Financial Inclusion: The News We Needed From Chairman Hood

Knowing what the questions were ahead of time, I had expected the flavors of the answers might be a little bland. I was wildly incorrect, because in my head, I had figured the marijuana banking topic would be the meat of the dish, and the Payday Alternative Loan program and cybersecurity topics would be a couple of nice side dishes.

What I wasn't expecting when the lid was lifted off my plate was a surprise, protein-rich dish of Hood's comments about financial inclusion and minorities.

In response to David's questions about payday lending and general priorities for the NCUA, Hood said, "I think that financial inclusion is the civil rights issue of my generation."

That response really made me sit up, and swish around in my mouth and take a moment to digest what he was saying.

When it comes to what the NCUA can do for minority communities that might be underserved and/or overlooked by credit unions, Hood has these groups on his radar. He said he wants to help credit unions support this struggling population. "I want to make sure that we are providing them with the flexibility and regulatory relief to serve their members," Hood said.

The answer to why he wants this to happen – which got me to sit up in my seat even more – was because, in part, of his life experiences. He said, "I think that as a person of color, I've embraced it even more because it's been my life story."

It's a fascinating perspective on such an important topic by someone who is in a position to really make a positive difference for this disenfranchised/underserved/possibly-ignored group of people.

According to data compiled in 2017 by the FDIC, nearly 85 million Americans do not have a bank account or only have access to the most basic banking services. And, guess what, those people are predominately from low-income, rural and minority backgrounds.

Here are some of the top-level items discovered in the FDIC's report:

• In 2017, 6.5% of U.S. households were "unbanked," meaning that no one in the household had a checking or savings account.
• An additional 18.7% of U.S. households were "underbanked" in 2017, meaning that the household had an account at an insured institution but also obtained financial products or services outside of the banking system.
• Approximately 24.2 million U.S. households, composed of 48.9 million adults and 15.4 million children, were underbanked in 2017.
• Almost 70% of U.S. households were "fully banked" in 2017, meaning that the household had a bank account and had not used any alternative financial services in the past 12 months.

The full FDIC report is a fascinating read and I'd encourage you and everyone on your team to take a look. While it does show that the underbanked rate in the U.S. has fallen 1.2 percentage points since the 2015 survey, there's one disturbing and growing gap that's happening within the underbanked population:

• More than half (58.7%) of unbanked households in 2017 were not at all likely to open an account, up from 40% in 2013. This increase was fairly widespread among segments of the unbanked population.

What that possibly or, I think, most likely tells us is that a growing majority of those who don't have or have access to banking services, have given up believing that anyone or any organization will come into their lives to help them out.

This isn't about a significant part of the people who live in our communities who need to pull themselves up by their bootstraps, or anything related to that way of thinking. This is about the growing and deepening talons the payday lenders, rent-to-own centers, pawn shop lenders and whatever other shady lending businesses have on so many Americans.

This is about the Category 5 poverty storm that doesn't simply stay along the Gulf Coast, but has spread into many corners of our towns, states and country. And I very much believe this is something that Chairman Hood and the credit union system as a whole can do something about.

Hood mentioned in the interview that he is making a point to meet with groups "to encourage connections between credit unions, minority groups and businesses." Hood said the NCUA is actively reaching out to Historically Black Colleges and Universities – and that is a great thing to do. I feel like the bigger and more impactful connections will be made, as he stated, by meeting and growing the direct connections between the NCUA and African American and Hispanic Chambers of Commerce. To me, that's so much closer to getting to the root population that could use banking assistance from credit unions.

I was surprised to see that financial inclusion has also become a platform for many candidates in the 2020 presidential election. Normally those candidates are focused on the sexier topics such as health care, the national deficit or military spending …blah, blah, blah.

Financial inclusion holds the key to bringing a sustainable economic future for every single person in this country. If you can financially help to pull up 85 million Americans, the entirety of the United States of America will be pulled up as well.

The benefit of keeping down millions of Americans economically is lost on me. It's inhumane.

I applaud Mr. Hood for this first step of what he said on-the-record about the financial inclusion issue. I hope he will use his new position and perspective to turn his words into some real and positive changes for millions of people.

Michael Ogden

Michael Ogden is editor-in-chief for CU Times. He can be reached at mogden@cutimes.com.