90 million are ‘unbanked,’ ‘underbanked,’ FDIC chairman says

Notes emphasis on examining for consumer harm

About 27% of households — 90 million Americans — are unbanked or underbanked, with more than two in five of those (42%) earning less than $30,000 a year, the chairman of the Federal Deposit Insurance Corp. (FDIC) said Friday.

Speaking at the agency’s seventh annual FDIC Consumer Research Symposium, Board Chairman Martin Gruenberg added that – based on the most recent data available — nearly half of Hispanic and African-American households each are un- or under-banked, at 46% and 49%, respectively.

Additionally, he said about half (46%) of households headed by a working-age individual with a disability are un- or under-banked.

The data, Gruenberg said, were gathered from the FDIC’s National Survey of Unbanked and Underbanked Households, conducted every two years in partnership with the U.S. Census Bureau.

“This data—and related research from the FDIC—is regularly cited by financial institutions, non-profit organizations, and public officials as providing a basis for understanding the scope of economic inclusion challenges in their communities and as a starting point for considering approaches that can enhance economic inclusion,” Gruenberg said. “In addition, we have been gratified to see the research community downloading our respondent-level data and conducting independent work to increase understanding in this area.”

In other comments, Gruenberg noted that FDIC examiners are placing greater emphasis on “consumer harm.”

He said the risk-based examination approach evaluates whether an institution has established appropriate policies and procedures and taken other measures to ensure that it can offer its products and services in compliance with applicable law, minimizing the risk of consumer harm.

“This emphasis on consumer harm helps ensure that the federal banking agencies are well-positioned to implement the consumer protections embedded in federal law,” he said. “In practice, this means that examiners are focusing less of their attention on technical concerns and more on issues which may actually impact consumers.”

He said the approach to supervising compliance with consumer protection standards has been favorably received by financial institutions, and said banks report that compliance examinations add more value when they bring a focus on potential substantive concerns.

Remarks by Martin J. Gruenberg, Chairman, Federal Deposit Insurance Corporation to the Seventh Annual FDIC Consumer Research Symposium; Arlington, VA