one of my visions for the 

3 future.

4 But I do think that hearing just about 

5 the possibilities, and the champions that exist 

6 to set folks up for financial success, to use a 

7 word I’ve heard earlier today, inspiring. So, 

8 with that, let us go to lunch, and plan to return 

9 around 1:15. Thank you.

10 (Whereupon, the above-entitled matter 

11 went off the record at 12:13 p.m. and resumed at 

12 1:29 p.m.)

13 MS. ORTIZ: Welcome back, everybody.

14 This is the members' roundtable 

15 portion of the meeting. When I sat down, I was 

16 like, oh, my goodness, where's the panel? 

17 Something has happened to the panel.

18 (Laughter.)

19 No, you are the panel.

20 So, it is my pleasure to ask our 

21 newest ComE-In member, Susan Weinstock, to kick 

22 off the members' roundtable today, as part of --
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1 as Marla remembers, you know -- our new member 

2 ritual.

3 (Laughter.)

4 MEMBER BILONICK: Hazing.

5 MS. ORTIZ: A tradition. Can we call 

6 it a tradition?

7 (Laughter.)

8 CHAIRMAN GRUENBERG: Susan, this is 

9 the staff's idea, not mine, for what it's worth.

10 (Laughter.)

11 MS. ORTIZ: With that, Susan will 

12 start us off, and then, we'll work our way to her 

13 right. And let us begin.

14 MEMBER WEINSTOCK: Thank you.

15 Well, first of you, for those of you 

16 -- I thought I'd start off just to give a 

17 description of Consumer Federation of America, 

18 for those who may not know about us or our work.

19 So, we're an association of nonprofit 

20 organizations, consumer organizations, 

21 established in 1968 to advance the consumer 

22 interest through research, advocacy, and 
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1 education. Today, we have more than 200 groups 

2 participating in our Federation. And I started 

3 here as President and CEO about a year ago. So, 

4 it has been not that long.

5 CFA is a research, advocacy, 

6 education, and service organization. As a 

7 research organization, we investigate consumer 

8 issues, behavior, and attitudes through surveys, 

9 focus groups, investigative reports, economic 

10 analysis, and policy analysis. And then, this 

11 research, obviously, is a very important basis 

12 for the policy positions that we take.

13 And then, we're an advocacy 

14 organization. We work to advance pro-consumer 

15 policies on a variety of issues before Congress, 

16 federal and state regulatory agencies, state 

17 legislatures, and the courts.

18 We're also an education organization. 

19 We disseminate information on issues to the 

20 public, to policymakers, and other public 

21 interest advocates, and, of course, our members.

22 And then, we're a service 
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1 organization. And our principal service to 

2 individuals is through the America Saves 

3 Campaign, which we started in 2000. And I'll 

4 talk a little bit about that in a minute.

5 The question was about challenges and 

6 opportunities, and it fits well with CFA's focus 

7 and our work. Our advocacy efforts these days, 

8 actually, often fall into the category of what I 

9 would call challenges.

10 We see the CFPB, first of all, as 

11 integral to financial inclusion, and we are very 

12 focused on protecting the CFPB, along with the 

13 others in this room. We want to ensure that the 

14 CFPB can continue to do its work and to fulfill 

15 its mission.

16 And then, there's a few specific 

17 products that we're concerned about that we think 

18 hinder inclusion.

19 First of all is the explosion of new 

20 credit products -- examples like buy now/pay 

21 later, training repayment agreements, earned wage 

22 access, and products that use a "tips" model. 
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1 Each of these products is credit. They provide 

2 funding today and are repaid later. Given that, 

3 we maintain that these products should be subject 

4 to state and federal consumer protection laws 

5 that regulate credit products.

6 We are in strong support of the CFPB's 

7 proposed safe harbor of $8 for credit card late 

8 fees. The CFPB provided ample evidence that this 

9 amount is fair, reasonable, and proportional to 

10 the costs incurred by issuers for late payments, 

11 and issuers can charge more If they can justify 

12 the amount under Regulation Z.

13 Overdraft is another issue we're 

14 concerned about, the practice of charging high15 frequency, high-cost overdraft fees preys upon 

16 the financial vulnerability of lower-wealth 

17 households and hinders inclusion, as it drives 

18 many of them out of the banking system and 

19 towards other financial services with fewer 

20 protections. Reforming these practices is key.

21 And then, over the last two years, 

22 increased attention to dysfunction of the 
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1 overdraft system has led to some changes by 

2 banks, and we are very supportive of that and we 

3 applaud those changes.

4 Overdraft fees are still penalty-level 

5 fees unrelated to a bank's actual costs, and the 

6 vast bulk of these fees are still paid by low7 balance accounts.

8 In the opportunities space, I want to 

9 call out CFA's strong support of the Military 

10 Lending Act. And we see another opportunity in 

11 supporting the Community Reinvestment Act 

12 modernization.

13 Finally, there's a number of aspects 

14 of CFA's America Saves Program that is an 

15 opportunity. There are multiple parts to America 

16 Saves. A couple of them came up this morning. 

17 And we really focus on the low- to moderate18 income population.

19 Military Saves. We just launched 

20 Veteran Saves earlier this year. America Saves 

21 at Work, which is where we work through 

22 employers, and America Saves for Young Workers, 
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1 where we work through youth employment programs. 

2 And America Saves supports over 325,000 active 

3 savers, and we have over 11,000 engaged partners.

4 We recently, actually, updated our 

5 focus and our mission -- I'm sorry -- our mission 

6 and our values. And we're really focusing on 

7 what we're calling financial confidence. So, the 

8 mission of America Saves is to empower all, 

9 particularly those who are financially 

10 vulnerable, to build financial confidence through 

11 effective saving, debt reduction, and wealth12 building strategies.

13 Some of the key values America Saves 

14 promotes are opportunities to expand inclusion, 

15 including when you focus on building financial 

16 confidence, there is space for everyone in the 

17 saving and personal finance conversation.

18 Saving for your past, reducing debt; 

19 present, emergency funds, and future, long-term 

20 savings, which is retirement or education or 

21 homeownership, is essential to overall financial 

22 wellness.
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1 And saving is a habit, not a 

2 destination. Starting with small habits can make 

3 a big difference. And we celebrate both small 

4 wins at America Saves and big milestones.

5 We just had America Saves Week from 

6 February 27th to March 3rd this year. And the 

7 impact was that we had 3,952 organizations joined 

8 to encourage their communities, their employees, 

9 their customers, their members, their 

10 constituents, to pause and do a financial check11 in -- reaching a collective nearly 9 million 

12 individuals.

13 Participating financial institutions 

14 report that, during the one-week time frame, over 

15 $788 million was deposited into new and existing 

16 savings and wealth-building accounts. Nearly 

17 181,000 individuals reported making positive 

18 financial behavior shifts during the week, 

19 including opening savings accounts, choosing to 

20 automate their savings, or increasing the amount 

21 that they were saving automatically.

22 And then, for America Saves Week in 
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1 2024, we're actually going to have the campaign 

2 take place during National Financial Capability 

3 Month next year. So, April 8th to 12th will be 

4 America Saves Week in 2024, and then, we'll have 

5 Military Saves Week from April 15th to 19th. And 

6 the theme will be "Saving for What Matters Most."

7 And I will stop there.

8 MS. ORTIZ: Thank you, Susan.

9 Jennifer?

10 MEMBER TESCHER: Good afternoon, 

11 everybody.

12 Can you hear me okay?

13 Congratulations, Susan, both on 

14 joining, but on all those incredible 

15 accomplishments.

16 I think you'll see some themes, as I 

17 give a few remarks. I'm largely going to focus 

18 on the results of some forthcoming research. 

19 I'll give you all a sneak preview.

20 We all know that the financial 

21 landscape has changed substantially over the last 

22 12 months with the supports the government was 
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1 providing through the pandemic having come to an 

2 end; the student loan payment pause about to come 

3 to an end.

4 And when we conducted our Financial 

5 Health Pulse Survey last year, we found, for the 

6 first time in the five years we had measured it, 

7 a drop in the percentage of Americans that were 

8 considered financially healthy, and, in 

9 particular, a drop in the share of households 

10 whose income exceeding their expenses.

11 And we're now in the field for this 

12 year's survey, and we expect to see those same 

13 trends in play. So, at our next meeting, 

14 hopefully, I will have some results to share.

15 When you couple those challenges with 

16 the loss of confidence that consumers feel in 

17 banks in the wake of the recent closures, we 

18 worry that they're going to alter how Americans 

19 engage with financial institutions, and we're 

20 worrying about the progress -- we worry that it 

21 will threaten the progress that's been made on 

22 expanding financial inclusion, on bringing more 
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1 people into the banking system strongly through 

2 Jonathan's and others' work.

3 I think bankable moments are going to 

4 be not just important, they're going to need to 

5 be more than a moment; that we're going to have 

6 to figure out how do we continue to engage people 

7 beyond the time that they've opened the account.

8 Last month, we published our first 

9 longitudinal survey, drawing on our five years of 

10 data from our Financial Health Pulse Survey. So, 

11 this is work the Citi Foundation has been 

12 supporting for a number of years. And we, 

13 generally, survey over 6,000 a year, and over the 

14 five years, about half of them were the same 

15 people.

16 So, we're really able to look at a 

17 trend over time, which is a really unique data 

18 set, and the data is really dispiriting. Almost 

19 half of Americans were not financially healthy 

20 for the whole five years.

21 Interestingly, just over a third were 

22 what we call chronically financially unhealthy. 
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1 So, they were unhealthy for anywhere between one 

2 and four years of the five years. They were not 

3 unhealthy the whole time. So, there is the 

4 possibility for movement and change. And the 

5 remaining 17 percent were financially health for 

6 all five years.

7 So, you know, even though last year 

8 about a third of Americans were considered 

9 financially healthy, fewer than 20 percent of 

10 them had been financially healthy for five years 

11 in a row -- just to kind of put that in context.

12 We found that having a savings account 

13 has a strong correlation with sort of longer-term 

14 financial health, but we also find that opening a 

15 bank account is associated with becoming 

16 financially healthy in the short term. And that 

17 holds true even when we take into account changes 

18 in income or employment, that the presence of a 

19 bank account really, in the short term at least, 

20 promotes some short-term stability.

21 We're currently fielding our -- I 

22 already said that -- that we're fielding our 
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1 current 2023 Financial Health Pulse Survey. 

2 We're going to continue to mine this data set. 

3 Again, it's really rich, being able to look at 

4 people's financial lives over the course of five 

5 years.

6 Now, we had kind of a pandemic in 

7 there. So, it throws a lot of things off, but it 

8 also provides a really interesting picture into 

9 what change looks like over time; what drives 

10 change, both for good and for ill.

11 Next month, we're putting out our 

12 Annual Spend Report. This, essentially, 

13 calculates how much Americans are spending on 

14 interest and fees in a range of financial 

15 products, about two dozen different financial 

16 products.

17 We both do primary and secondary 

18 research to understand that, and then, we survey 

19 consumers to understand what their usage is like. 

20 So, we're able to kind of put the numbers 

21 together.

22 So, we estimate that spending on 
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1 financial services rose by 14 percent last year 

2 to $347 billion. The largest driver is the 

3 increase in credit card finance charges. A lot 

4 of that is driven, certainly, by inflation, but 

5 increasing customer spending also accounts for a 

6 very significant portion of having more finance 

7 charges.

8 We find that Black and Latinx 

9 households continue to pay a larger share of 

10 their income on financial services than White 

11 households. The financially vulnerable pay 14 

12 percent of their income for financial services 

13 compared to just 1 percent for the financially 

14 healthy.

15 We also added a set of questions this 

16 year for the first time on overdraft that looked 

17 not just at usage, but on attitudes. And that's 

18 going to be forthcoming soon.

19 I want to just briefly mention a 

20 couple of products, in particular, that we saw 

21 dramatic increases in spending on.

22 Total interest and fees paid by 
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1 consumers from several alternative credit 

2 products and on unsecured installment loans 

3 increased last year. And the increases appear to 

4 be driven almost exclusively by households of 

5 color, particularly, Black households. This 

6 increase in the use of high-cost credit suggests 

7 that Black households, in particular, may be 

8 struggling to make ends meet and having fewer 

9 options for credit.

10 So, we see that there's loan stacking 

11 happening with buy now/pay later products. A 

12 third of users said that they used one of those 

13 products twice or more in the month prior to the 

14 survey.

15 And we also see that many student loan 

16 borrowers are anticipating struggling with 

17 payments, once the federal loan payment pause 

18 expires.

19 I think I'm going to stop there. I 

20 think the last thing I want to say is, I think 

21 we've got to continue to find not just additional 

22 moments, but additional partners to engage in 
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1 more moments. And so, we have been spending a 

2 lot of time, not just thinking about the role the 

3 financial services companies play, of course, but 

4 also the role that employers play.

5 And we spend a lot of work on working

6 with HR leaders to support workplace programs 

7 that advance financial health. We've created an 

8 employer toolkit that includes a Guide to 

9 Workplace Financial Health Solutions and case 

10 studies of employers who have made progress in 

11 this regard.

12 And, you know, our work, our findings 

13 are consistent with the FDIC's own findings, that 

14 starting a new job is associated with opening a 

15 bank account. And so, we spend a lot of time in 

16 that guide really giving recommendations for 

17 employers around how to make sure that they are 

18 helping their new employees to get banked; to put 

19 money into savings -- all the things that we want 

20 people to do when they are employed.

21 So, with that, thank you.

22 MS. ORTIZ: Jonathan?
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1 MEMBER MINTZ: I'll pass. No, I'm 

2 just kidding.

3 (Laughter.)

4 All right. All right. But I will be 

5 brief.

6 There's been a lot of talk about the 

7 progress of the movement and how partnerships, 

8 particularly, as you heard expressed in the first 

9 panel -- and as the Chairman so wonderfully said 

10 yesterday at the start of our conference -- you 

11 know, how important those partners have been, and 

12 how much progress has made in the market with 

13 almost 400 accounts being opened across 85 

14 percent of the ZIP codes, available in over 50 

15 percent of every branch; of all the branches 

16 making up 60 percent of the U.S. deposit market 

17 share.

18 We have made a lot of progress, 

19 although I will note that one of your senior 

20 staff members said, "400 is great. Where are the 

21 other 4,000?" -- which I think he might have 

22 gotten from you.
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1 (Laughter.)

2 But I am confident, because of our 

3 partnership with the American Bankers 

4 Association, that will be no problem.

5 (Laughter.)

6 But what I think is exciting is that, 

7 as we build this demonstrable set of choices, 

8 which we heard before are so key to the ability 

9 of partners, like the IRS and BFS, and the State 

10 Department of Labor in Maryland, and others, to 

11 accept this infrastructural opportunity to bank 

12 people because it's a set of standards that feels 

13 right.

14 It's a set of standards that are 

15 resonating in a sustainable market. We are 

16 hearing that banks are saying out loud now, not 

17 just privately to us, that this is their No. 1 

18 seller for a certified account. I hope this was 

19 in public -- in case it wasn't. But, you know, 

20 one of the major national banks said yesterday 

21 that half of the accounts they open across the 

22 year is a BankOn certified account. So, these 
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1 accounts are working for the banks and the credit 

2 unions, and that's thrilling.

3 And so, I think that we're at this 

4 wonderful moment when, even though the machinery 

5 of getting from 400 to 4,000, David, is 

6 continuing, and gaining momentum, it allows us to 

7 be setting our sights on the other part of the 

8 BankOn equation, which is not just supply, but 

9 how you connect people to these accounts; and to 

10 be able to leverage this incredible sort of 

11 pandemic-torn experience that we had, together 

12 with the IRS and BFS around the stimulus 

13 payments, and that proof of concept.

14 And our First State, thanks to the 

15 wonderful partnership with the folks at the CASH

16 Campaign of Maryland, on unemployment insurance. 

17 There are 49 other states. We've already got 

18 one or two of them as well.

19 I think it allows us to aim really big 

20 on the largest articulation of the strategy of 

21 getting people into the banking system, which is 

22 an ethic that that's how government payments get 
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1 made and facilitated. And, you know, it's so 

2 silly, but when the IRS says out loud, "We 

3 created a portal and we put in a link to get 

4 banked," it sounds like something you might kind 

5 of snooze through.

6 It was momentous and, really, it was 

7 hard to do. It was done. It was incredibly 

8 effective. We got the proof of that concept in 

9 the data from the FDIC Unbanked Survey in regard 

10 to how significant a factor it was for a third of 

11 the people that were newly banked to have become 

12 newly banked, primarily, because of getting 

13 government payments. So, it allows us to aim so 

14 big toward that larger idea that this is how 

15 government payments should be made and 

16 facilitated.

17 At the same time, I want to say that 

18 the BankOn team and our partners across the 100 

19 coalitions across the country, also, now have a 

20 wonderful opportunity to push deeper into the 

21 harder-to-reach populations.

22 And so, working with returning citizen 
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1 programs and figuring out what's the magic there, 

2 and how do we figure out that magic and replicate 

3 that magic.

4 Foster care programs, the one that 

5 really tugs most at my heart, and starting to 

6 experiment with those kinds of banking 

7 integrations as well. It feels exciting to be 

8 able to take this engine that so many of us at 

9 the table have built together and start to really 

10 deploy it.

11 And so, that's kind of where we are 

12 and how we're thinking.

13 MEMBER MCHALE: It really is wonderful 

14 to be together in person. I'm just really deeply 

15 grateful for the chance to be together and to 

16 learn from each other.

17 And I want to thank the Chairman and, 

18 actually, the whole entire FDIC team, for this 

19 opportunity. I think that you should know that 

20 the combination of creating access to thought 

21 leaders in this space, as well as the chance for 

22 open dialog, really is invaluable and has a huge 
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1 impact when we leave the room. So, it's not just 

2 an impact right now in the moment, but, 

3 definitely, sparks our thinking for the future.

4 Many of us have been doing this work 

5 for a long time. So, it's also we really 

6 appreciate the chance for some new inspiration 

7 and to see a spotlight being placed on both the 

8 financial inclusion challenges, but an equal 

9 spotlight being put on solutions.

10 Making a case for why and how 

11 financial inclusion matters, it isn't just good 

12 business sense or smart public policy. But I, 

13 actually, think we should always remember that, 

14 underneath it all, it really is, I think, an 

15 important tool for mending some of the divides 

16 that we have in this country. Fundamentally, 

17 when people are financially included, and they 

18 have a sense of economic well-being, they feel 

19 like they're able to participate fully in 

20 society.

21 But I should say, also, good 

22 intentions without solid execution can really 
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1 undermine the potential and can, actually, in 

2 fact, compound the negative skepticism and 

3 further increase the divide.

4 So, I was actually going to come in 

5 today and talk about something totally different, 

6 but, as I was preparing earlier this week, a 

7 piece of research jumped out at me, brand-new. I 

8 think it might have only been released last week. 

9 A new version of the Edelman Trust Barometer 

10 just came out. And it was, specifically, focused 

11 on the issue of racial justice.

12 And the survey showed that concern 

13 about racial injustice across all populations is 

14 growing. And in some ways, for those of us that 

15 are focused on the racial wealth gap, this is 

16 positive data to have, because what it shows is 

17 that this is not an issue that is further 

18 dividing us; that maybe there is an opportunity 

19 for us to come together and find common ground.

20 So, I do think that, as we think about 

21 financial inclusion, and we talk, specifically, 

22 about the racial wealth gap, it's still top of 
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1 mind and still seen as something that is 

2 critical.

3 But what really grabbed my attention 

4 is that 57 percent of the respondents in this 

5 survey felt that progress is just being stalled 

6 or decreasing. 

7 And trust in business as part of the 

8 solution has, actually, dropped down. However, 

9 business and NGOs, business and nonprofits, still 

10 have the most favorable ratings. They rate 

11 higher than media or government in being able to 

12 do something about this, but business saw the 

13 largest drop.

14 Why do I raise this in this particular 

15 forum? Because this survey wasn't just about the 

16 private sector, in general. The lowest 

17 favorability ratings were, actually, attributed 

18 to pharma and to banks, and to the financial 

19 services sector. So, you know, there is just a 

20 growing sense that businesses and the financial 

21 services sector, in general, are not following 

22 through on their public commitments.
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1 And a piece of the survey -- I heard 

2 somebody talk from Edelman about this -- it isn't 

3 just a sense that banks don't care. It's, 

4 actually, that there's still a lot of learning to 

5 do, and that, in some instances, we just don't 

6 know how; that we don't really have the kind of 

7 deep knowledge that we need in order to really 

8 look at the steps we are taking.

9 I think we get caught in the momentum 

10 of doing, but it's really important for us to do, 

11 and then, to stop and ask the "So what?" What 

12 difference is this making?

13 So, this is why my institution, Citi 

14 and the Citi Foundation, we recently completed, 

15 undertook a third-party racial equity audit that 

16 looked at our efforts to help close the racial 

17 wealth gap that fuels inequality.

18 It took us a year to conduct this 

19 effort. This was not easy work to do. We 

20 launched our racial equity, our racial wealth-gap 

21 commitment in September 2020. We refer to it as 

22 "Action for Racial Equity."
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1 Since that time, we've embarked on 

2 over a billion dollars, more than a billion 

3 dollars in strategic initiatives, a range of 

4 things -- eliminating overdraft fees, returned 

5 item fees, overdraft protection fees.

6 Scaling up the kind of product 

7 distribution partnerships that we've talked about 

8 today with national nonprofits, with municipal 

9 partners -- not just to increase access to 

10 products, but to really, also, help what I think 

11 is the theme for today, to address that 

12 underlying trust gap that exists between banks 

13 and under-served communities.

14 We've been bringing families into the 

15 financial mainstream by scaling up the children's 

16 savings accounts. So, it's so timely to hear 

17 about the youth efforts and our work to leverage 

18 summer youth employment programs. We've also 

19 been scaling up efforts like the groundbreaking 

20 San Francisco's Kindergarten to College, and 

21 bringing that effort to Los Angeles, Atlanta, San 

22 Jose, and other communities around the country.
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1 And we're going all in to ensure that 

2 CDFIs and MDIs have the expanded capacity that 

3 they need to leverage the unprecedented level of 

4 public dollars that are available to them. We're 

5 doing this both through our Foundation 

6 philanthropic work -- we just invested $50 

7 million in CDFI human capital and technology 

8 capacity-building efforts -- as well as working 

9 with on the bank side to create revenue10 generation opportunities for MDIs.

11 I could go on. I'll just say I think 

12 what we all know: none of these initiatives on a 

13 standalone basis, in and of itself, are new 

14 ideas. But it's really been about trying to take 

15 a new approach by working comprehensively on 

16 these issues; by not saying, oh, we have this one 

17 thing here. We've got to have lots of things.

18 But it's not just about doing more, 

19 and doing things differently. For us, 

20 undertaking a racial equity audit was a chance to 

21 both, one, make sure that we are doing our part 

22 to bridge the trust gap by having verification 
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1 that we're doing the things that we said that we 

2 would do; identify the barriers we're facing to 

3 doing more, and then, really using all of this --

4 we call it an audit. And, you know, in the 

5 banking industry, we tend to think of that as 

6 backwards-looking, but I see this, racial equity 

7 audits, as actually a roadmap for informing the 

8 future.

9 We used, in our audit, we did have an 

10 external law firm, Covington & Burling, along 

11 with they contracted to get subject matter 

12 expertise from Jennifer's organization, from the 

13 Financial Health Network.

14 There were lots of internal document 

15 reviews, lots of internal interviews, lots of 

16 extensive external interviews. You know, in the 

17 interest of time, I won't go through all of the 

18 "how and the what." It's all available publicly. 

19 We've posted this on our website. I invite you. 

20 It's a nice, light, 90-page read, if you're 

21 interested in taking a look at it.

22 (Laughter.)
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1 But let me, actually, give you my --

2 I'm going to wrap up here. Let me just give you 

3 my editorial, the couple of things that really, 

4 as someone who's trying to work as an internal 

5 change agent and a community champion within a 

6 financial institution, say the few things that 

7 were big takeaways for me.

8 These efforts cannot be a one-and9 done. And I think that that's the skepticism 

10 that the general public is feeling -- is that 

11 there was a crisis moment. There was a response. 

12 But we know from doing this work for decades 

13 that the impact doesn't happen immediately after 

14 the crisis. It happens because you're there for 

15 the long term.

16 We have, like many other financial 

17 institutions, set up dedicated units with 

18 specialized expertise to focus on these issues. 

19 I think what we need to start doing, and the 

20 audit showed us, is that we need to stop thinking 

21 of these as special initiatives, but really say, 

22 how do you bake this into your core business 
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1 planning and how do you create KPIs that are 

2 owned by the company as a whole, outside of those 

3 specialized units?

4 Credit scores. Incredibly 

5 foundational to any racial wealth-gap effort. I 

6 think we get caught up in the outputs -- how many 

7 loans did we make? -- but, really, what we want 

8 to be thinking about is, how are both consumers' 

9 and businesses' financial lives better as a 

10 result of these efforts? And then, credit scores 

11 are an important way to measure this.

12 Having a verification system like this 

13 was helpful, again, not just to lend credibility, 

14 or to be able to say, "Yes, we did what we said 

15 we would do," but I was really surprised -- and 

16 really want to encourage other peers in the 

17 industry, if you're interested in doing this --

18 it, actually, was a tool for sparking additional 

19 innovation within our institution to think 

20 differently about our role in closing the racial 

21 wealth gap. And to see it, not just as an 

22 economic risk, but also as an economic 
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1 opportunity, and to really reframe the 

2 conversation.

3 And then, finally, no one financial 

4 institution is going to move the needle on this 

5 issue. What was interesting, one of the 

6 questions that we've gotten quite frequently 

7 about our doing this was, "Okay. So, how have 

8 you closed the racial wealth gap?"

9 And we're like, well, it would, 

10 actually be very difficult over a 24-month period 

11 for us to identify any specific causal 

12 relationship between what we've done and changes 

13 in the observable dimensions of the racial wealth 

14 gap in the U.S.

15 But I will just say that there is real 

16 power and value, and what we can see is I think 

17 that there is an openness that hasn't been there 

18 before to collaborating across the industry, and, 

19 in particular, also, with our regulators in new 

20 ways to standardize approaches through things 

21 such as special-purpose credit programs, which 

22 we'll hear about in the next segment.
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1 And so, I wanted to share today, when 

2 the assignment was, "What sort of top-of-mind 

3 challenges and opportunities?" I wanted to share 

4 that we've done this work. It's not done. We 

5 see this, again, not just as a look-back, but as 

6 a roadmap for the future.

7 Thank you.

8 MS. ORTIZ: Thanks, Brandee.

9 Margaret?

10 MEMBER LIBBY: Okay. Thank you, Liz.

11 Let's see, I think I'm going to flip 

12 the order of sort of how I was going to organize 

13 my comments, I think sort of drawing on some of 

14 what we've heard.

15 And I think this idea -- you know, of 

16 course, I'm focusing in on youth and young 

17 adults, and, in particular, BIPOC youth, and 

18 BIPOC youth from low-income communities. And I 

19 think this thing that you're hitting on, Brandee, 

20 around the sort of statements of support, you 

21 know, coming through the pandemic with George 

22 Floyd's murder, there were so many pronouncements 
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1 of like what might happen.

2 And I think that young people were 

3 maybe some optimistic, maybe some a little 

4 skeptical. And I do think that, without the 

5 follow-through, I do think there is sort of an 

6 additional lawyer of sort of trust-building that 

7 needs to happen in order to really kind of bring 

8 young people into the economy and, really, again, 

9 through a lot of the kinds of trusted community 

10 institutions that we've been talking about.

11 Because I think the experience of the 

12 pandemic, and then, the racial movement, the 

13 racial justice movement that has come about, I 

14 think that there is this question of like, what 

15 is really going to happen now, as the urgency of 

16 the moment has sort of faded. 

17 And I feel like that was one of the 

18 themes from this morning. In addition to, like, 

19 the breathtaking amount of work that happened and 

20 the collaboration, I feel like one of the themes 

21 was the sense of urgency. Like we have got to do 

22 something and quickly, and that really 
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1 facilitated the kind of collaboration and just 

2 the volume of shift, and all of the account 

3 openings, you know, that we've been hearing 

4 about.

5 And so, I do think this idea of 

6 urgency is an important one. And so, I guess a 

7 couple of things that I wanted to sort of share 

8 on that front is that, for young people, there is 

9 this sort of maybe crisis of faith and trust, but 

10 I think there is also just very real economic and 

11 health and mental health impacts, right, that 

12 have happened in this COVID economy.

13 And for young people, this is the 

14 second major economic setback in their relatively 

15 short lives. And I think some of the data that I 

16 wanted to share is we know that, in this critical 

17 inflection point that they're in, as they're 16, 

18 17, 18 transitioning into adulthood, they're 

19 wanting to go to school. They're wanting to get 

20 involved in the workforce.

21 And I think, during that inflection 

22 point where they're really building their 
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1 financial and economic foothold to transition 

2 into adulthood, to live in a way that they can 

3 set goals and dream -- and I think some of these 

4 things were coming up earlier -- the pandemic has 

5 really compromised their ability to do that.

6 I think there is a lot of data that 

7 was coming out. I think it was two weeks ago

8 Young Invincibles put out a survey just about how 

9 much struggle, especially Black and Latino young 

10 people are having. I think half are having 

11 trouble just meeting their basic monthly 

12 expenses. I think one in five young Black 

13 people, or young people that are Black, are 

14 disconnected from school and from employment. 

15 And I think, in general, there's 12 percent of 

16 young people between 18 and 24 who are 

17 disconnected.

18 And so, I think the opportunity to 

19 create an on-ramp for this generation who has 

20 experienced this setback, and is struggling in 

21 this way, I think is enormous with the foundation 

22 that has been laid in these last couple of years.
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1 And so, I think one of the things that 

2 I wanted to talk about, in addition to just 

3 sharing, like, kind of doom-and-gloom statistics, 

4 that these are lives, right, of the young people 

5 that we work with and support,

6 And I think the opportunity to open a 

7 bank account, which we heard earlier is a real 

8 entree into learning these kinds of skills when 

9 it's done in a trusted community organization 

10 with a peer approach. And so, the opportunity to 

11 get in and learn those skills, turn 18, start to 

12 build credit, and really be on a pathway to 

13 financial inclusion, economic inclusion, is a 

14 powerful thing that I encourage.

15 I think we've been talking about how 

16 we can get this kind of a pathway constructed, 

17 but thinking about the GetBanked portal, I mean, 

18 imagine If that was to 14-, 15-, 16-, and 17-

19 year-olds in some of these touch points, like 

20 youth employment. For foster young people, you 

21 know, they are often receiving payments from the 

22 state.
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1 So, to the extent that we are creating 

2 the opening for them to easily open a bank 

3 account, and really get that early start, I think 

4 that's something that we are even seeing, with 

5 all the success. You know, you think of the Safe 

6 Accounts Pilot, right, that began in -- am I 

7 going to get my years right? -- 2015? Is that 

8 what I heard earlier? Yes. Okay. I was going 

9 to say it was a decade ago.

10 But, you know, time is different now 

11 that it's hard -- but the amount of success, 

12 right, with that pilot and the learnings, and 

13 that sort of transforming into BankOn, and all of 

14 the success that that has engendered, you know, 

15 we sort of see a phase two of the Safe Accounts 

16 Pilot that would be really for safe youth

17 accounts. And the idea of, like, having support 

18 around a pilot like that, where banks and credit 

19 unions could sort of feel a safe harbor or a way 

20 to engage in something like that, to provide non21 custodial accounts, and leverage some of the 

22 kinds of community partnerships that we've been 
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1 talking about, I think could be a really powerful 

2 way to demonstrate that this idea of belonging 

3 that people, I think, have also touched on, and 

4 really, that first step in a powerful on-ramp for 

5 this generation.

6 And I think the other thing is I'm 

7 excited about the credit discussion this 

8 afternoon because I think that is absolutely a 

9 next step that's really important for young 

10 people, to have those opportunities, to build 

11 credit, you know, as soon as they turn 18.

12 And I think, in a lot of cases for the 

13 young people that we work with, they may be the 

14 first person in their family to be credit-visible 

15 and to have a credit score and a credit history 

16 that really enables them to do the kind of 

17 borrowing that they need to be doing in order, or 

18 that they want to be doing, to do the sorts of 

19 things that they want to be doing in their lives.

20 And I guess the final thing, If I have 

21 another 30 seconds, is I feel like there's a way 

22 that listening -- which I think to draw on your 
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1 point, Brandee -- is a way to even reimagine the 

2 way that we're thinking about financial products. 

3 Because I think that we don't necessarily yet 

4 have, I think, the set of products that are 

5 really going to help close the racial wealth gap 

6 in the way that I think we envision and that our 

7 young people envision, as they built out this 

8 youth economic rights document.

9 And so, even thinking of something 

10 like the child savings accounts, you know, what 

11 if we were investing that money throughout the 

12 duration, like a retirement account, so that, at 

13 the end, you know, in addition to the aspiration 

14 that it roots in a young person to think of 

15 themselves as college material and college-bound, 

16 and the way that that changes conversations and 

17 changes behavior, if they also, when they turn 

18 18, really have a chunk of money to direct at 

19 that kind of pursuit?

20 I think, ultimately, young people, 

21 they need capital and they need investments that 

22 can really transform their economic or their 
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1 education trajectories, and their ability to get 

2 the kind of job and employment training that is 

3 going to change their lives, their families' 

4 lives, and I think build the kind of wealth that 

5 they're interested in building, and I think that 

6 we've been talking about.

7 So, I will close there and just look 

8 forward to this continued discussion around, you 

9 know, how do we think about an on-ramp that could 

10 include a safe youth account?

11 MS. ORTIZ: Thanks, Margaret.

12 MEMBER LIBBY: Yes, thank you.

13 MS. ORTIZ: Kenneth, you're up.

14 MEMBER KELLY: Thanks, Liz.

15 Good afternoon, everyone

16 I'm Kenneth Kelly. I serve as 

17 Chairman and CEO of First Independence Bank, 

18 based in Detroit, Michigan. I've actually gained 

19 a title as an Interim Board Member through the 

20 end of this year with the Federal Home Loan Bank 

21 of Indianapolis. So, I'll talk from both of 

22 those perspectives.
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1 But, first, let me say thank you to 

2 our current Chairman. Chairman Gruenberg, I want 

3 to thank you and Director McKernan. What you did 

4 in March is the reason I think we can sit here 

5 today. And I just want to publicly acknowledge 

6 that, what you all did --involved in being sure 

7 that our system is safe and sound.

8 We know, statistically, that when 

9 there is instability, it negatively impacts 

10 people of color, specifically, African Americans. 

11 And it's one of the reasons I want to take the 

12 moment just to say thank you for your leadership 

13 and what you have done.

14 I have a firm belief that culture 

15 determines policy, and policy determines 

16 economics. And so, I want to speak from that 

17 perspective, as we talk about some of these 

18 topics around homeownership. We all know that 

19 things such redlining -- we've heard many of my 

20 peers address some of these disparities just a 

21 moment ago. So, I won't spend a lot of time on 

22 those. But I think we all understand them 
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1 principally.

2 But the point I want to make is that, 

3 if we continue to do the same thing we've always 

4 done, we're going to continue to get the same 

5 outcomes. And so, to your point a moment ago, 

6 Margaret, about the topic of credit scores, those 

7 have produced outcomes. They are policies that 

8 produce outcomes that we have stated that we are 

9 not in agreement with. And so, we have to look 

10 at adjusting those.

11 What I will tell you is I firmly 

12 believe and have tried to operate out of a center 

13 of partnerships and policies through cooperation 

14 and collaboration. Our ability to expand into 

15 Minneapolis was because there were five banks who 

16 believed in what we represent in moving an 

17 African American institution into that market.

18 And so, again, I say this, not to 

19 brag, but just to give an example of the 

20 potential if we all believe in changing, that 

21 culture changes policies, that changes economics 

22 and outcomes. So, as I think about that, I want 
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1 to say it was not just in us moving into 

2 Minneapolis, but it has been along the lines of 

3 what things can we do differently.

4 That includes looking at mortgage 

5 lenders. We know that there's a disparity there, 

6 and we are continuing to talk about those topics 

7 going forward.

8 It impacts the discussion around 

9 appraisers. Many of you have seen the news, and 

10 you've seen the topics, and even seen the 

11 legalities associated with that, where there has 

12 been litigation associated with disparities in 

13 appraisals.

14 So, my point, again, is just to give 

15 some examples of what cooperation and 

16 collaboration will mean. As we think about 

17 Minneapolis, I have to thank Operation HOPE. 

18 We've been a partner with them in Minneapolis and 

19 in Detroit.

20 And I know Gina is here with us today. 

21 Thank you, Gina, for being present.

22 But the point I want to make is that 
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1 they have been a great partner in the financial 

2 services space, and one that we have directly had 

3 partnerships with, that we're hopeful will 

4 continue to produce fruit going forward.

5 With our effort at the Federal Home 

6 Loan Bank, I had the opportunity to go to South 

7 Bend and to see collaboration around building, 

8 really, a neighborhood that would be focused on 

9 affordable housing. And I will tell you, without 

10 spending a lot of time here at this table, that 

11 the collaboration that we saw across public and 

12 private entities is one that I think should be 

13 considered, if not a model, certainly, one that 

14 can be replicated in other areas of the country.

15 On the BankOn, I know my colleague 

16 will talk about this in just a moment, but the 

17 American Bankers have firmly been about 

18 inclusion.

19 Jonathan, I think you mentioned it a 

20 moment ago, but we remember having these 

21 conversations with Secretary Mnuchin along the 

22 way of the PPP distributions was an opportunity 
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1 for ensuring that people could move into the 

2 banking system. Because there was concern that 

3 it may take up to 10 to 18 weeks to get checks 

4 printed and out, based on the volume that was 

5 needed at that time. So, we are, certainly, 

6 still supportive of that.

7 To your point a moment ago, Brandee, I 

8 do want to acknowledge your CEO Jane Fraser. 

9 She, actually, recently, hosted the MDIs there in 

10 New York. I'm so sorry I could not make that, 

11 but we did have a representative there. And 

12 again, demonstrating possibilities around 

13 inclusion, we have to think differently about 

14 that.

15 I would probably say, 5-10 years ago, 

16 that was not on the radar -- that CEOs and other 

17 leaders inside of MDIs would be hosted by a G-SIB 

18 CEO there. And so, I just want to show that we 

19 are making some progress, not all that we need 

20 to, but there is, certainly, some that is being 

21 made.

22 And then, I want to thank and 
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1 recognize the Chicago Regional Office, 

2 Mr. Chairman. Your Regional Office, as recently 

3 as this Friday, hosted the MDIs in the Chicago 

4 region as a listening session -- hearing about 

5 the issues and the challenges that we face, as 

6 minority depository institutions. It means a lot 

7 when our regulators can take the time to listen 

8 to those and respond to those.

9 I will close by saying the "power of 

10 ‘and’." We think about sometimes and we behave 

11 sometimes, either/or, and in some cases, being 

12 close to the Hill, there is "nor" as a 

13 conjunction.

14 (Laughter.)

15 But I will tell you, I would ask you 

16 to think about the conjunction "and" and think 

17 about what can we do together.

18 I close by, one of my favorite movies 

19 is "Remember the Titans." All of you probably 

20 recognize Bertier and you recognize the name 

21 Julius, and unfortunately, there was always a 

22 character that has to play the other side of 
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1 that, which was the gentleman named Ray.

2 Julius and Bertier, I would consider 

3 "and's." They found ways to work together across 

4 their challenges, demographically, racially, to 

5 product a championship team. Ray was a "nor," 

6 not even an "or." He was a "nor" and he ended up 

7 leaving the team.

8 And so, as I close, and thinking about 

9 financial inclusion, Mr. Chair, I would ask all 

10 of us, how can we be an "and" in this 

11 solution/opportunity that's in front of us when 

12 we think about credit scores; we think about 

13 economic wealth exclusion, and/or inclusion.

14 And I want to thank you for the 

15 opportunity, again, to continue to serve on this 

16 Committee. Thank you.

17 MS. ORTIZ: All right. Tom?

18 MEMBER FOLEY: Thank you.

19 Tom Foley, National Disability 

20 Institute. I appreciate the opportunity.

21 And I, too, want to thank the FDIC for 

22 all you do. You know, I was thinking, as we talk 
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1 about statistics, that probably almost a decade 

2 ago, FDIC added the disability question to the 

3 Household Survey data collection. And that has 

4 been revolutionary for moving forth disability 

5 inclusion as part of financial inclusion.

6 When we were all together last time, 

7 we saw, happily, that the unbanked rate for folks 

8 with disabilities declined from 16.2 percent to 

9 14.8 percent. And one of the things that we get 

10 to do is dig deeper into that data, and we'll be 

11 releasing some of that information in a week or 

12 two.

13 But what we find, when we dig into it 

14 -- and so many other people have touched on this 

15 -- is the interaction of disability and race. 

16 And so, in the White disabled community, we have 

17 an unbanked rate of around 10 percent; Latinos, 

18 about 16.1 percent, and Black, about 26 percent.

19 Now, I will say, all these numbers 

20 have been consistently getting better since we 

21 had the data, which is great. But this has 

22 really highlighted where NDI spends most of our 
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1 time. For the last couple of years, we have 

2 been, specifically, looking at people with 

3 disabilities, living at that intersection of 

4 race, ethnicity, and disability.

5 And I'd be remiss without pointing 

6 out, we couldn't do this without funders like 

7 Citi and others who have allowed us to do this 

8 work.

9 And just sticking with the research, 

10 we've also had the opportunity to work with 

11 Financial Health Network on some really cutting12 edge research that will be out in a little bit --

13 really looking at communities, not only within 

14 disability around race, but sometimes within 

15 disability that just doesn't get counted. So, we 

16 will be excited to be able to talk with you about 

17 that later.

18 But, you know, we've learned a lot 

19 focusing with our partners at this intersection 

20 of race, ethnicity, and disability. There have 

21 been a number of pilot programs happening in a 

22 couple of different states. And we've got three 
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1 or four takeaways, and some of these won't 

2 surprise anybody.

3 You know, for people with disabilities 

4 who are Black or Latino, how many times have we 

5 heard the word "bank desert," right? They live 

6 in bank deserts. But they, also, sometimes live 

7 in service deserts, where, to get to the services 

8 that they need, it's not a bus. It's a bus to a 

9 transfer to another bus, to a walk. And, you 

10 know, for a lot of people with disabilities, that 

11 just isn't going to be very practical.

12 But, you know, we've managed to be 

13 able to work with grassroots disability 

14 organizations, grassroots civil rights 

15 organizations, and grassroots financial inclusion 

16 organizations. And we've also learned that a lot 

17 of them, mostly, haven't been talking to each 

18 other. They might be down the street. They, in 

19 some cases, are across the corridor and just had 

20 never had the conversations.

21 One of the other pieces that we've 

22 heard is that, you know, some organizations say, 
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1 "We want to serve people with disabilities, but 

2 we don't have a great deal of confidence in how 

3 we can do that."

4 So, in Louisiana and California, we've 

5 stood up a couple of pilot efforts where we help 

6 -- and somebody else mentioned it -- we help 

7 community-serving organizations learn how to be 

8 more culturally-sensitive to specific disability 

9 issues and/or, you know, benefits issues that 

10 come up in the community. Because when we talk 

11 benefits and financial inclusion, those two 

12 things often interact in really interesting ways.

13 But I wanted to share one of the 

14 things that we heard out of Detroit. And just a 

15 little background. At NDI, we run the ABLE 

16 National Resource Center. And ABLE accounts are 

17 a special savings account for people with 

18 disabilities.

19 And for those of you that don't know, 

20 if you're on federal benefits, there's a $2,000 

21 savings, asset limit, liquid savings asset limit, 

22 which, obviously, gets in the way of savings. 
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1 ABLE accounts, where you can save up to $17,000 a 

2 year, are a carve out from that. It's a way that 

3 people with disabilities can save money.

4 But one of the pieces we heard in 

5 Detroit from a young Black man with a disability, 

6 he said, "ABLE accounts are not for me. ABLE 

7 accounts aren't for my community." And he said, 

8 "That's for White people with a lot of money."

9 And, you know, because of the 

10 investments that many have made, our ABLE 

11 National Resource Center has 12 BIPOC disabled 

12 ambassadors who were able to meet with this 

13 individual; set up a series of information 

14 sessions, both in-person and online.

15 And again, it's hearing from people 

16 that look like you, that have the same experience 

17 as you, that you, too, can do this. You know, 10 

18 years ago, before we had ABLE accounts, the 

19 narrative was that people with disabilities 

20 couldn't save. You know, they didn't work 

21 enough. They didn't earn enough. They couldn't 

22 save money.
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1 As of today, there's over 110,000 ABLE 

2 accounts with over $1.2 billion in savings. So, 

3 clearly, people with disabilities want to be able 

4 to save and they can save.

5 On the policy side of the house, 

6 toward the end of last year, we had a win when it 

7 came to ABLE accounts. At present, to open an 

8 ENABLE account, you have to be a person with a 

9 disability where the disability occurred before 

10 your 26th birthday. This, obviously, left a 

11 number of people out of eligibility, including 

12 veterans, many veterans.

13 So, in December, a new piece of 

14 legislation passed that won't go into effect 

15 until January 2025, but it moves the age of 

16 eligibility up to 40 for folks with disabilities. 

17 We think this will reach somewhere between 6 and 

18 8 million new people with disabilities, as many 

19 as a million veterans.

20 You know, one of the other areas that 

21 we've been working on a lot is small business 

22 development. And I think I've mentioned this 
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1 before, but we did some research a couple of 

2 years ago in the middle of the pandemic looking 

3 at a small business foundation for people with 

4 disabilities. And we were even surprised.

5 We estimate the number at about 2 

6 million small businesses for folks with 

7 disabilities, many of which are micro8 enterprises, but as many as half of which are 

9 also people with disabilities who are, also, in 

10 BIPOC communities.

11 So, one of the things -- several of 

12 the things we've learned were, as you can expect, 

13 there are issues around access to capital, 

14 budgeting, business plans. Basically, the 

15 technical assistance that's available to many is 

16 often, certainly, not available to people with 

17 disabilities.

18 And so, we were able to stand up here 

19 in the DMV -- and we also have a national 

20 outreach -- a technical assistance for people 

21 with disabilities. And with support from SBA and 

22 many others, we have reached over 500 small 
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1 businesses.

2 And one of our first small businesses, 

3 the woman just sold her company for $10 million.

4 And, you know, that always underlines for me why 

5 we're all here today, right?

6 Jonathan and I were talking about 

7 this. Despite what we do, we are all in the 

8 opportunity business. And the thing about people 

9 with disabilities is they have far more capacity 

10 than they do opportunity. So, thanks to all of 

11 you for making sure, when we think about 

12 opportunity, we include people with disabilities.

13 Tomorrow, at 1:00 p.m., Asset Funders 

14 Network will be launching a new brief on funding 

15 within disability. We helped them write it. 

16 It's one o'clock Eastern. So, if you're not on a 

17 flight and interested, we would love to have you 

18 attend.

19 But I really appreciate the 

20 opportunity to be here today, and thanks to you 

21 for all you do.

22 MS. ORTIZ: Thank you, Tom.
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1 Naomi?

2 MEMBER CAMPER: Well, how am I 

3 supposed to follow that?

4 (Laughter.)

5 So, thanking both of you and everyone 

6 from FDIC for your continued emphasis on 

7 inclusion.

8 And at ABA, one of the things we've 

9 been focused on over the last several months, 

10 since we spent more time with you all, is making 

11 sure that, despite some banner headlines of a 

12 very small number of institutions, that people 

13 maintain their trust in banks of all sizes.

14 And for us at ABA, the magic of the 

15 American financial system is the ecosystem. So, 

16 even around the table, several ABA members 

17 representing an important cross-section from 

18 community banks to mid-sized banks, to the very 

19 largest banks.

20 When we talk, there's been a theme 

21 today about trust. And consumers have their 

22 choice of who they want to bank with, and some 
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1 trust the bank down the street and some trust the 

2 bank where they can to any city and see that 

3 name. And it's a very, very personal choice, and 

4 it's really important that the trust in the 

5 system as a whole be maintained. So, thanks to 

6 all of you for helping us get that message out.

7 I'm going to just tick through a 

8 number of things.

9 I think you all know from my non-stop 

10 talking about it, ABA's commitment to BankOn and 

11 encouraging banks of all sizes to offer certified 

12 BankOn accounts. And since we started this 

13 initiative, you know we've gone from about 40 to 

14 about 400. We need another -- I'm not a 

15 mathematician -- but I think if we did that same 

16 tenfold jump, we would get to 4,000 pretty 

17 quickly. So, that is a goal of ours, is that all 

18 banks would offer BankOn certified accounts. So, 

19 that is a goal that we continue to have.

20 But that's not where we stop. And so, 

21 our next step, for those who already offer 

22 accounts, we have a priority of helping them to 
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1 include the BankOn seal in their marketing very 

2 prominently. So, we know we'll never be able to 

3 compete with the FDIC logo in terms of consumer 

4 awareness and confidence, but we hope we can come 

5 close, so that it becomes a household name and 

6 really visible marketing.

7 We are also hoping -- and begging and 

8 pleading -- that banks that do offer BankOn

9 accounts report their data to the St. Louis BOND 

10 Hub. Because, in the way that we all -- who here 

11 uses Waze for their GPS? It's really nice that 

12 you get, like, real-time information about how 

13 it's working and how it can change your route. 

14 We hope that all banks report their data into the 

15 BankOn Hub, so that we can all learn from each 

16 other in a really dynamic way.

17 ABA has launched frontline training 

18 for all bank branch staff. So that the people in 

19 the front office and in the branches understand 

20 why the BankOn accounts might be appropriate for 

21 people who walk in the door. It's really 

22 important, especially with the turnover that 
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1 banks often see with their frontline staff, that 

2 that training is available.

3 That is free. That is open to our 

4 members. That is open to non-members. We even 

5 offer it to credit unions. We are, like, really 

6 on the BankOn train. So, anybody who wants to 

7 access this training is welcome to do it.

8 And then, the final area of focus for 

9 us in the BankOn space is ABA has a really robust 

10 alliance with all of our state bankers' 

11 associations. And they play such a critical role 

12 in the state and local coalitions.

13 And we know that BankOn is more than 

14 just an account, and it's more than just an 

15 account standard. It's on-the-ground 

16 partnerships. And so, our state alliance has 

17 become very, very involved in helping to increase 

18 the robustness of those coalitions.

19 Secondly, I'd just like to update the 

20 Committee on our work with the CDFIs and MDIs. 

21 We have lots of banking ABA members who are 

22 falling into both categories. Together with the 
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1 leadership of Kenneth Kelly, we had an incredibly 

2 robust MDI Summit. It's in collaboration with 

3 the National Bankers Association. In February, 

4 we had over 120 people, really great 

5 representation, also, from the regulatory 

6 community. So, thank you for your participation. 

7 And we have another one coming up in October in 

8 conjunction with the MBA Annual Conference.

9 And anyone who's on the live stream 

10 who's listening, we have, ABA has a Vice 

11 President job posting up for someone who is 

12 specializing in CDFIs and MDIs. If you don't 

13 have somebody whose job it is to focus on this 

14 area, we know it doesn't get done. We really 

15 want to hire somebody great into that position. 

16 So, look on our job board and please apply if you 

17 have an interest.

18 The third thing, just a precursor to 

19 the next panel that's coming up on the Special 

20 Purpose Credit Programs, we've also created a 

21 special web page that's available to anybody who 

22 goes to aba.com on Special Purpose Credit 
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1 Programs.

2 And a big shout out in advance to 

3 Zions Bank for helping us and U.S. Bank, too, for 

4 helping us develop this program page. It's to 

5 provide additional information on the small 

6 business programs that banks can do when they use 

7 the Special Purpose Credit Programs.

8 And while there's a lot more 

9 information on the mortgage use case, we saw that 

10 there might be a data gap on small business. We 

11 all know the importance of credit to small 

12 business programs.

13 And then, finally, as we all eagerly 

14 await what we expect will be sometime soon, the 

15 CRA rules coming out maybe in the next "whenever" 

16 time period, banks continue to take their CRA 

17 obligations very seriously. And ABA is launching 

18 an eight-part webinar series for banks that isn't 

19 focused on compliance. We're really trying to 

20 embrace the move away from CRA being a 

21 compliance-oriented activity and, instead, 

22 economic expansion and strategic business 
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1 opportunities in communities.

2 So, this is also free and open to 

3 anybody, but we are starting with our first one 

4 on May 31st, which is "Forming Effective 

5 Partnerships." Just to give you a flavor of the 

6 kind of things that we're talking about, the 

7 second one will be "Partnering with MDIs and 

8 CDFIs for Greater Impact," "Developing a CRA 

9 Business Plan," "Making a Difference in Rural 

10 Communities and Overlooked Areas," and then, 

11 there will be four more.

12 But the overall message is, I think 

13 banks, at least within the ABA remit, are really 

14 understanding -- and we're so proud of this --

15 that engagement with traditionally under served 

16 communities is not just a compliance exercise or 

17 an obligation to be undertaken in a check-the-box 

18 moment. It's a way of expanding the business 

19 footprint. It's a way to create sustainable 

20 societal systems where everybody is benefitting 

21 and the rising tide is lifting all boats. And we 

22 know that that takes sustained engagement and 
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1 it's not a one-time thing.

2 So, that's where we're spending our 

3 time. We're so pleased to be part of this forum 

4 and really value the opportunity. So, thank you.

5 MS. ORTIZ: Thanks, Naomi.

6 Mike?

7 MEMBER CALHOUN: Given the time, I'm 

8 going to try and give you a condensed version 

9 here.

10 It's great to be on this group with so 

11 many smart people who are contributing in so many 

12 ways. So, let me tell you about Center for 

13 Responsible Lending and some of the topics that 

14 have come up today.

15 First of all, it really is inspiring 

16 to see the people delivering at the people level 

17 that we got from the panels today.

18 We are very encouraged by BankOn and 

19 congratulations to those who have birthed it and 

20 delivered it. The two things I would say about 

21 it are, first, it is at lots of banks a high 

22 percentage of new accounts. It's a much smaller 
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1 percentage of overall accounts.

2 One barrier -- and some banks have 

3 addressed this -- is, at some places, to get a 

4 bank safe account, you have to open a new account 

5 -- close your old account; open a new account. 

6 There are transferability challenges and the 

7 technology issues there. And obviously, if you 

8 don't have a substantial float for lower-wealth 

9 households, it's very hard to close one account 

10 and open a new account. So, just to flag that.

11 And in general, the FDIC, I would 

12 encourage ways to facilitate technology in this 

13 field. Because one of the challenges is these 

14 accounts tend to be less profitable than other 

15 accounts. That's just the numbers. And in16 person contacts, you want to make those 

17 available, but you have to use technology to 

18 drive the cost down on these accounts.

19 The other things, it's just a lot of 

20 our focus just of the historic things going on 

21 right now, one of them is we've had 30 years of 

22 declining interest rates, and now, we've had one 
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1 of the fastest increases. And the ramifications 

2 of that are just utterly profound.

3 Two places that that is hitting -- in 

4 the mortgage market and hitting lower-wealth 

5 households harder and households of color. It 

6 has undermined our core model of how to do loan 

7 modifications, particularly for agency loans, not 

8 GSE loans. It works still there.

9 But the problem -- and it relates to 

10 the bank challenges we've seen about unrecognized 

11 losses, If you will -- for an FHA or a VA loan, 

12 If you want to modify the loan, the servicer has 

13 to take the loan out of the NBS, then modify it, 

14 get it reperforming, and put it back in the NBS.

15 And we had a discussion at lunch about 

16 this. The challenge is that you're taking out a 

17 loan that's generally at 3.5 percent. When you 

18 sell it back, it's going to sell at about a 20 

19 percent discount. And so, that is just a non20 starter for FHA and VA loans, and that is where, 

21 even though this is an historically low default 

22 time, that is where defaults are concentrated.
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1 We've worked closely with the group 

2 Housing Policy Center, agreed on method that 

3 works, without going into the details of it, for 

4 FHA. And they are headed towards implementing 

5 that.

6 VA has budget and fiscal challenges 

7 that don't make that work. And they, as of yet, 

8 do not have a solution for the delinquent 

9 borrowers there. But that's a place where there 

10 are these surprising consequences of this.

11 The other big one I've alluded to 

12 before. We published a paper on this in March 

13 with our usual partner, AEI. Ed Pinto and I were 

14 the co-lead authors. And it is on cash-out 

15 refinances, because the same thing has happened 

16 there. It has turned the world upside-down with 

17 the flip in interest rates.

18 So, for the last 25 years, if you 

19 needed to tap home equity, you would get a full 

20 cash-out refinance. You would get your equity 

21 out and, usually, get the benefit of a lower 

22 interest rate If they combined-rate refinanced. 
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1 But now today, if you do a cash-out refinance, 

2 you're, on average, increasing the interest rate 

3 on your whole existing mortgage by about 300 

4 basis points. Now, you would say, why would 

5 anybody do that? And this is for us two lessons 

6 from this.

7 So, this is where it's an example of a 

8 particular problem and a place where the 

9 financial services market has not been aware of 

10 the impact of the changes in its practices on 

11 lower-wealth households.

12 So, over the last 15 years, there used 

13 to be a robust market in second mortgage loans, 

14 freestanding second mortgage loans, second lien 

15 mortgages. They were a big part, unfortunately, 

16 in part of the financial crisis. There were 

17 piggyback seconds which were used to evade down 

18 payment and mortgage insurance requirements. 

19 They didn't perform very well.

20 But what you've seen since then has 

21 been a boom in HELOCs. And so, banks have, 

22 largely, phased out their second mortgage 
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1 programs, and non-banks have difficulty offering 

2 them because they don't have a place to portfolio 

3 them. And the GSE has phased out their purchase 

4 program for that.

5 So now, if you want to get a second 

6 mortgage, it needs to be a HELOC. Enter in the 

7 question you raised: credit scores. Most banks

8 have a cutoff of 680, some 660, most 680 or 

9 above, to get a HELOC. So, if you have a credit 

10 score below that and need to tap home equity, the 

11 only way to do it is to take one of these 

12 horrifically-expensive cash-out refinances, which 

13 about 15,000 households are doing with FHA and VA 

14 loans every month this year.

15 And we have a calculator, and over a 

16 seven-year period, the average loan period, that 

17 costs those households over $35,000 in extra 

18 interest. And we compare that to taking out a 

19 13.5 percent second mortgage, you know, full 

20 market rate second mortgage and continuing your 

21 existing loan, and they will have $40,000 less in 

22 home equity if they had done this.
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1 But, you know, this just happened, and 

2 nobody has paid attention to it. And it's just 

3 hammering -- you know, this is billions of 

4 dollars of lost home equity, and the loans are --

5 the average credit scores on these loans are 

6 under 630. They're concentrated in minority 

7 communities. We should at least not be making 

8 the racial homeownership and wealth gap worse.

9 The other last thing I just want to 

10 comment is on overdraft. I want to praise the 

11 reforms that have been made, but, again, I think 

12 look at these through the equity lens and it's 

13 not quite as rosy.

14 So, we have had some significant 

15 reforms. The biggest one with a positive equity, 

16 in fact, has been NSF fees, which were among the 

17 least justified. They had a cost of about less 

18 than 50 cents and they were charging $35, and 

19 they were charging them for repeat representments 

20 of them. So, huge gratitude, and those were big. 

21 Those were north of 15 percent of the total take 

22 there.
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1 The other reforms, though, we are 

2 worried about them in two respects. One, that 

3 they have benefitted primarily the better-off 

4 households. And those reforms would be the ones 

5 you see advertised on TV. Those would be the $50 

6 cushion that helps some, and then, the one-day 

7 cure period.

8 But what we have seen, the studies, 

9 data on this have shown they reduce the 

10 percentage of households who incur any overdraft 

11 fees in the course of a year. You're seeing that 

12 down by almost, like, a third. But they do not 

13 really address where the bulk of the fees come 

14 from, and those are from high-frequency over 

15 drafters who are paying 35 bucks a fee, often 

16 three times per day, for over 100 bucks a day.

17 And so, ironically, we're 

18 concentrating the remaining overdraft, which is 

19 still $10 billion a year, and we have, largely, 

20 seen progress stall in the last six months. 

21 Hopefully, CFPB is going to proceed with the 

22 rule. FDIC and OCC came out with some additional 
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1 guidance and highlighted some practices there. 

2 But this is still a place where lower-wealth 

3 households are being left behind, even in this 

4 reform effort, and still need to be addressed 

5 there.

6 And then, last, just on time, just as 

7 a teaser for another time, is student loan 

8 cancellation. Most people handicapped odds of 

9 that getting past the Supreme Court at under 

10 50/50. There is good news, though, still there. 

11 It is the Department of Ed has got major reforms 

12 to income-based repayment programs. The impact 

13 of that would be almost as great, and perhaps 

14 even more concentrated in benefit for households 

15 of color than the cancellation programs.

16 So, people should not miss the huge 

17 impact of that program and the need to support 

18 and implement that program. And that had always 

19 been planned, regardless of the outcome of the 

20 cancellation program. There are also other 

21 authorities that the Administration may choose to 

22 try and repropose the cancellation.
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1 But the student loan program is one of 

2 the classic examples of a loan program that works 

3 for households with family and intergenerational 

4 wealth. It does not work for those without, and 

5 particularly, for households of color.

6 I'll stop there.

7 MS. ORTIZ: Thanks, Mike.

8 Marla?

9 MEMBER BILONICK: All right. In the 

10 home stretch, and I know we're tight on time. 

11 So, I'll try to keep it as fast as possible.

12 Again, I'm Marla Bilonick. I'm the 

13 President and CEO of NALCAB, which is the 

14 National Association for Latino Community Asset 

15 Builders. We are a network of over 200 

16 nonprofits and CDFIs that are working to advance 

17 economic mobility for Latinos and other under 

18 served populations across the U.S.

19 I'm going to go through a laundry list 

20 of challenges that we're seeing in our work, and 

21 I'll just ask for your grace as I toggle between 

22 our two constituents. One is the members that we 
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1 serve, which are the nonprofit organizations, and 

2 the other set of constituents are their clients, 

3 customers, community members, residents, small 

4 business owners.

5 So, in terms of what we're seeing in 

6 the community, of course, just to reiterate what 

7 others have said, the rising interest rates and 

8 the impact on the cost of capital is limiting 

9 those seeking debt. And for those that are 

10 taking it on, they're, obviously, paying a higher 

11 price. This is shutting people out of 

12 homeownership.

13 Us, as a CDFI intermediary that has 

14 CDFI clients ourselves, we're seeing that the 

15 cost of capital for CDFIs is driving more CDFIs 

16 to us for capital. We're very concerned about 

17 what that means in terms of how they're passing 

18 that down to their end borrowers, and also, the 

19 limit to their spread and how that impacts their 

20 cost of operation, or the lack of the ability to 

21 cover those operational costs.

22 Another thing to note is just that I 
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1 think, obviously, an unintended consequence of 

2 the pandemic on small businesses is that, in 

3 order to kind of cover and make it through, a lot 

4 of small businesses really damaged their own 

5 credit in the process. And so, we've seen a 

6 surge in our small business loan guaranteed 

7 program in the sense that a lot of our lenders 

8 cannot make loans that they are wanting to make 

9 without that added enhancement.

10 Another thing that has been very, very 

11 impactful is the recent bank failures. We had an 

12 incredible conversation over lunch with the 

13 Chairman about this, which was just a "pinch me" 

14 moment, but very, very fascinating.

15 But I was sharing how, for the Latino 

16 community, there is deep cultural relevance to 

17 this in the sense that many people's country of 

18 origin experiences have led them to have, you 

19 know, real-life experiences where the failure of 

20 banks meant the loss of funds.

21 And I think, to Naomi's point, this is 

22 really an opportunity for public awareness around 
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1 how the government protected people's assets. 

2 And just to kind of reinforce that messaging, I 

3 mentioned that, on the day after First Republic 

4 was absorbed by JPMorgan Chase, that I was 

5 interviewed by Telemundo, which is a Spanish 

6 language news outlet. And one of the questions 

7 that the interviewer asked me was, "Should 

8 everyone pull out their deposits from their bank 

9 account?" And I vehemently said no. But that's, 

10 you know, kind of a real concern and question on 

11 people's mind.

12 Another thing that's top of mind is 

13 the end of Title 42, which took place a couple of 

14 weeks ago, and the perceived surge that that 

15 wasn't. But I think what was interesting for me 

16 is listening to media, watching television. I 

17 think that moment, for whatever reason, really 

18 across the board I saw a very strong anti19 immigrant sentiment coming through, whether that 

20 was from liberal or conservative media. And 

21 there are real financial implications to that.

22 When there's inflation, or the fear of 
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1 recession, there's perceived scarcity of 

2 resources, which contributes to anti-immigrant 

3 sentiments. This is important because it kind of 

4 emboldens people, not only residents, but also 

5 people who are working in financial institutions. 

6 I think folks know that it's a practice, 

7 although not a rule, that ITIN holders are denied 

8 bank accounts. And I think this kind of 

9 environment probably emboldens folks to pursue 

10 with that practice.

11 Let me see what my thought was here. 

12 Oh, and then, also, in turn, when our community 

13 members are not banked, it creates an environment 

14 where predatory players can take further 

15 advantage of our community.

16 And other thing, going up to our 

17 constituents that are the organizations that we 

18 support and serve, I would like for folks to 

19 think about inclusion in kind of a different way, 

20 in the sense that, in the same way that we 

21 encourage small businesses to -- or sorry --

22 large corporations and government to engage in 
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1 supplier diversity, I don't know that we 

2 necessarily think of the contracting process for 

3 nonprofits in that same view.

4 And what we see as an organization 

5 that serves Latino-led and Latino-serving 

6 organizations, many of the federal opportunities 

7 that fund the important work that needs to be 

8 done are out of reach for our members. And so, 

9 we're doing a lot of work.

10 And it's unfortunate that Brandee 

11 left, but I'll still give her the shout out here, 

12 that Citi has funded one of our programs that is 

13 in this vein around helping our members become 

14 certified as CDFIs and approach CDFI Fund 

15 funding.

16 But that's just one example of 

17 traditional funding that's out there that is 

18 critical to the work that our members do that 

19 feels out of reach for our members, and we're 

20 trying to bridge that gap.

21 Lastly, I'll just say kind of on a 

22 positive, we've been watching IRS modernization 
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1 very closely. The IRS-led e-filing pilot that's 

2 coming out is very exciting to us, also, because 

3 language access was taken into account, and the 

4 very first pilot includes a Spanish language 

5 parallel track.

6 And as was evidenced from today's 

7 panels, partnering with community organizations 

8 for that will be critical, particularly in the 

9 Latino community, where there is already a 

10 distrust or fear of sharing personal information 

11 with the government.

12 And also, lastly, not to end on a kind 

13 of downer, but tax filing is one of the areas 

14 where there's the greatest abuse of Latino 

15 community members, individuals purporting to file 

16 taxes for people that take exorbitant amounts of 

17 money, in most cases to not even file their 

18 taxes. So, to remove that middle player will be 

19 really, really impactful in the long run, once 

20 it's integrated into the community. So, that's 

21 something that we are behind and partnering with 

22 the IRS and Treasury on. So, that's an 
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1 opportunity -- to end on an opportunity.

2 MS. ORTIZ: Thanks.

3 MEMBER BILONICK: Thank you.

4 MS. ORTIZ: Thanks, Marla.

5 All right. Steve, saving the best for 

6 last.

7 (Laughter.)

8 MEMBER ANTONAKES: Okay. Well, 

9 hardly.

10 But good afternoon, everyone.

11 I'd like to, again, also thank 

12 Chairman Gruenberg, Director McKernan, the 

13 professional staff of the FDIC, for hosting this 

14 meeting.

15 I am cognizant of the fact that I am 

16 all that is holding you between the break. So, I 

17 will try to be brief and not repeat the salient 

18 points already made by several of the Committee 

19 members.

20 So, just to speak to the obvious for a 

21 moment, the last several years have been nothing 

22 short of extraordinary -- with the global 
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1 pandemics; the significant stimulus; the 

2 migration to remote work; a robust, albeit 

3 uneven, labor market, and now, significant 

4 inflation, rising interest rates, and the growing 

5 likelihood of a recession -- the latter of which, 

6 you know, has and will most profoundly impact 

7 low-wage earners.

8 I'm the Chief Risk Officer at Eastern 

9 Bank in Boston. Our footprint primarily 

10 encompasses eastern Massachusetts and southern 

11 New Hampshire, with $22 billion in assets, and we 

12 are a 205-year-old small regional or large 

13 community bank, depending upon your definition. 

14 I prefer large community bank these days.

15 (Laughter.)

16 And certainly, the last 10 weeks have 

17 been challenging for everyone. Having started my 

18 career as a CRA Bank Examiner during the S&L 

19 crisis, then having served as the Massachusetts 

20 Commissioner of Banks during the financial 

21 crisis, I was really hoping to make it through my 

22 career without a third potential crisis. There 
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1 are times in which I really miss working as a 

2 bank regulator. Then, there are other times in 

3 which I don't miss it quite as much.

4 (Laughter.)

5 And in all seriousness, I just want to 

6 repeat the comments that Kenneth made. Greatly 

7 appreciate the extraordinary efforts of the FDIC 

8 over the last several weeks.

9 In our market, specifically, in 

10 Boston, the challenges of economic inclusion and 

11 the wealth gap were most acutely demonstrated 

12 through the Color of Wealth Study that was 

13 published by the Federal Reserve Bank of Boston 

14 in 2015.

15 And just to remind those that may not 

16 have those findings top of mind, that report 

17 demonstrated that White households in Boston have 

18 an average net worth of nearly $250,000, while 

19 the average Black household has an average net 

20 worth of $8. That's a staggering statistic and 

21 undermines the significance of the challenges we 

22 have before us.
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1 The study also discussed startling 

2 disparities in homeownership, mortgage debt, the 

3 ownership of retirement accounts, student loans, 

4 and medical debt. Unfortunately, these findings 

5 have probably only grown more pronounced since 

6 the pandemic.

7 Shifting gears slightly, while 

8 homeownership is considered and believed to be 

9 integral to the accumulation of wealth, the 

10 median sale price for a home in eastern 

11 Massachusetts in April was $820,000.

12 The Massachusetts apartment vacancy 

13 rate is the lowest in the country at 2.8 percent, 

14 and Boston has the second-highest median asking 

15 rents other than New York City.

16 Accordingly, affordable housing 

17 options are exceptionally limited in our market. 

18 Resolving the wealth gap and improving 

19 economic inclusion is both challenging and 

20 complex. Banks have an important role to play 

21 and, arguably, can and should do more, but 

22 meaningful progress will require far broader 
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1 coordinated efforts and the commitment and 

2 cooperation of the public, private, and nonprofit 

3 sectors.

4 Key areas to drive economic inclusion 

5 that we have identified include advancing equity 

6 in the small business ecosystem, enriching early 

7 childhood development, securing safe and 

8 affordable housing, and promoting workforce 

9 development.

10 Through our foundation, we extend 

11 about $16 million in grants annually to 

12 organizations focused, specifically, on these 

13 goals. And I'll just speak briefly to our 

14 efforts to address advancing equity in the small 

15 business ecosystem.

16 As I previously described -- and this 

17 will set up well for our final panel -- we have 

18 been working to develop a Special Purpose Credit 

19 Program. Earlier this year, we launched what we 

20 call our Equity Alliance for Business. The 

21 program has a dedicated team of bankers comprised 

22 entirely of women and people of color embedded in 
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1 our communities with the goal of increasing 

2 opportunities for women- and minority-owned small 

3 businesses through the use of Our Special Purpose 

4 Credit Program, partnership with nonprofit 

5 organizations, and access to other financial 

6 services and products.

7 The Special Purpose Credit Program 

8 offers small business loans to women- and 

9 minority-owned businesses from $10,000 to 

10 $250,000. Loans have reduced minimum credit 

11 scores and relaxed debt service requirements. 

12 The minimum credit score is 640. However, for 

13 applicants with a credit score below 640, they 

14 have the option of working with one of our 

15 nonprofit partners, and upon completion of a 

16 technical assistance program, we'll approve loans 

17 between $100,000 and $150,000 with scores as low 

18 as 580. We'll also approve loans of $100,000 and 

19 less with no minimum credit score, if they have 

20 completed that technical assistance program.

21 Loans are made for a five-year term at 

22 a rate of prime plus two. Application and 
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1 processing fees are capped at $250.

2 At this time, we're excited that we 

3 have approved our first loan, and we have several 

4 additional applications in the pipeline and some 

5 that are also being referred to those nonprofit 

6 partners.

7 We will continue to monitor the 

8 success and the learnings from this program, and 

9 our goal will be to create a parallel mortgage 

10 product thereafter.

11 That concludes my remarks. Thank you 

12 for your time.

13 MS. ORTIZ: Thank you so much, Steve.

14 Okay. I'm going to embrace the "and." 

15 Okay?

16 (Laughter.)

17 So, we are going to take a break "and" 

18 set up the next panel at the same time.

19 (Laughter.)

20 And be back in five minutes.

21 (Laughter.)

22 Okay. Say it with me: "Yes, we can."
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1 (Whereupon, the above-entitled matter 

2 went off the record at 2:57 p.m. and resumed at 

3 3:07 p.m.)

4 MS. ORTIZ: All right. Welcome back 

5 everybody. Thank you so much for your 

6 cooperation. I'm really pleased to hand the 

7 microphone over to Paola Diaz who's going to 

8 moderate our final plan for the day on 

9 establishing Special Purpose Credit Programs. 

10 Paola?

11 MS. DIAZ: Thank you very, Liz, and to 

12 everyone for coming back to the last session of 

13 the day. The name of this session is 

14 Establishing Special Purpose Credit Programs. 

15 And this panel will highlight Special Purpose 

16 Credit Programs and resources. We will be using 

17 the acronym SPCP during this segment.

18 In February 2022, eight federal 

19 agencies issued an interagency statement 

20 highlighting creditors ability and The Equal 

21 Credit Opportunity Act or ECOA and Regulation B 

22 to establish SPCPs to meet their credit needs of 
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1 specified classes of persons. Financial 

2 institutions play a key role in expanding access 

3 to credit among disadvantaged groups and 

4 communities. We believe SPCPs can be helpful 

5 tools in fostering economic inclusion.

6 I will be your moderator today. I'm a 

7 Senior Community Affairs Specialist in the 

8 strategic partnerships and program development 

9 section within the consumer and community affairs

10 branching the division of the depositor and 

11 consumer protection at the FDIC. And I've been 

12 in this role for nine years.

13 And I'm not sure if I see the world 

14 too much with the lenses of my responsibility 

15 areas. But in my outreach lately, I have heard 

16 the SPCP keyword very frequently in many banker 

17 events. And we hope the information you will 

18 hear today inspires you to consider SPCPs as a 

19 tool to better serve and understand specific 

20 populations in your institutions.

21 Today's panelists are our own Gary 

22 Clayton, Senior Examination Specialist at the 
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1 Division of Depositor and Consumer Protection at 

2 the FDIC, Chad Gourley, Manager of Retail Lending 

3 Products at Zions Bank. Thanks, Chad, for 

4 driving from Utah. Gabe Del Rio, President and 

5 CEO of Homeownership Council of America, which 

6 you will hear us refer to as HCA for short. And 

7 he's locally based but a serial traveler, and we 

8 thank him for making it all the way today.

9 Gary would be so kind to provide a 

10 conception framework and explaining to us what 

11 are SPCPs and ECOA at a very high level. And his 

12 presentation will be followed by Chad's 

13 presentation about Zions Bank's SPCP focused on 

14 small business and Gabe's presentation about his 

15 501(c)(3) nonprofit SPCP focused on affordable 

16 mortgage access services to community development 

17 financial institutions or CDFIs and all the types 

18 of lenders including banks. I will ask a few 

19 follow-up questions.

20 And after our discussions, my 

21 panelists will answer questions from the members 

22 of the committee. So we will get it started with 
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1 Gary Clayton, our expert on fair lending. Gary, 

2 please provide an overview of the interagency 

3 SPCP statement, give us a time line on how it 

4 came about, and please describe the FDIC's review 

5 procedures for SPCPs.

6 MR. CLAYTON: Well, great afternoon to 

7 everyone. Just a few basic things regarding 

8 Regulation B, ECOA, and Special Purpose Credit 

9 Programs. As you know, under federal law, 

10 lenders are permitted to design and implement 

11 Special Purpose Credit Programs to extend credit 

12 to a class of individuals who otherwise be denied 

13 credit or would receive it on less favorable 

14 terms under certain conditions.

15 Regulation B specifies that a program 

16 qualifies as a Special Purpose Credit Program 

17 only if it was established and it is administered 

18 as not to discriminate against any applicant on a 

19 prohibited basis. However, all program 

20 participants may be required to share one or more 

21 common characteristics, some commonality such as 

22 their race, their national origin or sex so as 
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1 long as the program was not established and is 

2 not administered for the purpose of evading the 

3 requirements of ECOA. Finally, a refusal to 

4 grant credit to an applicant is not a violation 

5 of ECOA or Regulation B if the applicant does not 

6 meet the eligibility requirements under the SPCP.

7 With regard to the special credits 

8 purpose program, on December 21st, 2020, the CFPB 

9 issued an advisory opinion to clarity the content 

10 that a for-profit institution must include a 

11 written plan to qualify as a Special Purpose 

12 Credit Program. In addition, that advisory 

13 opinion clarified the type of research and data 

14 that may be appropriate to inform a for-profit 

15 institution determination to establish a Special 

16 Purpose Credit Program to benefit a specific 

17 class of individuals. Following in December of 

18 2021, HUD released guidance concluding the SPCPs 

19 developed in compliance with ECOA and Regulation 

20 B generally would not violate the Fair Housing 

21 Act.

22 Quarterly creditors may consider the 
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1 use of Special Purpose Credit Programs across all 

2 types of credit covered by ECOA and Regulation B 

3 including residential real estate. Afterwards as 

4 mentioned earlier today, the interagency 

5 statement from the FDIC, the Board of Governors, 

6 thank you so much, NCUA, the OCC, the CFPB, HUD 

7 and DOJ, and the FHFA was issued on February 

8 22nd, 2022 to remind creditors of the ability 

9 under the Equal Credit Opportunity Act and 

10 Regulation B to establish Special Purpose Credit 

11 Programs to meet the crediting of specified 

12 classes of individuals. So to develop the SPCP, 

13 the bank must develop a written plan that 

14 supports the need for the program.

15 This determination can be based on a 

16 broad analysis using the organizations' own 

17 research or data from outside resources, 

18 including governmental reports and studies. All 

19 plans must be in writing as to meet these four 

20 requirements listed on the slide. Without having 

21 this required information in writing, the plan 

22 would not meet the regulatory requirements and 
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1 the banks' risk extending credit in violation of 

2 ECOA.

3 The written plan must include, first, 

4 it must identify the class of individuals or 

5 people that the program is designed to benefit. 

6 For example, minority residents of low and 

7 moderate income census tracts, residents of the 

8 majority-minority census tracts, operators of 

9 small farms and rural communities, or minority 

10 and women owned small business owners. Secondly, 

11 the plan must set fort procedures and standards 

12 for extending credit pursuant to the program, for 

13 example, no down payment, no PMI portfolio home 

14 purchase program.

15 Third, it must establish with research 

16 and data support that the class of individuals

17 under the institution's customary standards of 

18 creditworthiness are people who probably would 

19 not receive such credit or would receive it on 

20 less favorable terms that are ordinarily 

21 available to other applicants applying for a 

22 similar type and amount of credit. It could be 
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1 based on research or data that is already 

2 available in the public domain. For example, 

3 HMDA data or in the case of small business 

4 lending the Small Business Administration is a 

5 public source of information.

6 The bank can also use its own data and 

7 research that may be helpful from their 

8 perspective. As a reminder, the advisory opinion 

9 issued by the CFPB provided additional guidance 

10 regarding research and data support for 

11 establishing the Special Purpose Credit Program. 

12 And finally, the program the written plan must 

13 state a specified period of time for which the 

14 program will last or contain a statement 

15 regarding when the program will be reevaluated to 

16 determine if there is a continuing need for the 

17 program.

18 The FDIC encourages all state 

19 nonmember banks and affiliated institutions to 

20 consider offering the SPCP to meet unmet credit 

21 needs of the community in which they operate. 

22 Regulatory agencies, including the FDIC, do not 
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1 approve SPCPs. I'm going to say that again. 

2 Regulatory agencies, including the FDIC, do not 

3 approve SPCPs.

4 However, state nonmember banks can 

5 submit their draft SPCPs to FDIC staff to obtain 

6 feedback. State nonmember banks can request to 

7 meet with the FDIC staff to discuss the 

8 consideration of implementing an SPCP. If a 

9 state nonmember bank has already enacted an SPCP 

10 plan, it will be reviewed by the FDIC staff as a 

11 part of the normal compliance examination process 

12 for compliance with Section 1028 of Regulation B 

13 as well as being considered during the fair 

14 lending process scoping of that examination. And 

15 with that being said, I'll pass.

16 MS. DIAZ: Thank you very much. That 

17 was a very clear explanation. And now we'll hear 

18 from one bank that implemented an SPCP. Chad 

19 Gourley, please begin by providing a profile of 

20 your institution and then share with us an 

21 overview of your SPCP, especially your target 

22 market.
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1 MR. GOURLEY: Sounds great. Well, 

2 thanks everyone. Appreciate the opportunity to 

3 share about our Special Purpose Credit Program at 

4 Zions Bancorp.

5 So just a quick word about our 

6 institution. At Zions Bancorp, we are committed 

7 to a distinctively local approach to banking and 

8 a relationship driven approach to banking. 

9 Headquartered in Salt Lake City with just over 93 

10 billion in assets, we operate in each of our 

11 markets under our distinct affiliate bank names 

12 and have some local decision making and really 

13 try to drive that community banking approach 

14 within each of our markets.

15 We view ourselves as a large community 

16 bank that has the scale and efficiency of a 

17 larger bank with that kind of local touch in each 

18 of our markets. So you may recognize us from our 

19 different affiliate names in those markets for 

20 Utah, Idaho, and Wyoming. We are Zions Bank. 

21 We're National Bank of Arizona, Amegy Bank of 

22 Texas, California Bank in Trust, Nevada State 
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1 Bank, Vectra Bank of Colorado, and the Commerce 

2 Banks of Washington and Oregon.

3 And in 2021 -- May of 2021, we just 

4 celebrated a two-year anniversary for our Special 

5 Purpose Credit Program. We launched we call it 

6 the small business diversity banking program. 

7 And our program -- actually move to that next 

8 slide -- our program was designed to improve 

9 access to capital for small businesses owned by 

10 women, racial and ethnic minorities, and 

11 veterans.

12 The program -- one of the key features 

13 of that program is it's not a set aside program 

14 where you have to specifically apply for loans 

15 under this program. But rather it's an overlay 

16 of our existing small business lending products 

17 and framework. So what we've done is at the time 

18 of application, any small business applicant 

19 using our regular application process can self 

20 certify as to whether or not they are eligible 

21 for the program.

22 And there's an eligibility form and 
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1 outlines ownership percentage requirements and 

2 things. And they sell certified, yes, I'm 

3 eligible for this program. And from there, once 

4 the application is self certified, it really goes 

5 through our same process with a couple of 

6 caveats.

7 So any product through our small 

8 business centralized processing center which 

9 generally does loans up to one million can self 

10 certify. And in cases where we would've likely 

11 rendered a decline, these clients that have self 

12 certified, instead of issuing that decline notice 

13 on that loan, we can then pivot that application 

14 to underwrite to our Special Purpose Credit 

15 Program where we have created expanded credit box 

16 to find more ways to come to an approval through 

17 that process. So we take that kind of waterfall 

18 approach.

19 One of the things we really love about 

20 that is the customer doesn't have to experience a 

21 decline and then a counteroffer. There's no kind 

22 of pivot. There's no change in pricing or 
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1 product or terms or conditions.

2 As far as the customer is concerned, 

3 they've received an approval. And it doesn't 

4 really matter at the end of the day to them what 

5 credit policy we use to approve their loan. So 

6 we take that waterfall approach.

7 From there, we also integrate our SBA 

8 counteroffer from there because even in some 

9 cases, we still can't come to an approval even 

10 using that expanded credit box in which case we 

11 use an SBA counteroffer as a third path for us to 

12 find an opportunity to make that credit to a 

13 customer. And then the fourth which I'll 

14 probably spend a little bit more time talking 

15 about is one that we're in development with which 

16 is an off-ramp to CDFIs to ideally help fund that 

17 request even If we're not the ones who can make 

18 that request. So I think I've covered what you 

19 need there. In the interest of time, I think 

20 I'll turn it over to Gabe for now.

21 MS. DIAZ: Thank you very much. And 

22 talking about ecosystem, I really appreciate the 
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1 way you explain how everything is integrated. So 

2 Gabe, you play multiple leadership roles in the 

3 homeownership space. But first tell us about 

4 Homeownership Council of America. And then in 

5 the interest of time, I'm going to ask you to 

6 also talk about your mortgages SPCP and the 

7 toolkit you contributed to with the Mortgage 

8 Bankers Association and the community lending 

9 initiatives mortgage banking client program.

10 MR. DEL RIO: Thanks for having me. 

11 So Gabe Del Rio, HCA as we call ourselves often 

12 to shorten it. Our mission is really building 

13 more equitable access to credit for America's 

14 under-served communities.

15 We obviously focus on mortgage credit, 

16 on ownership credit, though our services and team 

17 have been pulled into consumer and small business 

18 as well especially in SPCP. We generally work 

19 with a lot of CDFIs and nonprofits around the 

20 country but also in the past year plus a year and 

21 a half or so since the toolkit. We've been 

22 helping a lot of for-profit entities to build 
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1 their SPCP written plan and to design and deploy 

2 their SPCP.

3 So we're a national nonprofit 

4 organization. We're made really of a small group 

5 of subject matter experts who have been doing 

6 this work for a very long time. And we came 

7 together to really share that knowledge and help 

8 expand the mission by helping all the partners 

9 that we work with out there to be more 

10 successful, to grow their programs.

11 And so we're proud to look back behind 

12 us and see a lot of transformation and impact and

13 growth among our partners. We skip over this. 

14 One of the big contributions that we made is our 

15 partners of MBA and NAFA came to us as the 

16 technical assistance providers for building the 

17 SPCP toolkit.

18 So we facilitated the entire project. 

19 We put together the majority of the content on 

20 there and performed all the focus groups so that 

21 we could build this toolkit. We now know that 

22 this has been used to build at least 20 mortgage 
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1 products.

2 So the SPCPtoolkit.com has been very 

3 useful to a lot of institutions who have the 

4 capacity to deploy that knowledge and build their 

5 own SPCP. When you don't, of course, HCA is 

6 around to help or just to create adjunct capacity 

7 to get through that process quickly. And I'll 

8 speak to a little bit through your questions 

9 about that. This is already done through our 

10 CLIMB program.

11 To really know HCA as our core, as our 

12 social enterprise, and that is community lending 

13 initiatives and mortgage banking. That's what 

14 fuels our mission. That's the CLIMB program 

15 where we're a consultant and partner to many 

16 groups.

17 Giving you some engagement overviews 

18 there. We work with all kinds of different 

19 partners in the industry. And we really do focus 

20 in on lending, loan deployment, growth of that 

21 lending to under-served communities.

22 And a lot of the work, I would say 
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1 two-thirds of our work now is on racial equity. 

2 And that's really -- we've got some comments 

3 later. But we look back as many of you do and 

4 we're not happy with what we see.

5 And we're embarrassed as to where we 

6 are. So it needs that focus. But we've worked 

7 on all kinds of great projects with groups.

8 The other core program that's really 

9 developing at HCA and this has been around for 

10 the past couple years is our equity programs. 

11 And we're going to talk to you a little bit more

12 about the Equity DPA. We actually set about 

13 solving for how to create a national or multi14 state down payment assistance community product 

15 or affordable second that would be supported by a 

16 nonprofit.

17 And that's because we didn't see it in 

18 the market. We've worked with CDFIs and 

19 organizations all around the country. And we can 

20 see that no one was really doing multi-state or 

21 national programming.

22 And it needs to be solved for. Just 
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1 give you an example of large employers which 

2 we're now taking on DPA for who have multiple 

3 states of operation. They need a nonprofit who 

4 can handle that.

5 And we need it to solve for how we 

6 would do so. And so that's what was the genesis 

7 of Equity DPA was solving for how to deliver DPA 

8 in all 50 states. And then we thought when we 

9 were talking to our board getting authorization, 

10 we thought, well, let's make this an SPCP.

11 Let's been an example in this space

12 and in racial equity where we want to be and how 

13 we help others. And so we ended up making the 

14 national DPA solution also an SPCP or Special 

15 Purpose Credit Program. So it helps -- it's 

16 funded by both LMI and BIPOC funds, and it helps 

17 in both of those cases depending on the donors 

18 desire.

19 And we will tell you a little bit 

20 about that pilot. If you want to see a video, 

21 there's actually two really great videos. 

22 Realtor.com was one of our first donors, and 
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1 they're a board member. They're doing lots of 

2 work with us.

3 They helped to create these videos. 

4 Go to realtor.com/fairhousing. And then you'll 

5 see right at the beginning Jose and Deandre's 

6 video.

7 Jose was an LMI BIPOC buying in L.A. 

8 Deandre is actually somewhat of a more 

9 interesting story in that he's not low income. 

10 But he is a first generation Black home buyer, 

11 and I think he represents a message that's really 

12 important, that these programs must go beyond LMI 

13 and that LMI as a proxy has not actually moved 

14 the needle in racial equity.

15 So we must move beyond the income 

16 proxy and speak specifically to race and 

17 ethnicity. We did a pilot for Equity DPA to 

18 demonstrate and understand, learn from how we 

19 would deploy this through our partners. So we 

20 did that piloting in three states, about six 

21 lenders that we just wrapped up.

22 And we're expanding that program this 
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1 year because of donor dollars in Louisville, 

2 Columbus, and Las Vegas. We've got groups like 

3 Fifth Third Bank, New American Funding, Veterans 

4 United, Pulte Mortgage involved in that 

5 expansion. And essentially, we've now proven 

6 that the vehicle can be driven.

7 We've proven that it works. We've 

8 proven we can onboard it with different 

9 institution types. And so we're just beginning 

10 the fund-raising for it to put gas in the car as 

11 I like to say because this program is really 

12 designed to facilitate funds going directly into 

13 consumers' hands for down payment assistance.

14 MS. DIAZ: Thank you very much, Gabe. 

15 So this hopefully has been a primer in SPCP. 

16 And we have a lot of good resources. And we also 

17 had a bonus SPCP program by Member Antonakes 

18 earlier. But assuming that institutions want to 

19 take action in exploring SPCPs as a result of 

20 what you're hearing today, Gary, can you please 

21 describe the process for an FDIC regulated bank 

22 to initiate a consultation on SPCP?
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1 MR. CLAYTON: I would be glad to do 

2 that. If you're a state nonmember bank and you 

3 have questions regarding SPCPs and would like to 

4 talk to the FDIC staff about starting an SPCP, 

5 you can contact the assistant regional director 

6 or the field supervisor for which -- in the 

7 region for which your bank is located to set up a 

8 meeting, to set up a conference call to talk 

9 about implementing an SPCP. If you've already 

10 done so and would like to submit your draft SPCP 

11 to us, you can do so the same way to us.

12 But I do want you to understand we 

13 will review it. We will make comments. We will 

14 give you a critique on it. But understand, it is 

15 not an endorsement of your SPCP.

16 As I said earlier, the federal 

17 regulators do not approve an SPCP. You can 

18 implement it without our approval from that 

19 prospective. So we are really encouraging state 

20 nonmember banks to look down that path for SPCPs 

21 to meet that unmet need for special individuals 

22 or classes of individuals.
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1 And we are making ourselves available 

2 to you to set up a meeting with us to come in and 

3 talk about it if you're considering it, if you 

4 already have a program in place, if you want us 

5 to look at it before you've implemented it, 

6 please let us know and we will gladly set up a 

7 meeting. We will set up a conference call 

8 because we are encouraging you all to look at 

9 this avenue for making sure that we include 

10 everyone in the communities for any unmet credit 

11 needs. So give us a call or send us a text or 

12 send us an email.

13 (Laughter.)

14 MS. DIAZ: Thank you so much for that 

15 encouragement. Back to Chad. Can you please 

16 tell us what motivated you to start an SPCP 

17 program?

18 MR. GOURLEY: Yeah, absolutely. So 

19 for us, fortunately, it was a top down 

20 initiative. At Zions Bank, we had broad support 

21 from our CEO and really directive to establish a 

22 program to improve access to capital for women, 
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1 minorities, and veteran -- and veteran-owned

2 businesses. Excuse me.

3 And so having that initial support 

4 from our CEO made things move pretty quickly. 

5 But we then set about looking at what the 

6 requirements were under the Special Purpose 

7 Credit Program guidelines. Unfortunately, right 

8 around the time, I think it was November of 2020 

9 that this directive came down.

10 And a month later, the CFPB published 

11 their advisory opinion which gave us really the 

12 building blocks of the steps we should take. And 

13 so we set about looking for data that we could 

14 use and reports and research that we could rely 

15 on to establish what would this credit box look 

16 like. What different businesses should be 

17 eligible for this program.

18 And so we relied on -- I mean, to 

19 date, we can't collect this kind of information 

20 on business applications. That won't always be 

21 the case as we're all very familiar. But leading 

22 up to that point, we had no idea what the 
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1 approval rates would look like for women, 

2 minority, veteran-owed businesses versus none.

3 We had no idea at least within our own 

4 population. So we relied on reports and data 

5 from the Federal Reserve, from the SBA, from 

6 think tanks, universities. Really anything we 

7 could get our hands on that was credible to 

8 establish this expanded credit box and determine 

9 who would be eligible for it and really 

10 understand that demonstrated need that Gary 

11 mentioned.

12 MS. DIAZ: Thank you so much. And 

13 Gabe, can you tell us what are you observing is 

14 motivating the institutions that are coming to 

15 you for assistance?

16 MR. DEL RIO: Sure. There's really 

17 three buckets here. So for nonprofits that are 

18 not regulated in the same way, it's much easier. 

19 It's on mission.

20 So that's sort of a mission 

21 motivation. In the for-profit FIs that we've 

22 worked with which is almost a quarter of the 
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1 SPCPs on the market now, you see two buckets 

2 there. And that is, one, because they got a 

3 community benefits agreement or maybe they're 

4 under a directive because they've had some 

5 regulatory findings.

6 And this is part of the remedy to that 

7 directive. Or it is because the other bucket 

8 would be because they're being really proactive 

9 in reaching new markets and expanding new 

10 markets. When you look at the demographics of 

11 growth markets in this country, they are mostly 

12 diverse.

13 And so we'd like to remind people that 

14 if you're not good at lending to BIPOC today or

15 in 10 years from now, maybe 20 years from now, 

16 then you may not be relevant. And so this is a 

17 requisite skill. This is what all successful 

18 institutions will have as a skill set in the 

19 future.

20 MS. DIAZ: And Gary and Chad mentioned 

21 a few data sources for small business programs. 

22 Do you have some --
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1 MR. DEL RIO: Absolutely. So in --

2 MS. DIAZ: -- for mortgage?

3 MR. DEL RIO: -- the mortgage space, 

4 we primarily use HMDA data. And that is publicly 

5 available. It's also important to remind FIs 

6 that you do not need to utilize your own data or 

7 to provide extra data that is not provided in the 

8 public sources.

9 So you can just use publicly available 

10 data. It is important to do some comparison 

11 there. But there's no need to release additional 

12 data than you've already released.

13 We also use American Community Survey 

14 and census data regularly. We use a lot of 

15 studies, Federal Reserve studies, Urban 

16 Institute, et cetera. But the data sets, HMDA is 

17 terribly useful for this, very, very useful and 

18 so is census.

19 MS. DIAZ: So this is looking pretty 

20 good for those that want to do something because 

21 there's very clear regulation expectations. 

22 There's also a toolkit. There's data that's 
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1 readily available and free. And Gary just opened 

2 the lines for anyone who has questions.

3 MEMBER KELLY: I have one, Ms. Diaz. 

4 I have one if you happen to have a moment.

5 MS. DIAZ: Absolutely.

6 MEMBER KELLY: So help me understand 

7 the market size of others that are doing this. 

8 If you don't mind, I'd love to hear from both of 

9 you. Are they the banks or what's the 

10 competition like for these SP -- SPCP -- SPC?

11 (No audible response.)

12 MEMBER KELLY: I want to go SPV, 

13 special purpose vehicle, from my MNA day. So 

14 pardon me. Okay, got it. But just help me with 

15 that. What's the size of the market in terms of 

16 other institutions, et cetera, that are doing 

17 this? And then the follow-up is, is there the 

18 potential for partnering with other banks to do 

19 it using your program as opposed to having a 

20 stand one up completely?

21 MR. GOURLEY: Gabe, you probably have 

22 better insight into what competitors are doing 
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1 than I do.

2 MR. DEL RIO: So in the mortgage 

3 space, it's about 50 companies so far that we can 

4 count that we've got a lot of friends trying to 

5 make that count. And so we think about 50 

6 institutions out there. You can see on the 

7 toolkit the ones that are public.

8 So there's actually a minority of 

9 institutions that are public about their program. 

10 Both GSEs have pilots out now affecting 15 

11 different MSAs around the country. And we expect 

12 that number of providers of SPCPs will double 

13 annually for years to come.

14 MEMBER KELLY: Thank you. That's 

15 good.

16 MR. GOURLEY: The only other 

17 institutions that we were aware of when we 

18 established the program -- actually, it's just 

19 one. We were aware Union Bank had a very similar 

20 program and they were gracious enough to meet 

21 with us and kind of give us a little bit of 

22 insight. They've had their program for over a 
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1 decade, I believe.

2 And when we learned of that, we 

3 learned some things from them. And fortunately, 

4 they were, like I said, gracious enough to share. 

5 So some of what we will built was modeled after 

6 what they had already established.

7 MEMBER KELLY: Thanks, Chad. Tell 

8 Scott I'm not surprised you all are doing this, 

9 and we appreciate his leadership, Scott Anderson.

10 MR. GOURLEY: Yeah, I will.

11 MEMBER KELLY: Thank you.

12 MEMBER TESCHER: Thanks for your 

13 presentations. Really interesting and promising 

14 information. I want to talk a little bit more. 

15 This is just for my own understanding of in the 

16 waterfall. They don't qualify for the standard.

17 So then the next step is wider credit 

18 box. I wonder if you could describe in just a 

19 little bit more detail what does that look like. 

20 And also if I heard you correctly, you said no 

21 price difference.

22 MR. GOURLEY: Correct.
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1 MEMBER TESCHER: So what is that -- I 

2 don't know how long you've been at this now. But 

3 what is the implications for the institution as 

4 it relates to the business case? How do you then 

5 make that justification? And to the degree that 

6 you have delinquencies or defaults that are 

7 higher than in other parts of your portfolio, how 

8 do you and your regulators view that? How does 

9 the FDIC, for instance, as a supervisor view 

10 that?

11 MR. GOURLEY: So your first question, 

12 the credit box, like I said, we looked at all 

13 this third party data to establish what that 

14 would be. Primarily, one of the primary drivers 

15 we see in decline rate differences is on credit 

16 score. So of course, we made some credit score 

17 allowances.

18 We don't use FICA. We use an SPSS 

19 score in our model. So there's lower SPSS score 

20 requirements, higher BK allowances, BK scores.

21 And some of our products depending on 

22 kind of how deep we dive in our analysis, we 
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1 allow for different leverage ratios, liquidity 

2 ratios. One of the things that's a little bit 

3 creative is some particular industry types, we 

4 would consider cautionary or restricted. But we 

5 also had data that showed that those industry 

6 types were more likely to be owned by our target 

7 audience.

8 And so we made adjustments to those 

9 policies as well. Other things, we've talked a 

10 lot this morning about unbanked or underbanked. 

11 We also found that some of our policies would 

12 benefit a customer if they had an existing 

13 relationship with you.

14 There's lower credit criteria. And

15 there's certainly a lot of data that support from 

16 a risk perspective that an existing relationship 

17 is less likely to default. But we also recognize 

18 that our target audience in this case is less 

19 likely to have a relationship. So we looked at 

20 that as well. So it's kind of a holistic view. 

21 It's not just --

22 (Simultaneous speaking.)
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1 MEMBER TESCHER: That's very helpful. 

2 And do you have enough seasoning to see the 

3 portfolio level differences?

4 MR. GOURLEY: Not really. I mean, we 

5 only launched it two years ago. There's just --

6 and everybody knows credit quality has been 

7 fantastic for the last two years. So there's not 

8 really much we -- any conclusions I think we can 

9 draw at this point. We were really cognizant to 

10 not make a price difference.

11 There was a thought, maybe you need to 

12 price for this additional -- this perceived 

13 additional risk. And the reason we didn't do 

14 that is one of the stated requirements of the 

15 program is that applicants would've received 

16 credit -- either wouldn't have been approved for

17 credit or would've been approved under less 

18 favorable terms. And in our thought process, 

19 well, if you establish the program and then 

20 everyone who gets approved under the program has 

21 a higher interest rate, you haven't really met 

22 the objective of a Special Purpose Credit Program 
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1 because they just received it under less 

2 favorable terms.

3 MEMBER TESCHER: So now here's the 

4 dumb question. If time goes by and this 

5 portfolio performs well -- these portfolios 

6 perform well, does it make you think differently 

7 about what your standard credit box is in the 

8 first place?

9 MR. GOURLEY: Well, yeah, I think 

10 that's the argument, right? I mean, I think the 

11 basis under which you establish a Special Purpose 

12 Credit Program means that you subscribe to the 

13 belief that there is something inherently wrong 

14 with the way we measure risk and credit, right? 

15 And maybe an individual institution can't solve 

16 the way a credit score is established.

17 But we can build things at our own 

18 institution that help to drive that. When we 

19 talk about program metrics, I'll share some of 

20 what we're seeing. And really the things that we 

21 do to measure the success of the program -- and I 

22 don't want to jump the gun. So I'll leave that.
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1 MR. DEL RIO: I do want to speak to 

2 mortgage because I'm very small business focused 

3 is we are often not changing the credit box in 

4 mortgage. We're often providing incentives. So 

5 it's a discount on fees. It's a credit towards 

6 your closing. It's a discount on the rate.

7 But it doesn't actually change the 

8 credit box. So I don't anticipate that 

9 performance would be any different. And I think 

10 it's biased to think that it would. So I 

11 wouldn't back that at all.

12 But there are -- and I guess we're 

13 going to see over time now that we have a lot 

14 more proactive programming, there are some 

15 portfolio products that are pushing the 

16 boundaries of what we would consider the credit 

17 box or what is standard through saleable through 

18 GSEs, right? So we will soon have a compare and 

19 contrast of those that are more aggressive on the 

20 credit box. But the GSE pilots are absolutely 

21 saleable, ability to repay, strong credit, yeah.

22 MEMBER TESCHER: Thank you.
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1 MR. CLAYTON: And Ms. Jennifer, let me 

2 just real quickly.

3 MS. DIAZ: Thank you. I think Member 

4 Antonakes had a question and then Marla Bilonick. 

5 MR. CLAYTON: Okay. Let me just speak 

6 to something she asked, though. While we are 

7 encouraging for profit institutions to consider 

8 Special Purpose Credit Programs, at no time are 

9 we encouraging them to make unsafe and unsound 

10 loans. We do understand that the business of 

11 banking is banking.

12 And so while we do want them to meet 

13 unmet credit needs in the community, things of 

14 that nature, what we don't want them to do is go 

15 so far beyond they're making loans that are 

16 unsafe and unsound and at the end of the day, 

17 nobody benefits from these loans at all, the bank 

18 nor the community that's in need. So we 

19 encourage you to do it. Please always consider 

20 safety and soundness in the back of your head 

21 when you're making these programs and you're 

22 discounting or you're developing criteria to meet 
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1 those who may not have qualified or those who may 

2 have received the credit at a less advantageous 

3 rate or things of that nature.

4 MEMBER TESCHER: Totally fair. And 

5 listen, it may be that there will be absolutely 

6 no difference in performance and that would be 

7 fantastic.

8 MR. CLAYTON: Wouldn't that be 

9 awesome.

10 MEMBER TESCHER: But to the degree 

11 that there might be, maybe it's very small. But 

12 it could be different. And so that difference 

13 doesn't necessarily mean it's not safe and sound. 

14 It's just a touch more risky.

15 MR. CLAYTON: And the other thing is 

16 that's why I think they put the caveat as one of 

17 the parts of the plan that you have to put a date 

18 in there when you're going to reevaluate so you 

19 can go back and look at the mechanics of the 

20 program to see how it's working, what's not 

21 working, and make any adjustments that you may 

22 need to make to solidify the program. Or you 
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1 decide we met it enough and we no longer need to 

2 offer it.

3 MEMBER TESCHER: Got it. Thank you.

4 MS. DIAZ: Valuable addition.

5 MEMBER ANTONAKES: So great, thank you 

6 very much. Got some good learnings here that 

7 I'll take back. So I appreciate it very much. 

8 So one observation, I guess, and this isn't meant 

9 to be flippant and then one question.

10 And I guess -- and I know we're stuck 

11 with the language of the regulation. But we 

12 really have to demonstrate the research and data 

13 for what we should know that's self-evident 

14 already in terms of protected classes being 

15 disadvantaged and the availability and pricing of 

16 credit. It seems like a very bureaucratic step 

17 that I think some banks don't want to take and 

18 why the uptake hasn't been great.

19 And the clarification was really 

20 helpful in terms of broader industry data. I 

21 think some banks have interpreted this as they 

22 almost have to do a self-evaluation that their 
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1 product suite is not sufficient serving protected 

2 classes. And I think they don't want to put that 

3 in writing.

4 So the clarification was helpful. The 

5 second point -- and again, Chad, you are helpful 

6 here in terms of SBA -- we would love to extend 

7 our Special Credit Product to members of the 

8 LGBTQ+ community and to individuals with 

9 disabilities. We have struggled to find the data 

10 that would be supportive of that approach. So if 

11 you could point us in that direction, we would 

12 love to have it.

13 MR. GOURLEY: LGBTQ+ Alliance has some 

14 good data on that particular set, yeah.

15 MEMBER ANTONAKES: Okay. Thank you.

16 MS. DIAZ: Marla?

17 MEMBER BILONICK: Thank you. Well, 

18 one just soapbox comment is just that I think to 

19 your point it is probably more challenging to 

20 establish SPCPs for small business lending given 

21 the lack of 1071 being fully enacted. So that's 

22 just one thing. But the other thing I was going 
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1 to say is I really -- I think it's really great, 

2 Gabe, that you've done sort of a creative kind of 

3 consulting I guess is the best way I could put 

4 it.

5 You've got the toolkit. You've got 

6 technical assistance. And I was wondering if 

7 something similar existed in the small business 

8 lending space. And if not or even If it were, 

9 whether folks who are doing small business 

10 lending, SPCPs had considered approaching CDFIs 

11 as area experts in how to lend to lesser served 

12 populations.

13 MR. DEL RIO: Right. We've actually 

14 been pulled into consumer lending and small 

15 business lending just because of the -- and I 

16 find it much easier than mortgage lending which 

17 is way more regulated. And so, yeah, we maybe 

18 should be putting out an ABA, add to that toolkit 

19 or what more can we do.

20 (Simultaneous speaking.)

21 MR. DEL RIO: I was just going to say 

22 to Steven's comment too. Demonstrating need is 
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1 incredibly easy. So don't think of that as a 

2 challenge. You don't have to air your dirty 

3 laundry, A. And B, demonstrating need is very, 

4 very easy.

5 MS. DIAZ: Great. And Gary, if 

6 financial institution goes in to the FDIC, what 

7 type of support is available to them?

8 MR. CLAYTON: Your know, from a 

9 consultative perspective, we're here to walk you 

10 down the path of the program, make you understand 

11 what the components of the written plan have to 

12 be, how you can achieve it. We got a community 

13 affairs staff that can guide you to some 

14 resources so you can find the research and the 

15 data to help build your program. Like I said 

16 earlier, you can set up a meeting to talk to us 

17 about those who are considering implementing the 

18 plan.

19 If you've already got the plan, you 

20 can submit that to us. We will review it. We'll 

21 highlight it. We'll write notes on the side of 

22 it.
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1 But what we won't do, once again, we 

2 won't endorse it because that's not what we do. 

3 I just want to make sure that is very clear. But 

4 our goal here is to support you in any way we can 

5 so that these unmet credit needs in the community 

6 can be met by some perspective. One of the 

7 things that we want to -- and I'll just go ahead 

8 and add this also.

9 There have been times where there has 

10 been a hindrance because they were afraid of 

11 fair lending. And as long as you can provide the 

12 data to show that this program is set up to meet 

13 the unmet crediting of a special group, fair 

14 lending typically is okay with you all from that 

15 perspective. So we'll talk to you about fair 

16 lending as well.

17 When we see something that may cause a 

18 fair lending concern, we'll highlight. This may 

19 be a concern. You may want to go back and 

20 reevaluate this perspective. So our goal here is 

21 to establish that partnership with you all to 

22 keep communities alive so they can keep building, 
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1 can keep growing, and they can all have a piece 

2 of that American dream. So we're here.

3 MS. DIAZ: Thank you. Jonathan?

4 MEMBER MINTZ: Gary, does the FDIC

5 approve -- no, kidding.

6 (Laughter.)

7 MEMBER MINTZ: My mind was where Jen's 

8 was. I felt like I was missing part of the 

9 equation. And I think you just filled it in.

10 I was trying to figure out what the 

11 incentive was for the financial institution to do 

12 this beyond their better angels. And I think you 

13 just said it which is the ability to specialize 

14 the standard without getting in trouble for 

15 discriminating. That's the gift, right, here? 

16 Is that accurate?

17 MR. CLAYTON: And that is accurate.

18 MEMBER MINTZ: You answered my 

19 question for me.

20 MR. CLAYTON: And that is true. But 

21 we do have a caveat. Let's say, for example, you 

22 set the program up to serve the needs of 
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1 individuals who live in majority-minority census 

2 tracts. Well, under that caveat, you can't 

3 discriminate against women, who live in majority4 minority census tracts.

5 Or you can't discriminate against men. 

6 So within the confounds, you can't have 

7 discrimination. But the program itself can be 

8 there to meet the needs of those individuals who 

9 have struggled or whatever to get along or the 

10 interest rates and things of that nature. So you 

11 can still do that perspective of it.

12 MR. DEL RIO: Yeah, SPCPs are based on 

13 eligibility. And eligibility is set through 

14 either geography or a people-based approach.

15 MEMBER MINTZ: But the point is you're 

16 given permission to --

17 (Simultaneous speaking.)

18 MEMBER MINTZ: Thank you. That's 

19 exactly what I was searching for. Yes, exactly.

20 MR. DEL RIO: Yeah, and hopefully the 

21 good business that that brings you is what keeps 

22 you there.
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1 MEMBER MINTZ: And then maybe can lead 

2 you to where Jen was saying which is, like, well, 

3 If it works for this population --

4 MR. DEL RIO: Possibly.

5 MEMBER MINTZ: -- maybe it can work 

6 for everybody. Okay, great.

7 MR. CLAYTON: And we won't say 

8 positively discriminate.

9 (Simultaneous speaking.)

10 MS. DIAZ: While this engagement is 

11 really wonderful, I would ask for all of you to 

12 think about any last questions. But while you do 

13 that, I'm going to ask Chad to share a little bit 

14 of the metrics which is also the reason why we do 

15 all this. So do you mind to share some impact 

16 stories?

17 MR. GOURLEY: Yeah, so the two major 

18 ways that we measure the success of the program 

19 is through the percentage of our applicants that 

20 are applying for our small business loans. How 

21 well does that percentage of those who self 

22 certified match up to the demographics of the 
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1 market that they serve? And I'm happy to report 

2 that in that space, clearly, we didn't have any 

3 data that showed us what that looked like before 

4 2021.

5 But we had kind of a six- to nine6 month run rate that we believe is likely what the 

7 makeup of our applications were before we 

8 launched. And since launching, we've seen a 

9 growth of about -- well, I should say since that 

10 nine-month period, we've seen a growth of about 

11 10 percent really driven through grassroots 

12 efforts in each of our markets. Because we 

13 operate on that affiliate bank model, each market 

14 has their own kind of marketing budgets and 

15 contacts within their communities and things.

16 And so in some markets, we've had kind 

17 of mass market marketing efforts. In other 

18 markets, it's really just driven through 

19 grassroots efforts with Black-owned business 

20 chambers or Latinx associations, women-owned 

21 business associations. And through those 

22 efforts, we've seen that 10 percent growth in our 
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1 application pool.

2 The other way we measure success of 

3 the program is through what we call closing the 

4 approval gap. So I mentioned before that we 

5 didn't have any internal data when we launched 

6 the program. We expected that what we saw 

7 broadly through the studies and reports that were 

8 out there, it's likely what we would experience 

9 as well.

10 Two years into the program, we can 

11 confirm that same approval gap exists even within 

12 our organization. Happy to report that we can 

13 see the difference of what the approval gap is 

14 and what it would have been. Essentially, the 

15 deals we were able to approve using our expanded 

16 credit policy help to close that gap.

17 Happy to remove that we are seeing a 

18 real improvement. I mean, it’s not just this 

19 marginal difference. So it's working 

20 essentially.

21 Now have we done everything we needed 

22 to do? Is it working perfectly? No, not yet. 
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1 We reevaluate the program on an ongoing basis, 

2 understand where we're still seeing common 

3 decline ratios, where we can potentially make 

4 additional tweaks and things that are still 

5 taking into account safety and soundness but also 

6 give us an opportunity to further close that 

7 approval gap.

8 And I think that's the important thing 

9 to consider. I think this goes back to your 

10 question, Jen, that we're not trying to approve 

11 every loan, right? We're not trying to create a 

12 100 percent approval rate for our SPCP eligible 

13 clients and everyone else is at their current 

14 rate.

15 But rather we're just trying to create 

16 some parity there and get that approval rate up 

17 so there's some equality there. And so that's, 

18 like I said, one of the objectives. And we 

19 continue to see improvement there. But there's 

20 still work to be done and we continue to make 

21 those fine tuning tweaks and things.

22 MR. CLAYTON: Could I just piggy back 
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1 on one thing he said and I think is wonderful. 

2 You said how you market the program because it 

3 doesn't make sense to develop a SPCP and no one 

4 knows about it. He said you market it through 

5 the Black business through the various 

6 mechanisms.

7 So look at the marketing strategies 

8 for making sure people are aware that you offer 

9 this specialized program to increase the parity 

10 in these communities and things of that nature. 

11 Marketing plays such a vital role. So how you 

12 choose to market that program would determine the 

13 success of that program as well. So while you're 

14 developing the program, also develop a marketing 

15 strategy to make the people aware that you're 

16 offering this program.

17 MEMBER CAMPER: Can I just ask a quick 

18 question about that? So If I understand how you 

19 do it, it may not even be visible to the customer 

20 that they got approved under the program.

21 MR. GOURLEY: That's correct.

22 MEMBER CAMPER: But is it because some 
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1 customers would presume that they wouldn't --

2 don't even bother to apply because I have a name 

3 your impairment? So how does the marketing fit 

4 with your approach that a customer may not even 

5 know that they're getting credit that way?

6 MR. GOURLEY: So the customer knows 

7 that they self certified under the program. So 

8 when they apply, they say, yes, I'm eligible for 

9 this program. When they're granted their 

10 approval, we don't distinguish between how they 

11 got -- were granted that approval.

12 MEMBER CAMPER: But do you think that 

13 some customers came into the bank because they 

14 knew you had a special program?

15 MR. GOURLEY: Uh-huh.

16 MEMBER CAMPER: I see, okay.

17 MEMBER LIBBY: I was going to ask a 

18 similar question about outreach because I love 

19 that you've designed so that it is this funnel 

20 and it's not a specifically targeted program. 

21 But then it does seem like that almost 

22 potentially impacts your ability to get the word 
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1 out. And then word of mouth seems like it could 

2 be especially powerful in addition to the kinds 

3 of partnerships that you were talking about. So 

4 I'm still maybe unclear. So somebody would know 

5 that they were qualified this way once they 

6 receive the loan?

7 MR. GOURLEY: They would know they 

8 were eligible --

9 MEMBER LIBBY: Okay. So they --

10 MR. GOURLEY: -- when they applied.

11 MEMBER LIBBY: Yeah.

12 MR. GOURLEY: And our position is once 

13 you get the approval.

14 MEMBER LIBBY: Okay.

15 MR. GOURLEY: I mean, so from our 

16 position, it's irrelevant, right?

17 MEMBER TESCHER: But you could still 

18 market it and say, like, are you a farmer who 

19 blah, blah, blah, blah. We want to --

20 MEMBER LIBBY: Right. We want to 

21 partner --

22 MEMBER TESCHER: -- talk to you. We 
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1 want to talk to you.

2 MEMBER LIBBY: -- with you and bring 

3 you in, yes. Okay, got it.

4 MR. DEL RIO: This is a challenge that 

5 lenders are having. So there's a big gap in how 

6 you communicate, that you have a racial equity 

7 program. How do you do that and not offend your 

8 non-Hispanic White borrowers, right? And so 

9 there are some solutions that's coming forward. 

10 We actually have an announcement next month that 

11 I won't mention but that's coming out to 

12 facilitate just this.

13 MEMBER TESCHER: Right. But the way 

14 they've set it up, I think the experience from 

15 the potential borrowers is seamless. I think it's 

16 preferable to do the overlay as opposed to in the 

17 waterfall and how you do the application. I 

18 think that's great.

19 MEMBER LIBBY: Agreed. I love that 

20 piece of it. But I think I was thinking of small 

21 business owners that in my former life we used to 

22 engage with. And I think once you get denied, 
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1 it's often hard to go back to apply for a loan.

2 So I was just sort of thinking about that 

3 barrier.

4 And then I guess it is just the 

5 importance of those partnerships to bring people 

6 -- to bring folks in.

7 MEMBER TESCHER: You could go back to 

8 your clients in the last X years, right?

9 MS. DIAZ: Well, thank you, everyone, 

10 for your engagement. It does seem like we made 

11 an old tool exciting again. And we do look 

12 forward to your questions. Thank you.

13 MS. ORTIZ: Thank you. All right. 

14 Mr. Chairman, that concludes us, I think, our 

15 panels.

16 CHAIRMAN GRUENBERG: Listen, thank you 

17 all. It's been a terrific day. Let me thank all 

18 the panelists who participated. Let me thank our 

19 committee members for their very thoughtful 

20 comments, really helpful.

21 And I'd like to particularly thank the 

22 FDIC staff who organized really a terrific 
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1 program today. So thank you all. This committee 

2 is the gift that keeps on giving.

3 So thank you for that. We'll try to 

4 put together an interesting program for the next 

5 time we meet. In particular, I think we have a 

6 lot of work in progress to build on.

7 We can also give some thought about 

8 things we want to do going forward. I think 

9 maybe timely to give that some consideration as 

10 well. So it's been a pleasure. Thank you all. 

11 See you next time.

12 (Whereupon, the above-entitled matter 

13 went off the record at 3:56 p.m.)

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