Sens. Brown, Warren, and Smith Press FDIC on Removal of “Underbanked” Language From Report
U.S. Senators Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), and Tina Smith (D-Minn.) recently sent a letter to the Federal Deposit Insurance Corp. (FDIC) Chair Jelena McWilliams, criticizing the agency for excluding the term “underbanked” in its 2019 report. Where in previous years the FDIC’s survey was released in a report titled the “National Survey of Unbanked and Underbanked Households,” this year’s report was titled “How America Banks: Household Use of Banking and Financial Services” and the term “underbanked” is referenced only in footnotes throughout the 76 page report. The Senators claimed that omitting the term could have been politically driven, and makes it difficult to understand a group of financially vulnerable people.
“We are deeply concerned that you have allowed political considerations to derail the Federal Deposit Insurance Corporation’s (FDIC) 2019 report on unbanked and underbanked households,” the Senators wrote in their letter, which was provided exclusively to Morning Consult. “Without regard to the integrity of the history of this report, you have all but erased a vulnerable community that we care about—people who have access to bank accounts but are still not well-served by the banking system.”
“The FDIC’s failure to discuss these critical distinctions when the Division of Research eliminated the experience of underbanked communities in the 2019 report gives the misleading impression that 95% of households are now well-served by the banking system by simply being served at all,” the letter also reads.
The FDIC moved the biennial report of the unbanked and underbanked to the responsibility of the Division of Insurance and Research, rather than the Division of Depositor and Consumer Protection, which was created after the 2008 financial crisis. The Senators criticized the move, stating that it negatively impacted the report’s “substance, focus and conclusions.”
The report did not include findings on the underbanked, those with bank accounts but who often rely on alternative financial products, compared to the unbanked, or those with no bank accounts or access to bank products at all. The report found that 5.4 percent of U.S. households were unbanked, compared to 6.5 percent in 2017. According to the Senators, the findings imply that 94.6 percent of households are fairly and adequately banked.
The Senators wrote that the decision “makes it impossible to adequately track whether the banking system you are charged with overseeing is providing traditionally underserved communities with the affordable services they need.”
The letter asks why the report was handed off to the Division of Insurance and Research, as well as why the consideration of underbanked groups was eliminated.