Good afternoon everyone. My name is Sarah Bainton Kahn. I’m with the Office of Financial Empowerment at CFPB, which is part of the Division of Consumer Education and Engagement This panel is titled “Improving Information and Access for Consumers.” Now that we’ve heard about some of the challenges consumers gaining or regaining access to accounts that financial institutions offer, we’re going to shift gears to hear about some solutions that have been developed over the years in response to the issue These are programs and initiatives designed to help consumers either regain or gain access to the system, through products designed to meet their needs as well as information. The information has a few different purposes One is to help consumers identify the best products for them, also to help consumers be successful in those accounts, and, third, how to regain access to the system, for those who have been screened out. We heard some examples of that in the last panel, but that could be helping a consumer walk through the steps of pulling the report, identifying there are errors, if there are not errors then helping then to understand how to pay back what they owe to the bank or the credit union We have an impressive panel. This group represents a mix of representatives from local and federal government, industry, and nonprofits. Let me introduce the panel. First we have our moderator, Louisa Quittman. Louisa is Director of the Office of Financial Education at the U.S. Department of Treasury, in the Office of Consumer Policy. She’s responsible for policy development and coordination related to promoting the financial decision-making of Americans. She coordinates the interagency FLEC, which is the Financial Literacy and Education Commission, and the President’s Advisory Council on Financial Capability for Young Americans. She also oversees the research for her office. Prior to Treasury, Louisa was Program Manager at the CDFI Fund Next we have Dara Duguay. Dara as Executive Director of the Credit Builders Alliance, which provides nonprofits with the ability to report loan data to credit bureaus, as well as pull low-cost client credit reports for financial education purposes. Prior to joining the Credit Builders Alliance, Dara ran her own consulting practice, and advised clients such as TD Bank, the World Bank Group, Experian, and SunTrust on financial education topics. She has also served as a Director of Citi’s Office of Financial Education and the Executive Director for the Jumpstart Coalition for Personal Financial Literacy Next we have Janet Gordon. Janet serves as the Associate Director for Community Affairs in FDIC’s Division of Depositor and Consumer Protection. In that role, she is responsible for oversight of FDIC’s financial education programs, which includes MoneySmart. I’m sure many of you are familiar with MoneySmart She also coordinates the FDIC’s community affairs teams across the country, which support economic inclusion initiatives focused on low- and moderate-income consumers Roger LaCruz is the Vice President and Senior Product Manager for Retail Deposits at Union Bank. He’s responsible for developing and executing the bank’s emerging or LMI segment product strategy. Roger currently manages retail products and alternative financial services, focused on unbanked and underbanked segments, and in that role, Roger is the lead designer of the Union Bank Access Account, which you’ll hear about in a minute. He has over 15 years of product management experience in debit, ATM, and retail deposit products Let me just say, before I turn it over to Louisa, that I think these are really important efforts you’re about to hear about, and this was highlighted in the past two panels, considering how we know this is such an opaque system and consumers really don’t know much about it. So these efforts have been really important in elevating the issue and in elevating information that’s passed on to consumers Oh, Leigh. I’m so sorry, Leigh—and Leigh is a friend of mine, too. Leigh Phillips, last but not least, is the Director of the San Francisco Office of Financial Empowerment, which is part of the Office of the Treasurer for the City of San Francisco. She has worked for Treasurer Jose Cisneros since 2004, and in that role she’s created the Office of Financial Empowerment at the city level, and she’s also implemented major initiatives, including the very first Bank On program—we’ve heard a lot about Bank On today—Bank on San Francisco,, and Kindergarten To College She received the James Irvine Foundation Leadership Award in 2008, and last year was named one of the Bay Area’s Top 40 Under 40 With that, I’ll hand it over to Louisa Thanks, Sarah, and thanks to the CFPB for pulling this even together today. It’s a privilege to be here with this august panel, and it’s a privilege to be joining you as you have your lunch, but I think what we’ll really try to do is make this last panel really,

I think, the most exciting panel, because we’re really going to be talking about solutions, what the Federal Government can do, what cities and communities can do, what nonprofits can do, and what financial institutions can do to really address this issue of people out of the financial mainstream, and how we can seek to bring them in We heard, certainly, the first two panels were really great, gave us a lot of great examples of what is already happening in this space, so I’ll ask this panel to tell us what they’re doing, to talk about maybe how they came about it and where they think these approaches can be going, but also maybe to push it a little bit further beyond just opening accounts and helping people use them successfully, but also to start to look at broader issues of financial inclusion and financial stability of American families, since this is an issue that really does speak to financially fragile families and financially fragile individuals So we might go a little bit beyond just opening accounts on this panel Let me just take a minute to talk a little bit about the history. Sarah asked me to do this. I think you heard this from Anthony on the last panel, and others, that over the last decade, communities such as those leading Bank On initiatives have really been faced with coming up against, as Jonathan described, the brick wall of people wanting to open bank accounts, people being encouraged to open accounts, led down that path, and then encountering the barrier to opening accounts. And for a long time, practitioners in the field really didn’t even know what was happening. They didn’t know to the extent that people were facing these barriers, where they were being faced, who was facing them I think this is still a relatively new area for all of us who are interested in financial capability and financial stability of our families to really understand what is happening, to what extent it’s happening. And I think the FDIC, when they did their first household survey in 2009, really gave us a broad base of information, and I know Janet is going to talk a little bit about that information, to start putting some concrete numbers on who these people were who were not in the banking system, and some of the reasons why And certainly they really unearth this number, that about half the people who were unbanked were people who previously were in the banking system I think the communities on the ground, whether it’s in San Francisco or in Los Angeles, or all across the country, where they are trying to bring people into the financial system, are connecting and seeing that people are out of the banking system, hearing the stories like Anthony mentioned, that people have an attitude that “I’m never going to be able to open a bank account. Banks don’t want people like me,” and I think I haven’t heard it said today, but these are really disproportionally affecting minority communities, so maybe the panel can talk a little bit about that, as well But I think there’s also been a lot of great solutions, at the local level, in community organizations, in financial institutions, and at the federal level. I think it’s worth noting that back in 2010, when the National League of Cities surveyed Bank On programs at that point, over 80 percent of them indicated that some sort of account access to people with account screening records was part of that program, and some of the services that were being provided or required were things like financial education, flexible restitution policies, and ignoring records more than 6 or 12 months old And just one example that we saw at the time, Bank On Jacksonville was working with the University of Florida Cooperative Extension to provide a one-day workshop to people, after which they received a certificate that they could take to a participating bank or credit union and open an account So I think, certainly, financial education can be part of our conversation, and though my title includes financial education, I’m certainly not here to think of that as a panacea to the situation that we’re facing. I think many of the programs that we will hear about include an element of financial education, and making sure consumers have an understanding about how accounts work, as the last panel talked about, and have access to sound and safe financial products. Again, the last panel talked about that I think, though, it’s also important to put this work of opening accounts and addressing barriers to opening accounts in a broader framework of helping Americans deal with the broader financial stability issues that they’re facing. I hope that the panel will help us think about more holistic approaches that help people not just open accounts, manage them successfully, save for emergency, save for the future, and also build and repair credit, and have access to appropriate credit that they need to manage the liquidity challenges

in their lives And then, finally, I would like the panel to think about how we look at the youngest households. We know that the youngest people, people under 30, are the least likely to be using financial institutions. They’re the least likely to have bank and credit union accounts. And yet even 40 percent of those young bank households are previously banked, and we heard some indications that they might already be facing barriers to opening accounts So I hope the panel will also make sure that we address the young people who, if they’re facing challenges now, what is it going to look like in 10 or 20 years from now? So those are some of my goals for this panel Let me start by asking each of you on the panel how you came to see this issue of account access challenges, and what you’re doing about it, and then maybe talk a little bit about how you came into this issue and where you see your work going I’m going to let Janet start by kind of giving us some of the data framework that the FDIC has unearthed, and talk a little bit about what you’re doing at the federal level Sure. Good afternoon, everybody. Keep chewing It’s okay. We’ll talk through it. The FDIC really has a multi-part approach to economic inclusion. We do research to better understand the unbanked and underbanked through our national survey. We work very actively to encourage financial institutions to offer safe transaction accounts—I think we’ve heard about that today, and I’ll talk a little bit later about it—that are particularly designed to meet the underserved consumers’ needs We work through our Community Affairs group to help across the country in forming coalitions, at the local level, at the state level, and to provide technical support. And, finally, we also do a lot of financial education and financial capability development, and some of them with CFPB, Treasury, and others in this room I want to start by taking about why we think this is important, going into the data that we’ve collected, and then talk a little bit about the safe account product, and then we can double back on some of the other issues I think it’s been made very clear today that, for consumers, bank account serves that basic essential entry into the financial system People have talked about it. It’s really important for the ability to manage household finances, a platform to build essential savings, a credit record, all those things. For financial institutions, interestingly, we heard a lot today about how financial institutions see it as an essential element of their customer relationships, sort of getting on the ground with the customer, serving that customer The FDIC has the mission of promoting public trust and confidence, and the stability of our financial system. One of the essential reasons we do this economic inclusion work is because we believe it’s very important that the widest possible segment of the American public be served by insured depository institutions, and that is not only for their benefit, for the benefit of the system as a whole, and that those deposit insurance features and the customer and consumer protections that are associated with mainstream financial institutions, are really an important element of public trust and public confidence in our overall financial system We understand economic inclusion as a ladder, where bank accounts and financial knowledge and education are sort of the first rungs You develop savings. You develop other assets You perhaps get included in the home ownership opportunity. Financial institutions may even serve your small business needs, and, over time, you build assets and become part of the financial mainstream The data indicates that we still have a way to go, in terms of incorporating people into the financial mainstream. We’re about to release our 2013 survey. Stay tuned to We will be doing that on October 29th. The 2011 data indicate that about 8 percent of Americans lack any kind of banking account, and 10 percent of households surveyed lacked a checking account. But underbanked households and unbanked households are overrepresented in minority groups. For about 20 percent of American and Hispanic households are unbanked They don’t have any kind of bank account Keeping that in mind, also keep in mind that, as Louisa pointed out, about half of unbanked

consumers were previously banked, and for a variety of reasons did not sustain a banking relationship, and then the other half have never had an account, obviously So what are the real reasons that people don’t have an account? They report that they either feel they don’t have enough money for an account, or perhaps that they don’t need or want one Some also report leaving banking relationships because of high costs and fees, and others report the, sort of, “institution closed my account.” So all of those reasons are part of the picture Households that previously had a bank account are more likely to want one again, so people who had bad experiences still tend to want to open a bank account. But of all the unbanked households, only about one-third say they are very likely or somewhat likely to open accounts in the future. I think that tells us that we do have a trust issue. We have a barrier, that it’s not going to be simple The solutions are not going to be simple, in order to overcome So that’s the baseline data. You’ve heard a lot about safe accounts already today. One of the key initiatives that the FDIC put forward, working with its Advisory Committee on Economic Inclusion, is the model safe account template We began to work on that in 2010. We did a pilot initiative with about nine banks in 2011. Now, we are seeing an increasing wave of institutions joining the flow, and wanting to organize to offer safe accounts. They may choose different approaches to that, but in recent months we’ve seen a lot of increased adoption, by both regional and national institutions, and Key Bank, this morning, talked a lot about its approach. Roger—I’m not going to take too much of his thunder—he’s going to talk about it I just want to say that this is an essential part of improving access, and it’s an essential part of sustaining access, because these accounts are checkless. They’re generally card-based, electronic accounts. Withdrawals are allowed through automated tellers, through POS, through automated clearinghouse. They have very low opening balance requirements, they have low monthly balance requirements, and, very importantly, such bank accounts, those that conform to the FDIC’s template, will not be able to result in overdrafts or NSF fees. So this is a key element in the sustainability. It also eliminates the float problem and increases the predictability So we’re very excited to see these account catch on. Nonprofits and others reporting up through our Community Affairs network indicate to us that they haven’t caught on enough, and we’re encouraging folks to step up I think you set it up very well for Roger to talk a little bit about what you’re doing at Union Bank, how you developed the product that you think serves this need, and what you’re doing with it Thank you for having me here. I’m glad that you started talking about the Access Account To start, let me just share with you that in an effort to demonstrate a commitment from our bank, Union Bank, to responsible banking, back in 2013, we developed the Union Bank Access Account. We leveraged a lot of information from the FDIC, that tells us a lot about the unbanked and underbanked, but we’re taking it one step further, where we also include people that were previously banked or people that are new to banking What we did is we developed a product, and we knew that one of the challenges in creating a product for the unbanked or underbanked is because we knew that there was this thing called ChexSystems, that a lot of them will not qualify to have a regular account that will be safe. So when we were building the features and functionality for the product, we developed a low-cost product that offers features that will prevent the customer from getting into trouble. Mainly, we put guardrails in these accounts to ensure that the customer did not get into trouble with the account with mismanagement, or minimize the possibility of fees, like overdraft and nonsufficient funds fees. What we did was we blocked those fees. So if the customer doesn’t have enough money in the account, the transaction does

not go through. The customer does not have overdraft, so they’re safe But, in addition to that, we also make the possibility that if a customer wants to open an account and they were previous in ChexSystems, we will allow the customer to open the account The only requirement that we have is that if the account is in ChexSystems due to fraudulent activity, we will not open the account. I think today we learned the many reasons why It’s hard for us, as a financial institution, to understand or know why this customer was reported to ChexSystems due to a fraud flag It’s hard for us to really go back to whatever institution reported the customer, or whatever the customer did or didn’t do, to be in that system. But I think that addressing the fact that some customers do get into trouble with ChexSystems, and they deserve a second chance to do it right, we figured that it was the right approach for us to allow some of these customers to open the account Our main features of our account, as you guys heard before, is the overdraft. We do not have overdraft fees. The second good feature is that if you’re on ChexSystems, you can open the account. The way we did this, we looked at research and tried to figure out why sometimes people get into trouble for ChexSystems. One story that I want to share with you guys is that sometimes you have banks that offer accounts, that you can open an account today for $1. You go to a local fair and you open an account for $1, and you have this checking account But if you’re 18 or 19 and you think this is a good deal, and then you get a free tee-shirt for opening that account for $1, within 30 or 60 days you realize that you’re getting these letters, which are negative letters from your bank, saying that you only had $1 and we charge you $8 for the monthly fee, and now your account is negative, and if you don’t pay us an additional $33 for overdraft fees, your account will be closed. So it’s an 18- or 19-year-old who is not familiar with how to manage and account, and you’re probably going to walk away from that account, saying, “I don’t want anything to do with that, because now they want more money from me.” When we built this account, when we tried to figure out what was the initial deposit, we wanted to make sure that we did a deposit that would be good for the customer to get that account established and start using the account, so we require a minimum deposit of $25. This account is $5 monthly fee, if you have online statements. If you don’t have online statements and you want paper statements, it will be $6. But if the customer has direct deposit, the account is completely free to the customer So when we designed the account, we wanted to make sure that the customer has enough time to set up the account, to start using the account, so they can not have any negative overdraft fees associated with the account So, by doing that, the customer has the opportunity to open the account, get it established, and the first letter from us will be, “You have opened this account 30 days ago. There’s $25 fee.” If there’s a monthly service charge, the customer who has $20 and has time to realize that if this is something that a customer wants to keep or not, and if they do not want to keep the account, they’ll go ahead and close the account. No harm, no foul. They can open an account 3 years later, if they decide to open a checking account with another institution So some of the things that we were looking at when we built this account were really to try to make sure that we have guardrails on the account, to ensure the customer does not get into trouble. Let me stop there before I take too much time Leigh, why don’t you talk a little bit about all the different things that you’ve been working on in San Francisco, but I think you probably want to start out with one Thank you. I just wanted to start off by saying I’m very glad to be here today. This is actually a conversation we’ve been wanting to have for some time, and we’re very grateful to the CFPB for convening us today, so we can begin this dialog I’m actually going to start by telling you a little story that my colleague, Anne Stuhldreher, who is formerly with the New America Foundation, gave me permission to share with you this morning, although I didn’t tell her it was being live-streamed, so, sorry, Anne, if you’re watching this Anne, when she was at the New America Foundation, actually brought the original idea that pertained back on San Francisco, to the city and county, and the reason that she decided to do that is that she, herself, had had a ChexSystems issue in the past. She had an account in one city, which she closed when she moved to a new city, and didn’t realize that a friend that she’d written a check to, for $2.80, had never cashed that check. Five years go by. Anne moves again, this time to New York City, and goes to open a new account, and is told that she’s been flagged for account abuse, because her friend cashed the $2.80 check after the account was closed, and that bounced, and the issue was never resolved

So I guess you could say that all’s well that ends well, in the fact that this brought this issue to Anne’s attention, and that she then went on to become quite a strong advocate for consumerism in this space The story continues when Anne, at the New America Foundation, brings the idea for Bank On San Francisco to the city and county, and came to our office, the City Treasurer’s Office, because we manage all the banking relationships for the city, and said, “Mr. Treasurer, we’d like to help banks, some of the 15 percent of San Franciscans who are currently unbanked.” We also know that that was disproportionately affecting the African American and Latino communities, where about 50 percent of our residents in those communities were unbanked So this really led us to this process of looking at what were the real barriers to banking, and Janet’s mentioned some of them this morning We talk a lot about fees, about accessibility, or geographic locations, and so on and so forth, but we also looked at two very strong, actual hard barriers, institutional barriers that were blocking people from banking. The first of those was identify and documentation, so people having the right kind of IDs necessary to open an account. But the second issue really was what we’re talking about today, which is people who were effectively blacklisted or blocked from banking Back in 2005, we did manage to get our hands on some data that showed the prevalence of this issue in San Francisco by ZIP code, and, as Jonathan Mintz mentioned earlier today, it’s not a very small problem. In fact, it’s quite large. The highest percentage we saw, in one ZIP code, was 25 percent of residents had a negative history for banking, and I’m sure it won’t be a surprise that that is a predominantly low-income and minority community in San Francisco. So the fact that we, therefore, have 1 in 4 in a certain ZIP code, and the numbers vary across the city, really flagged this as a major issue. And I would like to add, actually, while I’m talking about this, put out a call that I’d like to see this data, actually, more broadly, for how prevalent is this issue across the United States. I haven’t seen it. I don’t know if anyone here has, but I’d really like to see something like that broken down by ZIP code, so we can get a better understanding of this issue and its impact So we’re looking at the barriers. Of course, we convene the banks to form what will become Bank On San Francisco, and we met with our banking partners over about a 9-month period, and we brought a list of, here are the barriers to banking. How can we work collaboratively to resolve those? Our bank partners and credit union partners really participated with us in good faith, and I think that’s very important to note. We came out with a solution to this issue, to participate in Bank On. This is a set of criteria, and one of those would be you had to offer an opportunity for second-chance checking. So you couldn’t just deny people across the board if their name was flagged by an account screening CRA, that you actually had to have a way in place to work with the consumer We heard our bank and credit union partners, where they said they didn’t want to bank people who had a history of fraud, and we agreed that that was reasonable. We also agreed that anyone who had been flagged on ChexSystems, or a similar system, within the last 12 months, could be required to take some kind of training before they would be able to open an account, but if it was older than 12 months, then the banks or credit unions would open those accounts We thought, okay, that sounds good So we have our set of criteria. We have 15 banks and credit unions signed up. Many of the major banks signed up. We launched the program and it didn’t take long before we started hearing from consumers that some of these issues around second-chance checking were being raised, and the consumer experience tended to be a lot different than what we We had folks just go into banks. We had one woman who called me and was told that the bank wouldn’t help people like her. Actually, to be fair, that was a credit union. We started to get these types of phone calls, and one of the other issues that we weren’t anticipating was that people in San Francisco who we were training and were actively participating in the program—as I said, our banks and credit unions were really enthusiastic about this work, and really wanted to help—but their corporate offices were closing were closing accounts, sometimes as fast as they were opening them on the branch level, and that was another issue, too. So the branch manager would sit down and say, “Yeah, I think I can help you out with part of Bank On San Francisco,” and then the client would walk out of there, thinking they had an account, and a week later would receive a letter from the corporate office telling them that their account had been closed because of a negative banking history So, I would say that this has been probably one of the most difficult challenges that we’ve faced locally, with the Bank On program, and part of that really is it’s very difficult for us to explain to consumers what the situation really is at all these different financial institutions. We surveyed all of our banks, and we asked them for information about their products in order to meet the criteria to get into the Bank On program, and one of the questions we ask is, “What is your policy around ChexSystems, or screening customers?”

There’s a really wide variety, so, obviously, we’ve talked a lot this morning about fraud Another one big issue that has come up, and comes up for us consistently is lack of clarity around restitution, so Bank A may say, “We only care of you owe money to us. If you owe money to another bank, that’s fine.” Another bank will say, “If you owe money to any bank, we won’t bank you until those issues are resolved.” So, from our perspective, it actually becomes very difficult to advise consumers about where to go and what to do, and the best answer we have oftentimes for people is, “There are two community development credit unions in Bank On, and if you think you have an issue, you can go there.” I’ll stop there for now, but those are just some of the big issues that we’re seeing on the ground Dara, I know your solutions are working with community-based organizations who are very much on the ground, working with individuals Can you talk a little bit about what you all are doing? Sure. Hang on. I think I’m the only person here with a PowerPoint. You now, you can’t talk unless you have a PowerPoint, right? It’s impossible. I wanted to start with why is CBA here, because we’re not talking about credit today, so I wanted to explain how we got into the whole area of ChexSystems. But first, I just wanted to back up a little bit and talk about why we were founded. We’ve been around since 2006. There was a group of community development financial institutions that were giving microloans to primarily low- to moderate-income individuals, and they were very concerned that they were not able to report the loan payments to the credit bureaus and help their clients build credit The reasons for that were several. There were threshold requirements. If they were a small lender, they usually didn’t have a big enough portfolio, and also, quite frankly, that credit bureaus had a lot of concerns about the nonprofit’s ability to be able to report accurate data And so CBA was really formed to be that intermediary That’s the role that we fill right now, and if you can take a look at the little slide up there, we are, in essence, the intermediary between our nonprofit members—we currently have 410 nonprofit organizations. Many of them are microlenders, but not all, but all are engaged in some type of financial education, financial coaching, so all interested in credit building, in general So we are the liaison between those groups, those 410 groups, and growing every month, and the bureaus. We have had a relationship since the beginning with TransUnion and Experian, and I think there are a couple of representatives from Equifax in the room. I’m thrilled to say that Equifax finally, after many years, has decided—yay—to accept our members’ data, so all our members’ data is going into all three of the major credit bureaus Now, why is this important? Experian did a pro bono analysis of our members’ data over the summer, and they went back in time. All of the loan portfolios that we receive every month, we batch up and forward them to the bureaus. They’re all coded as Credit Builders Alliance, so it’s actually very easy to go back in time. And they looked at a population of 3,000 low-income borrowers, and they wanted to see, what was the impact of having this microloan reported to a bureau? The impact was huge Two of the major findings were that 20 percent of those in this cohort of the 3,000 moved to a lower risk category. So, what does that mean? They moved from subprime to nonprime, or nonprime to prime, or from unscorable to subprime. And we all know that that really affects their cost of credit, right? You’ve all heard the saying that it’s expensive to be poor, and it really is, so being able to move to a lower-risk category really makes a huge difference And then the second major finding was that they found out that they had thicker files Why does this matter? Most of the clients that our members help are credit invisible We’ve heard that term. If you pull their credit report, you’ll see nothing. And it’s really hard to get a loan if you don’t have a credit history. It’s one of those Catch-22s, just like a job. You can’t get your first job until you have experience. How do you get experience? You know about having a first job, and the same thing applies for credit So we were thrilled that we found out that the vast majority of the recipients in this data study were able to increase the thickness of their file by three to five additional loans, meaning that by having the existence of this one trade line, that they were actually able to qualify for additional loans, which, in the past, they probably would have been denied. So that was very exciting Okay. I wanted to give sort of a background and explain how we got to ChexSystems. Because our members deal primarily with 85 percent of their clients are low- to moderate-income individuals, they do a lot of hands-on, intensive coaching. They really follow them, and they

have a holistic view. Instead of just giving them a loan, it’s usually paired and coupled, as Nancy explained earlier, with financial education, and that’s the best of all worlds So you lump it sort of together, the education with the product What they were finding is they were finding that many of their counselors really didn’t know how to coach people that were having problems getting a bank account, so they actually asked CBA if we would be willing to create an educational module to help them with understanding how to help their clients open bank accounts So what we did is we got funding from the city foundation, and we started by assembling a task force. And the task force really was bankers, and also a representative sample of our membership. We really wanted to find out what were the bank account opening procedures that are currently in place, and what were some of the issues that our members’ clients were facing One of the big findings was that 75 percent of the nonprofit practitioners within our network that we surveyed said that they, themselves, were very dissatisfied with their own knowledge, just like Chi Chi said earlier. The whole issue of ChexSystems, many of us are not familiar with it. So if they’re not familiar, how can they assist their clients, and how can they really help their clients. That was sort of the main takeaway that we got from our membership This is just an example of one of the slides that’s within our training, and what we ended up developing was two different modules. They’re all self-directed, and I’m going to show you, in a second, how all of you can access this It is in a public area under Consumer Resources on our main website, So the two different modules, from one of them, were very, very specific about ChexSystems We want to show people, like this slide really indicates, what the report looks like, what kind of information is on it, how long do things stay on it, how do you get the file? How many of you know what website, what URL to go to, to get a copy of your ChexSystems? Wow, and this is a room of people that work in this area. I must admit, I didn’t either Actually, to let you know, it is That’s just an example of what’s on one of the slides So of the challenges for our nonprofit practitioners—and we talked about this in other panels earlier today—is that there’s a lack of standardization So there’s no only just one issue that clients are facing. They’re facing a whole multitude of challenges. So one of our members might be working with someone that is a victim of theft, or has had some issue that they need to resolve, so everyone has their own individual issues that they need to surmount. And then, also, the financial institutions themselves have different processes for opening accounts, and different underwriting criteria, and so forth, so sort of, again, lack of standardization Finally, the overarching need was the need to have better resources, to be able to help them in their financial coaching, and to give direction to the nonprofits, the clients that they served So these are the two modules that were created The first one is Demystifying Account Opening We really wanted to separate two different areas, and, first of all, we wanted to talk about just account opening. Are they going to be prepared? What kind of ID requirements? What kind of reports are they going to be pulling? So we really get into that area And then the second one is Really Taking Account, and that’s where we really get into sort of the nuts and bolts of ChexSystems. We did work really closely with FIS, the parent company for ChexSystems, in developing all of these modules, and, again, you just go to our main website and you click on Consumer Resources, and you will find it But we also have made it very easy, within this whole training. We want people, to be able to do just, with a click, be able to find the website that you need to get to, in order to get a free copy of your report We also wanted to point out, we have a really cool banking action plan. It’s actually a form that can be downloaded and can be used by a practitioner. We called it a Banking Checklist. So if you’re sitting down with someone who’s unbanked, we have all these steps that they need to go through. The first step, “Is a bank account right for me?” It may not be. Not everyone is in a position where they should or could be banked. Step 2, “Can I open a bank account?” That gets

into, do I have anything on ChexSystems that’s going to prohibit me, and so forth? How do I get a copy of the report? Step 3, “If there are things on ChexSystems, what do I do to improve it?” I think that’s really critical, because if you find out that someone is on ChexSystems, so what? How do you help them? I think that’s the critical piece, because you’ve got to sort of deal with that situation. So we have a whole sort of process that they can go through. If there’s something incorrect, we tell the counselors how to deal with a dispute. Once they confirm the information, if it is accurate, they would work on, how do we work on a plan to repay the debt in full? There’s more steps, and I don’t want to get into all of them, but the important thing is that there are actually steps that exist to deal with a ChexSystems With that said, we also have links to more resources, anything you could ever want to know about FRCA, Bank On, identity theft, a variety of areas that are sort of tangential, but also interrelated, as I said earlier Clients have a variety of different issues, so we want to just sort of think about anything that could be helpful in making all the resources in just a one-stop shop. And then, finally, we have some really neat videos, really short videos. There’s nothing better than hearing from practitioners themselves. I mean, hearing Nancy’s experiences of working on the ground is just phenomenal. So we have some little, short practitioner videos, talking about ChexSystems and the barriers, and especially how their clients have been able to overcome some of them Great. Thanks, Dara. That’s certainly a lot of great, really tangible tools that people can use to address these issues I want to get my question is. As you heard in my introduction, our office support the President’s Advisory Council on Financial Capability for Young Americans, and we know that young people, whether they’re teenagers or young adults, are really the segment of the population, in many ways, facing the greatest financial challenges. Unemployment is high People are dealing with student debt, whether or not they have a degree, and they are largely, or, at least, disproportionately outside of the financial system So I’d like to ask each of you, what trends are you seeing around young people, in particular, in financial access, and do you think either are solutions that you’re currently implementing, or you think are things that could work with those populations? I’ll let Leigh start LEIGH PHILLIPS: That’s a very timely question We partnered this year with the Cities for Financial Empowerment Fund, over the summer, to really look at the situations with summer youth employment, and, actually, we’d like to expand that now into all youth employment My boss, Jose Cisneros, is actually the Vice Chair of the President’s Council, and we just spoke there last week about this very issue, in calling for more clarity around account opening procedures for young people. From the city and county perspective, we enroll about 7,000 young people into summer youth employment every year, and, of course, that means it’s their first paycheck. We don’t have all of the information yet, but I do know that one of our partners did just a really quick study, a survey of all the checks that they’d issued in their program, and found that about 45 percent of them have been cashed at a check-cashing place So, for us to be putting our young people into a situation that they’re taking their first paycheck, which comes from a program that the city and county has jurisdiction over, and then taking that to a check-cashing place instead of to a bank or credit union, or onto a prepaid card, is highly problematic So we will be looking more at those issues over the next year, and I think the CFE fund will be putting out some interesting information about that. This was a five-city pilot program that really delved into these issues across the country One of the things I think we would like to see is a bit more clarity around what are the rules and regulations around opening accounts for young people, particularly those under age 18. I think, on a previous panel, the issue came up around identity theft issues for young people, and having had accounts opened in their name, by parents or foster parents, and that’s another issue that we have raised with the President’s Council in our city’s and community’s working group, and I know that CFPB is working on. So there’s a whole range of issues there that we would like to do more about in our community, and we’ll kind of get going on that over the next 12 months Roger, is that something that you’ve been thinking about at the bank, and any thoughts there? We notice, and we are offering some of our Access Accounts to people that are turning 18 and this is our first account, because, again, we feel we have the right guardrails to prevent it from getting into trouble. But we’re finding out pretty much

the same thing, where some of these guys that are turning 18 years of age and are opening an account for the first time, somehow they are on ChexSystems already, which is alarming to us because they are not aware of ever having an account, but they are on ChexSystems, and usually they are in there because of fraudulent reasons. And, again, it goes back to what you just mentioned, saying that maybe it was a relative who was using their information, or somehow somebody got access to that information For now, this person is responsible for fixing that problem, but sometimes it’s really hard to find out, or point him in the right direction for them to fix the problem, because they have no idea I think one of the things that I heard was that sometimes when you’re trying to fix a problem, the first thing they’re asking is if, in fact, it was fraud, we need a police report, so you need to file a report against Mom, Dad, an older sibling, or uncle, whoever used your information, and you know that these individuals are not going to do that, because, obviously, these family members somehow got access to information. So then, what do you do after that? We know that there are things like that going on. We don’t have the answers for that. We just try to help as many as we can with the Access Account, and letting them open an account if they’re on ChexSystems But once they are on ChexSystems because of fraud, it’s hard for us to go any farther with them All right. There are two major initiatives that the FDIC has underway, on empowering youth to engage with the financial system. The first one, I can plug CFPB, our sponsor of this event. We are in a joint endeavor with CFPB to develop curricula for four different grade levels. Some of this is renewing what the FDIC has done with MoneySmart over the past 10 years, but we are enhancing it and refining our youth curricula, together with CFPB, and putting that out on a website. But we’re going further. CFPB is helping organize a parents and caregivers’ website, we are organizing a teachers’ website, and we’re getting tools together that address the whole family, and we’re getting tools together that address the needs of the teachers, particularly with regard to the new kinds of curricula requirements that they’re facing So that’s a major initiative. The Pre-K to Grade 2 is out there in a pilot version. The rest will be available in early 2015 In addition, the FDIC has initiated a Youth Savings Pilot, together with nine banks. We had a competition to really try and explore in-depth what makes an effective savings program for young people in the schools, and we’ll be looking at that over the next year. We’ll also have a Phase 2. The Phase 1 is really existing programs, and Phase 2 is going to be sort of new initiatives. The Youth Savings Pilot is going to focus on the connection between having a product, having an actual savings account available, and having the education We all know that financial capability needs to bring both of those things together, and this is an effort by us to really bring that into the school system. So stay tuned. The details on this initiative are all on our website, at, and we encourage you to keep informed about it, and we’ll probably be bringing out reports and other information in the near term, including some information on relevant policy and process guidance that we hope to gain by working with these nine banks Dara, do you want to talk about that? I know you’ve been thinking about it, not just in terms of account access but also in terms of credit Yeah, absolutely. I’m on Experian’s Consumer Advisory Council, and so because of that, I’m able to stay abreast of a lot of the larger trends in the credit world Sort of the results that I’ve heard from Experian have been echoed by other credit bureaus like Lexus Nexus, and these are some of the trends that I’ve been seeing There is the lowest rate of car ownership among young adults ever, I think since cars were created, the lowest level of home ownership among young adults, decreasing percentages of young adults using credit cards—they use debit cards instead. So what does this say? Earlier, I talked about the term “credit invisibles.” We’re finding a lot of young

adults are credit invisibles, because they’re not part of the credit system. Recently, I met with Holly Petraeus and her team at the CFPB, and she told a story about a young serviceman at one of the bases who was very proud of the fact that he never used credit at all, that he paid cash for everything, and he had saved up a really good amount of money for a down payment for his first house. And she said, “This is great that you have money for this down payment, but who’s going to give you a mortgage?” So it goes back to, if you don’t have any credit, you can’t get credit. So I think that’s something, among this population, that should be a cause of concern. It’s also a cause of concern for our greater economy. If no one’s buying cars, if young adults are not buying cars, if they’re not buying homes, what does this mean for the economic stability of our country, as a whole? But I think that there are many resources for young adults out there, and other credit invisibles. Many of our members offer credit-builder loans, which are specifically for people that don’t have any credit whatsoever. So they’ll be able to get a small-dollar loan, usually just a couple of hundred dollars, and by being able to pay it back over time, they’re able to generate a credit score. The good news is that if you are credit invisible and you do have your payments reported, usually, with FICO, you can generate a credit score by 6 months. With VantageScore, they say by 3 months So we’re not talking about a long wait in order to be able to be scorable. But I think that this is something that we should be concerned about, just sort of the lack of credit usage among young adults The other panels did this, and this wasn’t in my preexisting questions, but I think the other panelists got an opportunity to each weigh in on what they’d like to see changed, to broaden the opportunity for people to access financial institutions. I guess I would ask each of you to kind of think about, what do you think can be done to make this ecosystem more accessible to more people? And, also, I’d ask you think about not just what government can do, but what are the leading practices that you think the private sector can engaged in, nonprofits can engage in, levels of government can engage in, so that we are really not just broadening opportunities to open a bank account, but really broadening opportunities, really, a pathway to greater financial stability I’ll let Dara start. Are you ready? Oh, I thought I was going to have time to come up with this great answer That’s all right. I was just thinking back to some of the recent changes in the credit reporting industry, talking about not weighing small balances that are there, collection balances, sort of just getting rid of them, and I’m just wondering if some similar practices can also apply to ChexSystems, and regarding bank accounts. If, for instance, you have a charge-off that’s on ChexSystems, that’s under a certain dollar amount, can it go away or not be weighted so heavily? Maybe re-looking at that 5-year mark I know with Credit Scores, that the farther away you are from the time when the incident happened, the negative happened, it’s weighed less heavily. Maybe looking at some of those best practices from the whole credit reporting industry and applying it with ChexSystems This was not on the list of questions that was shared in advance, so I get to say that these are my views and not necessarily the views of the FDIC. I think I can say that one of the things—and I have colleagues in the audience today, as well—that we’re here to listen and learn today, as well I think the answers continue to emerge from these wonderful panels I do want to say that one of my favorite things about my job is that I work with community coalitions across the country. We organize something called the Alliance for Economic Inclusion in targeted markets, but we also work with a large number of Bank Ons. We work with a large number of sort of informal bank community alliances, and we work with individual community organizations. We’ve worked with Dara and her group to bring credit builders’ training to four of the Alliance for Economic Inclusion participants So we are on the ground, as well as up here in Washington, and I do think we need to be responsive to what we’re hearing from the ground up, and I’m very glad that that’s what’s happening today, that we are listening to what’s happening on the ground. One of the important things that we’ve learned is that we need to continue to connect low- and moderate-income

people to financial knowledge at the times and places where they want it and need it, and we need to continue to promote access to financial products that are specifically designed to meet their needs, to meet a broad range of needs, like the ones we’ve heard about today. So those are two things we feel strongly about And we need to really tailor it to the community In Kansas City, we have an alliance that’s been very active, both in youth and in targeted LMI areas of economic inclusion. The alliance has just started a new initiative where they’re identifying employers of LMI people in the core urban areas of both Kansas City, Missouri, and Kansas City, Kansas, identifying employers that are very likely to have LMI folks working, going in to those employers, trying to link their employee base to existing financial capability partners that have financial opportunity centers, or goodwill, or other folks who are working on the ground, linking them to those resources, and also encouraging direct deposit So it is a way of sort of framing those collaborations very proactively. So I think that also is an important part of this solution I guess, from my perspective, and this is my opinion, is there are two things We would like to have more consistency of data from the CRAs, to make sure that we can all understand what’s in there, why our customers have been reported to ChexSystems, or other institutions or systems. But, most importantly, I think is that we would like to have a clear process in place where, when a customer is attempting to open an account, and they are unable to because they were reported by one of these agencies, that they can go through this process and clear things up without having to be told to go to different places or making different phone calls, or making payments back to some of the institutions, but yet not correcting the problem. That would be my number two opinion or recommendation And, number three, have it done in a very quick way, where they can do it fast. We know that this is a bigger problem and that we cannot solve it, but we’re trying to, as a bank, trying to help the LMI customer to have access to an account, and by changing some policies where we allow customers to open a checking account, although they are on ChexSystems, and the checking account was created to have those guardrails, we can make that happen, but I don’t think we can do that for many more millions of customers that are in the same situation. So, by making those changes in policy it can help us, but I think there’s definitely opportunity for more Leigh? Yes. I’d like to add a few thoughts. I think, definitely, I came into this session today feeling very confused about how to help and advise consumers, and there hasn’t, frankly, been much that’s been said that’s made me feel less confused, I think, and the thought that we can make this a consumer education issue when a room full of experts doesn’t even have clarity around how to resolve these issues doesn’t really seem practical or fair I think one of the things, when I mentioned earlier about the disconnect between the enthusiasm of the banks and the credit unions on the ground, for helping people in the local community, and then the barrier of having those accounts closed by corporate headquarters, really, I think, is a good illustration of what the problem is So I would like us to convene nationally, and I’m going to put in a shameless plug now for the Bank On 2.0 convening, which will be held here in Washington, D.C., on November 6th. On the local level, we’ve done a lot There’s more than 100 Bank On programs now across the country. We’ve got municipal governments involved, we’ve got community groups involved, and I would say that we’re doing all we can This has been met with great enthusiasm by our financial institution partners, but we still are running into barriers. I’ve helped launch a lot of Bank On programs, and this issue about second-chance checking or resolving these screening issue, number one, it’s first and foremost, and we don’t have a good solution because we can’t solve for this locally So, I am going to suggest that you all sign up and join us on November 6th to discuss this and many other issues about the future of what we can do together, because we really need to elevate this to the next level. There does need to be policy change and regulatory change, and a lot more clarity. If we’re going to be marking people for things like fraud, that’s a pretty serious accusation. And if we have any concerns that that’s being done inconsistently or unfairly, I think we have a duty to take action on that So, we look forward to continuing the conversation and seeing what we can do on the national level to support those of us working locally Great. Thanks. I know some of you have questions, and I think Sarah will

facilitate our discussion and questions Yes. Thank you so much to the panel. Same drill. Please identify your name, your organization, and if you want to direct the question to one of the panelists, please do so Either this panel is that good, or lunch was that good Hi. I’m Shamir. I’m the Co-Founder and CFO of Simple. There was a recent agreement between Capital One and the New York Attorney General under which Capital One basically agreed to eliminate ChexSystems usage, and I think one of the panelists on the earlier panel mentioned that. I believe that the justification there was the disparate impact of using ChexSystems As we’ve all heard, this proportionately eliminates low- and moderate-income people from access to banking services Do you guys actually think it’s a good idea for all banks in the country to stop using ChexSystems and just make checking accounts available to everybody, regardless of their previous history at any other institution? Does anyone want to answer that? Someone has to. I don’t know That’s probably not a good enough answer to the question. Well, I think what I’ve heard today—I mean, a system of information-sharing is only as good as the information that’s being put into it, and it seems that there’s so much inconsistency in the information that’s being put into the system, that even from a financial institutional perspective, I would be questioning the validity. However, we did hear, loud and clear, when we started Bank On, that financial institutions do have the right to protect themselves from fraud and from criminal activity, or from people who may be abusing those systems. So I think we need to find a better solution than the one that we have right now. I don’t know if I’d go so far as to say that, but I don’t know Perhaps Roger has a different opinion Actually, I don’t. I think that it has its purpose. It serves its purpose, and I personally don’t see any reason why we should be moving away from that. I just think that, just like any product—and I’m speaking as a product manager—there’s always a way to enhance or improve whatever product, process, or system we have in place, and I think the opportunity is there Hi. I’m Ruth Susswein with Consumer Action. It sounds like, from the first session until now, the issue of fraud keeps coming up, that it needs to be better defined, and it seems, as well—I guess I would direct my question to Roger, to say, so you’ve said if a consumer says, “It’s identity theft,” and “This fraud is not my fraud,” that your bank, at least, is stopped in its tracks in helping this person open an account So, my question is, what do we do for these consumers? Everyone seems to agree there’s an issue with fraud, so how do we actually help these people become part of the system? Well, from our perspective, we rely on the record that we get from provider If the record comes up as fraud, we have to ask the customer to go ahead and deal with that. Usually what happens is that, what we’re finding out is some of these customers have problems with banks that are no longer in existence. There’s been banks that were acquired So then the first thing that a customer needs to do is reach out to Bank A, and Bank A says, “Well, I don’t know who was Bank B. We acquired them but we don’t have a record of you.” So it’s really hard for the customer to go to the other bank, because they are no longer in existence. The new bank doesn’t know anything about that customer. So then it goes back and forth, and then they go to ChexSystems, or whichever agency that did the negative reporting is, and they say, “You have to deal with your bank,” whoever reported them So we’re kind of like trying to help them out, but we’re unable to say, “Go ahead and fix it,” because it’s really hard for a customer to fix this problem. So we’re limited on what we can do to help the customer do that If a consumer were then to dispute that information, is that something that your bank would be able to address on a one-on-one basis

No. We couldn’t because we have no idea what transpired between the customer and Bank A or B, or whatever. We have no clear information what was the reason for being reported as fraud. We only get a flag that tells us the account was closed due to fraud, and that’s kind of where we are As others gather their thoughts, I’ll just mentioned our experience at CFPB was similar to Dara’s, in that we heard from a lot of practitioners who were interested in more information, and there was a lot of confusion about how to help clients, so I’ll put a shameless plug in for a toolkit that we developed, Your Money, Your Goals, which includes some basic information about banking account history, barriers to opening accounts, and steps for consumers to take if they have issues. So that’s available It’s obviously free. It’s on our website, and that might be a good tool for practitioners, as well as the tool that the Credit Builders Alliance put together I think it also speaks to the need that we are still in an area where there is opportunity to innovate in financial products and services. I think we’ve got a lot of great products building out of the FDIC’s Safe Model Account product, but I think there’s also a lot of opportunity, still, for innovation, using technology, using mobile-based products and services that can help people better manage their money, better manage an account. Obviously, there are financial institutions that have to be willing to try these things, but hopefully we’re creating an environment across the regulatory agencies, across other partners in government, where constructive innovation and safe innovation is something that is certainly something that is welcome, in order to meet the needs of the many millions of Americans who are not currently being well served Just a comment, too. When we talk about being sort of outside of the mainstream financial system, we all know how costly that can be. But one of the things that keeps coming across, over and over and over, when you look at some of the research and data that’s been done through the Financial Diaries Project, talking to our members about their experiences with their clients, is that if you are outside of that mainstream financial system, you spend a huge percentage of your day just doing financial things, because you’re driving somewhere, you’re having to get a cashier’s check, you’re then driving to this other place to pay your utility bill before it gets cut off. I think that’s a huge benefit that we haven’t talked about today. There are so many benefits of being pulled into the mainstream financial system, but I think it’s really incumbent upon us to try to make the barriers less than they currently are If you can lessen the time, running around in your car, doing all of these things that many of us just do sitting at our computer, paying our bills, then what does that do? It opens up time to do a whole host of other things. So I think that if we’re talking about, holistically, Louisa said this is much bigger than just talking about check systems, I think we’re talking about quality of life, and this is something that if you become banked and part of the mainstream financial system, it really improves your quality of life Are there any other questions? Okay. Please join me in thanking our panel [Applause.] I’m not going to hand this over to Daniel Dodd-Ramirez, Assistant Director for the Office of Financial Empowerment at CFPB Good afternoon. Before the panelists leave, let me just give some instructions for the rest of the afternoon You’ve been sitting very patiently, and after eating we know that energy really starts to go down. The panels have been wonderful, but now we’re going to get you up, and we’re going to get you into some breakout groups, and we want to hear from you. We’re going to continue the discussions that we’ve had, and continue some of the questions that we’ve had in a more informal setting. The live-streaming portion of this event will end now, and let me just go through an explanation of what we’re going to be doing next Again, my name is Daniel Dodd-Ramirez. I’m the Assistant Director of the Office of Financial Empowerment at CFPB. The Office of Financial Empowerment is the office, which focuses on economically vulnerable consumers. We equate that with anyone that’s above 200 percent of poverty. Living in the United States, we know there’s about 100 million people that

fit that definition. Our office is tasked with really focusing on those consumers and looking at how to get them products and look at making them more financially capable, especially products which are safe and affordable. A lot of the things that we’ve been talking about affect them disproportionately There are couple of other offices I just want to mention real quick within our division, which is the Consumer Education and Engagement Division. The one which has already been mentioned is Servicemembers. Another is Students, and then the other one is Older Americans, and you can read more about them on our website, with the CFPB website So, again, thank you all for participating in the three morning plenary sessions. I know that we were all able to get a more comprehensive understanding of the check screening ecosystem We heard from financial institutions, large and small, community-based, regional and national, that are trying to balance risk and access We heard from credit reporting agencies that are charged with receiving, holding, and transmitting information about consumer banking history We heard from advocates and service providers about the consumer experience and innovations in the field to help consumers to get into account products that are safe and beneficial And, finally, we heard from others in government, including our fellow regulators who are working hard to help provide clarity, transparency, and fairness to all the players in the ecosystem This afternoon we are transitioning to these three breakout sessions with the express intent of fostering further conversation among all the players with the goal of increasing understanding each others interests and roles Hopefully we’ll be surfacing new ideas about how we can work together to make the system work better for consumers and for institutions as well There is always a temptation to leave early We hope you resist that