{
  "id": "R45979",
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      "id": 606668,
      "date": "2019-10-24",
      "retrieved": "2019-10-25T22:12:09.488875",
      "title": "Financial Inclusion and Credit Access Policy Issues",
      "summary": "Access to basic financial products and services is generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. Financial inclusion in three domains can be particularly important for households: \naccess to bank and other payment accounts;\naccess to the credit reporting system; and \naccess to affordable short-term small-dollar credit. \nIn the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. For example, the vast majority of consumers have a bank account, a credit score, a credit card, and other types of credit products. \nSome consumers\u2014who tend to be younger adults, low- and moderate-income (LMI) or possess an imperfect credit repayment history\u2014can find gaining access to these banking and credit products and services difficult. Currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. For those excluded, consumers may find managing their financial lives expensive and difficult. \nDifferent barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services.\nFinancial institutions may find serving these consumers expensive or difficult, given their business model and safety and soundness regulation requirements. For example, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Likewise, some consumers may lack a credit history, making it difficult for lenders to determine their credit risk on a future loan. \nNew technology has the potential to lower the cost of financial products and expand access to underserved consumers. For example, alternative (nontraditional) data may be able to better price default risk for lenders, which could expand credit access or make credit less expensive for some consumers. In addition, internet-based mobile wallets may provide affordable access to payment services for unbanked consumers. Yet, relevant consumer protection and data security laws and regulations may need to be reconsidered or updated in response to these technological developments. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed.\nGiven the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic may continue to be the subject of congressional interest and legislative proposals. In the 116th Congress, the House Financial Services Committee marked up and ordered reported H.R. 4067, directing the Bureau of Consumer Financial Protection (CFPB) to report to Congress on these issues. In general, political debates around how to best achieve financial inclusion for underserved consumers relate to whether policy changes could help expand consumers\u2019 affordable access to these financial products and services. Disagreements exist about whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at serving underserved consumers.",
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      "id": 606518,
      "date": "2019-10-21",
      "retrieved": "2019-10-22T22:08:12.754866",
      "title": "Financial Inclusion and Credit Access Policy Issues",
      "summary": "Access to basic financial products and services is generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. Financial inclusion in three domains can be particularly important for households: \naccess to bank and other payment accounts;\naccess to the credit reporting system; and \naccess to affordable short-term small-dollar credit. \nIn the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. For example, the vast majority of consumers have a bank account, a credit score, a credit card, and other types of credit products. \nSome consumers\u2014who tend to be younger adults, low- and moderate-income (LMI) or possess an imperfect credit repayment history\u2014can find gaining access to these banking and credit products and services difficult. Currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. For those excluded, consumers may find managing their financial lives expensive and difficult. \nDifferent barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services.\nFinancial institutions may find serving these consumers expensive or difficult, given their business model and safety and soundness regulation requirements. For example, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Likewise, some consumers may lack a credit history, making it difficult for lenders to determine their credit risk on a future loan. \nNew technology has the potential to lower the cost of financial products and expand access to underserved consumers. For example, alternative (nontraditional) data may be able to better price default risk for lenders, which could expand credit access or make credit less expensive for some consumers. In addition, internet-based mobile wallets may provide affordable access to payment services for unbanked consumers. Yet, relevant consumer protection and data security laws and regulations may need to be reconsidered or updated in response to these technological developments. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed.\nGiven the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic is likely to continue to be the subject of congressional interest and legislative proposals. In general, political debates around how to best achieve financial inclusion for underserved consumers relate to whether policy changes could help expand consumers\u2019 affordable access to these financial products and services. Disagreements exist about whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at serving underserved consumers.",
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  "topics": [
    "Economic Policy"
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}