WASHINGTON -- The federal government would make grant and loan money available to encourage financial institutions to reach out to low-income consumers who do not have credit union bank or credit union accounts, if a bill introduced Thursday by Sen. Daniel Akaka (D-Hawaii) passes.
One program would fund outreach efforts by credit unions and banks among communities in which there are large numbers of individuals who don't have accounts at financial institutions.
The other program would help financial institutions develop affordable alternatives to payday loans. Consumers who apply for loans under this grant program would also receive financial literacy education. Loans would be subject to the NCUA's loan interest rates, which for those loans currently cap the rate at 18%.
"About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services. With these federal resources, mainstream institutions will be better able to bank the unbanked. Akaka said in a statement.
The bill's co-sponsors are: Sens. Daniel Inouye (D-Hawaii), Sen. Joseph Lieberman (I-D Ct.) and Charles Schumer (D-N.Y.).
It has been referred to the Senate Banking Committee.
Akaka worked with several organizations, including NCUA, CUNA, NAFCU and the Hawaii Credit Union League, in developing the legislation.