Panel I - Laying Out the Welcome Mat: How to Attract (and Retain) the Unbanked

PROF BAIR: Let me begin by thanking the FDIC for asking me to moderate this very distinguished panel on the lead off topic here, which is "How to Attract and Retain the Unbanked". We really had a great turnout for this symposium this morning, and I think that underscores the widespread consensus that's emerging in this country on the need to expand access to mainstream depository institutions among those traditionally under served populations.

We, obviously, have broad political consensus, as well as widespread interest in the industry, among consumer groups, and the regulatory community. And I think that it's particularly important to note that a lot of this is being driven by industry's self interest, frankly. They now perceive that there is tremendous business potential in serving these communities who traditionally have not been served.

This is a welcome change from the 1990s, of course, when we saw a lot of withdrawals from low income communities, from immigrant communities, and ethnic communities by depository institutions, and the proliferation of alternative service providers who, though were providing a service, were providing it generally at a much higher cost.

And I would like to echo what was said earlier by Chairman Bachus and others, that I don't think our purpose here today is to bash alternative service providers, but rather to talk about the importance of promoting choice and competition, and to make sure that those who want to make that choice do have access to depository institutions.

A banking account really is the first step in economic integration. It's the way that you can find a place to begin saving money in a safe federally insured location, build a credit history, eventually qualify for a loan to buy a car, or to buy a home. It really is the key to being able to fully participate in the economic benefits that our society will offer.

And again, I think by encouraging depository institutions, through whatever means possible, to promote and expand their efforts in under served communities, we will be able to garner market forces to lower the cost of financial services that are still far too high in these communities.

In the context of competition, I do want to mention one particular product that was mentioned to me yesterday, and it relates to payday lending which, obviously, is on the minds of a lot of people these days. It's a Citibank product, and I'm sure there are other banks and credit unions who probably offer similar products. And I apologize for not also mentioning them, but I think it's a good product and it needs to be mentioned. I went on line this morning to look it up. It's called "Checking Plus". And as I understand it, it's a revolving line of credit you can get with a basic checking account at Citibank. You can establish a line of credit, I believe it was anywhere from $500 to $25,000. If you overdraw your account, they'll automatically cover the overdraft up to that line of credit, and there will be an automatic payment out of your next month's paycheck to repay the line of credit.

The annualized percentage rate on this product is 16 percent, plus a $5 annual fee. Now compare that to three, four hundred, 500 percent charges that you read about that payday lenders are charging, I think that's a fairly stark contrast. So I think this is a good example of the ways that depository institutions are encouraging and promoting their efforts to get into these communities, get in there and compete. Drive the cost down. You are able to offer better products at lower cost, and this is how market forces can serve a very useful purpose in serving the under served.

So with that, I would like to introduce our first panel. You're going to get the regulator's perspective first, a gentleman named Joe Smith, who's well known to all of you. He is the North Carolina Commissioner of Banks. He's been in that job since June, 2002 obviously, a very pivotal position in North Carolina. Before that, he was an old Washington hand, a partner at Thatcher, Proffitt, and Wood. He's written extensively on banking and financial services issues, including in areas such as how electronic banking can lower the cost of providing financial services to the poor. Joe, we'd like to start with you. Thank you.

COMMISIONER SMITH: Thank you very much. My timer is here so I know I've got to be quick. I'm under orders from the other J Smith, the guy with the whip, to really get going.

I'd like to thank the FDIC for sponsoring this seminar and for its leadership through Money Smart, and in other ways in economic empowerment generally. It's a privilege to be here. The reason I'm starting is because I know the least of this panel, and so I feel about the other members of the panel the way Mark Twain felt about Rudyard Kipling they know everything, and I know the rest. So what I will do is take a few minutes and talk with you about a program we're getting started in North Carolina to deal with the problems of the bank and the unbanked, and I hope that will facilitate some discussion and comment. And I actually hope to learn a lot, so don't be shy. I had a lot of friends from North Carolina here who I knew I'd hear from, except they've all gone to the hearing, I think. So please, feedback is welcome.

When I got the job, it's like getting a four year sentence. I had to have something. What was I going to do for four years, so my colleagues and I got together and decided to have some goals. That's kind of old school, but I'm old school. Two goals that we set out of four relate to the banking industry. One was, development of banking services for the poor and working poor who are either unbanked or marginally banked. The other goal, for those of you who are interested I mean, what was the other goal you may be inquiring. Well, it was to modernize our banking law and our enforcement of the state banking law. And I think these two goals go together because they are both forward looking and related to the future of banking in North Carolina.

Let me talk for a minute more about why we set this goal. Well, here are several reasons. One, I'm interested in it, I want to do it. But the other one is, I believe that banks, certainly under our state law and by the way, there is state law for those of you Washington people, we do have these things called states out there with sovereign enterprises, you know. Like North Carolina, some of them existed before the United States, and there was a guy named Thomas Jefferson. But never mind, we won't go there.

Under the state law in North Carolina, and I suspect a number of other states, banks are impressed by public interest. As I say to the students, and I talk to them often, banks are corporations, but they're different from other companies. Why? Because they are impressed with the public interest, to serve the public convenience and needs of the community. And I'll tell you, I've got four, five, ten groups, depends on the year, from various towns in North Carolina wanting to set up a bank, and they all claim it's for their grandchildren and for their community. So that leads to the question, well, what community are you talking about? And I think what we have found is in a number of other places, unfortunately, is that communities have tended sometimes, for good reasons and bad, to exclude a fair number of our citizens, which I will discuss later.

Banks also are corporations. We have these CAMELS, the infamous CAMELS rating, or famous, or wonderful, whatever you think about CAMELS. E is for earnings. We do expect them to make money. We do expect them to generate capital, and we want them to. And it's important, particularly in my state, which has been traditionally capital poor, that the proper use of capital is extremely important. So there is a tension, in my mind, between the public service goal well, a tension between that and the goal of profit. And that, I think, is where the rubber meets the road, in my mind, in terms of dealing with the issues of the unbanked.

So for the purpose of setting goals, at least for the first and perhaps only term of deity I may have, we decided that we would resolve it by a goal of service development, not a mandate. And I don't actually think the law allows me to mandate it but, of course, you all know that the Federal Community Reinvestment Act has a service component, but I was a Bank General Counsel in my long and checkered, or distinguished I guess I should say, career. And we all know, and it's properly so, that because of the way the law reads and for other reasons, that credit extension is the key to success under the CRA. And I do have a personal view that there's nothing wrong with that at all, but that we should emphasize these days saving a little more and borrowing a little less. And, by the way, I think the two go together. The development of a liquid net worth by those who are working their way up can be a basis upon which they can, in fact, borrow successfully.

I'm concerned, by the way, about our foreclosure rates that we have in North Carolina. I think the foreclosure rates are up around the country, and I think this is important in that regard.

{To achieve this goal, we had to answer several questions.] Who do I work with? How do we define the market we want to deal with? How do we mobilize resources, and then what do we do? What are the objectives and what are the challenges?

The working group is the usual suspects. I mean, again, I was pleased to see the way these panels worked out, because in my world, that's the way it works. You cannot deal with the problems of the low and moderate income communities without a bank or banks being involved. We cannot work without the non profit help. There is no way on God's earth, in my opinion, that a traditional financial institution can meet the needs of the unbanked without a partnership. And when you work, the public sector needs to be involved, as well. And I am pleased to say the FDIC, in particular, has been deeply involved in this activity.

Okay. So who is the market? Now the goal said "poor and working poor". I'm not a sociologist or whoever decides who that is. I mean, I'm not the Bureau of National Research. My view was that the easiest things to do in the first four years was to talk about the working poor. We'll talk about why it's a significant market, as I will show you in a moment. But also, frankly, it was the easiest sale to all the constituencies involved.

When you tell people we are going to help people who work to do better, that's a sale everywhere. That's a sale in the Kiwanis Clubs, it's a sale in the Rotary clubs. The coldest hearted banker I know thinks it's a good idea, so the issues of the poor, who I define, frankly, as people on public assistance, is an important issue. It's an important issue for the government, but it is a much more complicated issue. And we're going to go one step at a time at least where we are, so we thought the working poor would be first. And I define that, although again, this is probably not professionally competent in turn, but I'm not professionally competent as an economist. There are people who think I'm not professionally competent as a lawyer, but that's another story.

We define this as low wage workers who are eligible for the Earned Income Tax Credit. Which, again, as you will see in North Carolina, that's a significant number. We chose the market because it's significant in terms of its size and potential, its potential for financial literacy training. Again, the purpose of the exercise, and I will point out in a moment we borrowed shamelessly from the ShoreBank Projects in Chicago, was to link EITC participation with the opening of bank accounts. I understand that's not new news. We don't claim we invented it. We really didn't. We did invent barbecue. We did not invent this.

But we do think that there is potential here for financial literacy training because people who work, earn money. I mean, they have the capacity to actually have an account that can actually be successful. And then, as I said before, pardon me Ms. Seidman has to forgive me for saying South Shore. That just dates me. I'm not ignorant, I'm just old. It's now ShoreBank's Extra Credit Savings Program we looked at very carefully as we were thinking about what to do.

Well, how many working poor are there? And I don't know about you. I mean, you're all from big areas, big states, national in scope, international. I don't know. Where I come from, 600,000 people I mean, there are 600,000 filers claimed EITC in North Carolina in 2000. There are 8 million people in North Carolina. You do the math. I mean, that's a chunk of the population. If you double that, if you assume that most EITC is claimed by people who have children, that's over 10 percent. That's more like 14 percent of our population, so it struck me that was a fairly significant issue for public policy.

The average benefit was 1,600 bucks, 1,700 bucks, just about, which for a working poor family I think is a significant chunk of money. It's a real economic benefit. It brought $1 billion of cash money into our economy in North Carolina for people in need. And when you consider, using 10 percent as a sort of goalpost what that might be based on, that's just the credit. Right? So you figure that's $10 billion of earnings, 11 billion bucks kids, that's a big percentage of our state domestic product. I mean, it is about 5, 7, 8 percent of gross state product for that year. So again, it struck me this was a significant segment of who we are.

Regrettably, or happily, I don't know which to say. I think it's regrettable, North Carolina is the fifth largest state in terms of EITC, and we have a significant number of low wage workers.

The second point is that, frankly, everybody speculates on this, but between 15 and 25 percent of available EITC goes unclaimed around the country, so on that basis it's actually the Brookings Institution; I didn't make this up that has estimated between $90 and $177 million of additional benefit to low wage workers in North Carolina could be available, if we could get to them.

What we learned, we've done a little studying on this, and we're blessed with a number of academics who have studied the problem in North Carolina. We have found that a large number of people in our state, low wage workers or people of low income, actually have bank accounts. This is what has been mentioned earlier today. How satisfactory that relationship is, is an entirely different question. Sixty percent of a group surveyed by the UNC Center for Banking and Community Capitalism said that they had an account, only 8 percent had savings. No surprises there. The issue is how to raise the savings number. First of all, to find who is unbanked, bring them in. Secondly, to find who's under banked and help them out.

All this, by the way, I don't know about you, but the more I look at this, we can make estimates. It's fairly imprecise. I mean, there may be people who know exactly I mean, we're getting some pretty good info on it. But in my mind, at least, part of the four year project is trying to figure out who's out there, so I'll admit ignorance about that.

Mobilization of resources, I won't dwell on that much. I took the bank's money and gave 25 grand of it away. We're going to use that as seed money to set up VITA centers. Again, none of this we invented. We didn't invent EITC. We didn't invent VITA Centers. What we're trying to do is bring them all together, and make them work together, and see what we can do with the tools that are available. So it's the usual joint venture, you know. One side has money, the other side has experience they just trade hands same thing here. I had a little money, and we had some laptop computers, so I gave that over, and then the know how comes from the non profit side. No surprises there either, I think.

I think what I'm going to be able to show, the good news about this is, the net investment of that, if you count the computers as worth something, and they've been used by bank examiners so they have a few miles on them. Let's say it's $50,000 total. I'm going to get $200,000, $300,000, $500,000 benefit back into North Carolina. I mean, you can't get that in the stock market. You can't get that legally anywhere, that kind of return for an investment. Right? And so I'm hopeful that that's going to carry us through to years two, three, and four.

The program is to establish and implement VITA sites, and we're starting with five. We're going to focus on, we're going to try to extend it statewide over four years. And we're going to try, essentially, to hook it up to the opening of bank accounts. We're going to survey the clients. We're going to try to find out what they want. We still don't know the needs. I mean, I think some people have much better ideas than we do about what it is, so it's going to take us a year or two to figure out what's going to work in our market. And then we're going to have a sort of open source sharing of these things. We're going to shamelessly steal. Anybody who wants to give me anything, we will shamelessly steal from any of you, because we want to see what works, and we're going to share it around. Every indication I have is that the banks in North Carolina want to work with us. Why? Because I want them to. But more importantly, I think many do see a business opportunity here, and they honest to goodness don't know how to get there, really. So it's not a hard sale. This has been a surprise to me. I thought this would be the hardest of the four goals. I don't know if it's going to be the easiest, but it's the easiest to sell, actually.

The last issue, to me, is challenges. I think we need to speak truly to each other about the things that are holding us back. I mean, if these people are out there, why the heck aren't they banked now, or what keeps us from being able to be effective, or as effective as we would like.

One is, there are cultural barriers, which I don't need to tell this crowd about, I don't expect. You know more about it than I do. I'm waiting to hear more about them. That involves both immigrant populations and, regrettably, and I mean it regrettably I was a Bank General Counsel for eight years, and honest to goodness, we tried to be inclusive, and honest to goodness, we apparently failed. I mean, even I say even, with the African American community, which is a large contingent in our state, the evidence my friend, Mike Stegman, over at UNC has got is saddening to me about the absence, the lack of participation in the banking system by African Americans in this country. I have no explanation for it, and I don't think there's any excuse for it.

I do think the soft issues are a piece of it. I also think that there are hard issues, and let's talk about a couple of those. Documentation we need to talk about. Security issues, there are issues we can talk about maybe in discussion but, I mean, the issues about there are things that banks have that prevent people from opening bank accounts because they have a history, and we've got to deal with those.

And the final thing I will just say is managing expectations. It's a long march, not a short one. I don't think this is going to be easy. I think we need to have reasonable goals and keep working at them as the long march. But I appreciate the opportunity to be here, and thank you very much.

PROF. BAIR:Thank you, Joe. Our next panelist is Yman Vien, who is the Chairman and CEO, as well as Chairman of the Board of the American Metro Bank in Chicago. She was one of the "boat people", a refugee from Viet Nam. She arrived in Chicago in 1978 with very limited English speaking ability, perhaps giving her a special affinity and awareness of the customer base that she now serves as head of her bank. She's a true American success story, a true example of the American dream, a real leader in the area of reaching out to unbanked, traditionally under served populations.

She's going to be sharing with us this morning her own experiences in servicing a multi ethnic, culturally diverse customer base with a large immigrant population.

MS. VIEN: Thank you, Sheila. Good morning. I'm fighting with a cold, so you're going to have to kind of bear with my stuffy nose and voice.

I'd like to share with you my banking experience, but before that, let me share with you my family experience. As Sheila mentioned earlier, we came here in 1978, "boat people". And at that time, we were on the public system, on welfare for a few months. And then soon after that, my family, all my members got entry level jobs. My parents couldn't speak English at that time, so they got an entry level job as factory workers, and got laid off at different times.

But finally, my father bought a garment business through owner financing, because at that time we still didn't have enough savings to really open a business. So with the garment business, you're talking about cash flow, and that they didn't anticipate, so they ran into cash flow problems.

We did have a bank account at one of the community banks, so we decided why don't we invite the bank president to come to look at the factory, and we have all this machinery and hard workers maybe we can get a loan to fund the cash flow. So then the president came and said that you are very nice people, but you don't have enough collateral, you don't have enough history for us to make the loan. So that was really shocking to my family and we said why do we need to have established credit?

In Asia, you don't need to have a loan to make loans, to establish your credit. We pay everything by cash. And that was the problem when we were first really dealing with banks.

Today, American Metro Bank, where I work, is located in the heart of Uptown, north side of Chicago. That's known as one of the most ethnic, cultural, and language diverse neighborhoods. Uptown we're also known as a port of entry for refugees and immigrants coming to Chicago. In fact, my family came to Uptown in the beginning too.

The banks there are serving many immigrants who don't speak English, and the kind of customer that would not have the traditional I.D. and documentation to open bank accounts, and don't understand the banking systems. We also have a big population of senior citizens because they receive SSI payments, direct payments to their bank account. And a lot of them at the beginning are afraid to open bank accounts, because they said that if I have certain assets in the bank, my benefit will be cut, so they need a lot of encouragement and education to get them to come to the bank to open a bank account.

We also have immigrants that come in and they don't have credit, so how can they buy a car, or buy a house, so we have a special program there to help them. If you would open a small, maybe $500 or $1,000 savings account or CD, we can secure or hold this amount and give you a very low credit line so you can start your credit history.

The services that we provide in our bank are very time consuming and very labor intensive, as you see, and most of our staff are bilingual. They speak the language. We have Bosnian speaking, a few Asian dialects are spoken. Myself, I speak four Chinese dialects and Vietnamese, and I'm learning Spanish, so most of my staff can speak multi languages, I guess because of my pressure. Because even with Chinese, if you come from Hong Kong or from Taiwan, you cannot communicate. Even when we place ads, we have to place the ads in different languages also.

Most of our customers were referred by word of mouth. Sometimes I look at myself this way. I only work maybe two and a half hours a day. The reason I say that, the bank opens from 9 to 4:30 and I'm there at 8, so I work from 8 to 9. And then the bank closes at 4:30, so I work from 4:30 to 6. From 9 to 4:30, I spend a lot of time checking in with my customers and I go out to meet my customers. So sometimes one of my customers asks me why are you rushing to go back? I say I feel I'm not working because I'm not in my office, so I have to go back to my office. And then I work most Saturdays.

Most of the customers that walk into the lobby, I'm probably able to call them by their names so they feel very welcome and very important. My Chinatown branch just opened in April of last year, and this is a funny story that I opened on the first day of April. So a lot of people said why are you choosing that day? I said because that's a good day you will remember that the bank opened on the first of April, so everybody will remember my bank.

Soon after the Chinatown branch opened, we were authorized by the IRS to be one of the certifying accepting agents to process individual tax identification numbers. A lot of you know the ITIN for immigrants who do not have Social Security numbers is necessary to open an interest bearing account and to file income taxes. And thanks to Michael Frias[FDIC Chicago Community Affairs Officer]here, that told me about this piece, I jumped right away and applied for this process.

With this initiative, we are able to outreach to a lot of immigrants who don't have the traditional I.D. to open an account, and kind of tell them don't put your money under the mattress and be vulnerable to robbery and abuse. The staff are willing to take time. See, this is very labor intensive because the staff has to explain to them what is involved and how we can help them to get through this process. And we are serving in the Chinatown branch a lot of the new Chinese immigrants from southern China. We call them "Fokjo" Chinese. They don't speak English, and they don't have a lot of marketable skills. And they live together in maybe a compound or an apartment, like maybe 10, 15 of them. And you will see that they come in with the same address when they open a bank account.

But this population, this group of customers, they only open non interest bearing DDA accounts. As soon as they save enough money, they will wire that to their home in China. And for the history of my bank, the last three, four years we probably had maybe five to ten wires a week. Now we're talking about 15 to 20 wires a day that this group of people is wiring back. And they are happy with the service because my staff spent the time to translate when they give them a piece of paper all written in Chinese to go Leowlin, to go to Canton. And they translate word for word for them, so they are happy and feel safe because the money gets to their home on time, within a couple of days. And that's why we capture the market in Chinatown.

In Chinatown of Chicago, within maybe one mile, two miles we have eight banks. And in less than six months we're actually over our projections in terms of getting savings deposits.

This group of Chinese come and they feel comfortable to talk to my staff. They can't even write checks. They literally bring in the checkbook and ask how to write out the check. And every time they fill out a withdrawal slip you have to tell them how, and help them to fill out the deposit slip. That's the kind of time that you need. You have to be prepared to spend this kind of time with this group of immigrants.

We also have a branch in Harvey, Illinois. It's a very distressed area, and we actually have it [in] one of our customer's supermarkets. And that supermarket has two major populations; African Americans and Hispanic. We have to have very special products for this branch. We can't even have a minimum balance requirement. We have to waive that. We say okay, how about $10 to open an account. They say we don't have $10. We say okay, no problem. You open the account and the next paycheck that you receive, you come in and you deposit $10. And then we also give out the grocery incentive because we are right inside the grocery, so we work with the owner. We say can you give me half price for this, and then we will match it and give it to the customers. That's the kind of the incentive that we use to encourage people to open accounts.

We're a member of the Federal Home Loan Bank, and it depends on the loan request. We will probably look at the area, if that can be linked to something called the Community Investment Program, so we can afford to fund loans at a lower rate, at a fixed period of time. In the tradition, normally our policy would not do that, but we're able to provide that kind of loan program through Federal Home Loan Bank CIP Program.

My board of directors and myself, we are very involved with the Chamber of Commerce and Not For Profit Organizations. We're constantly going out to different events and placing ads in newsletters, and we go around and shake hands. I find that one of the most effective ways to outreach is if you know someone who is very influential in their community, and they literally introduce you to their members, they will be wow, this is a chairman, this is the president of the bank coming to talk to me.

One example I was sharing with Sheila last night was that one of the Hispanic customers came in and wanted to have a loan because of the salary, they referred him to me. But by the time he talked to me he said, you know, somebody already made me sign an exclusive agreement. I have to pay him 3% for a finder's fee. And on top of that, he doesn't even know what kind of rate he's going to get and how much money he can get. So I picked up the phone and I called the broker, and the broker got so mad, so upset at me, and he was screaming at me why am I interfering in his business, and he will not let go of this person.

So this person linked up two other properties and he was purchasing a half a million dollar property, but the broker got him a loan of $900,000 because he has two other properties available. So he charged him almost $30,000 just for the finder's fee. So he told me I don't even know that I can sit in your office and talk to you about my loan. I said, "Yes, you can." But by the time he found out, it was too late. He had to stick with this 3% with this person, and borrow $900,000. I said you don't need $900,000. You only need about five to six hundred if you need remodeling. But he can't, he already signed all kinds of papers with this broker for this finder's fee.

One other story also, a person that went to Mexico and whatever trouble he got into, he was there for six months, couldn't come back and make payments, so he was referred to us because his house is foreclosed. So we picked up the phone and we called the bank and said that we're willing to refinance, and you don't have to proceed with foreclosing on this customer.

I told the customer look, I don't have delinquencies. My delinquency in this bank is very low, and you cannot break my record. And I said, if you promise me to pay me on time and you put six months of payments in a savings account escrow, any time you are late or don't pay, I will withdraw from your savings. I will give you enough money to pay off the other bank and take care of your problem, and have six month savings put aside. If you agree to do so, and you agree to pay me on time, I give you a loan - and save your house. Is that a deal? And he said, "Yes." And he's been doing very well, so I'm trying to show you some of my stories here.

Another person had a really bad credit history because of a credit card that he's paying and tied up, and the same thing. We're willing to work with them, talk to them and understand their needs, and consolidate their debt and lower their rate.

You heard my background at the beginning. I often feel that people give you the opportunity to be successful. And if you're willing to help, and to listen, and to talk to people, they're willing to cooperate. And if they're successful, you are successful. Overall, I think outreach to the unbanked is not an easy task. You still have to be very patient to outreach, to talk to the community groups and to be involved, to be out there.

My bank is trying very hard because we only have three offices, so right now we're trying to expand to different parts of Chicago; Pilsen, Little Village, Humboldt or Logan. Even with the LPO to begin with, through outreach to put our name out there, to talk to try to outreach to this group of unbanked. It's not easy, but we are trying, and my board of directors are very supportive of my effort. Thank you.

PROF. BAIR: Thank you, Yman. Our final speaker is Chiquita Board, who is the County Extension Agent for the DeKalb County Cooperative Extension Service in Decatur, Georgia. Chiquita has been a real pioneer down on the front lines in providing financial literacy services to both youth and unbanked adults. She's worked on several projects over the year, and is currently the first accounts program manager. And I'm proud to say, her program was one of the recipients of the First Accounts Awards when I was at Treasury and oversaw that program. So, Chiquita, it's nice to meet you face to face, and I look forward to hearing more about your program and your financial literacy strategies. Thank you.

MS. BOARD: Well, good morning. I've got to make sure I can use the gadgets here, so I believe I'm going to be in a good position. I'd certainly like to thank Chairman Powell for paving the way and bringing us here today. Not only is today special to me for this symposium, it's actually my birthday, and I told Nelson. Nelson Hernandez knows that I'm waiting on my slice of cake today, so today I turn 21.

Certainly, when we look at and when I was asked to be a panelist for today's symposium, laying out the welcome mat, as Sheila has so eloquently stated, you know, we work on the front lines. The organization that I'm tied to is the University of Georgia Cooperative Extension Service, so coming here today is a delight to kind of walk through how it began, and actually where we plan to wind up somewhere down this road.

Initially, the University of Georgia established the Welfare to Work target audience as our first audience to take financial literacy to. We have actually been in the field for over 5 years really trying to touch and tap into low income markets. And this was a quick audience to serve, and to see if we could actually make changes and impact those who were solely on welfare at that particular time.

Certainly, from writing successful impact statements with the University of Georgia, we were able to assess where were the financial literacy shortfalls in our community. And from doing that, we moved to a partnership with the DeKalb One Stop Center. That was critical because in 2001, certainly the economy was doing terribly, and we certainly had an opportunity for more lay offs, and for DeKalb County in particular, we led the state's unemployment rate higher than the state rate. The state unemployment rate was like 4 percent. DeKalb County at that time was 5.4 percent, so what we did in that partnership with the DeKalb One Stop Center was actually identify the unemployed, the displaced workers, and the under served who were using that facility to find jobs.

In 2001, this is where I really became joined to the hip, so to speak, with the FDIC. We were actually selected from a very informal call to Jim [Pilkington - FDIC Atlanta Community Affairs Officer]. And Jim is sitting right here, so I'm very comfortable at speaking today since I see my cohort. But I called Jim in 2001 and asked about this Money Smart. You know, this Money Smart was hidden, it wasn't supposed to be told to the general public yet, so I called and wanted to know about it. And from that call to Jim, we actually became the demonstration site for DeKalb County to test Money Smart.

And what better way to test it, because at that time, Peter Burke, the director of One Stop, required that anybody using the services of the DeKalb One Stop Center, they could be automatically referred to the financial literacy education program. We served a variety of people, many who were used to making incomes from $70,000 to $80,000 and up, to those who were just receiving low income benefits from unemployment. Financial literacy was the crux of how DeKalb One Stop was placed on the map.

So from there, we actually looked at our impact, looking at our goals, reaching our goals. And there was an opportunity to apply for a First Accounts Grant. And what I looked at, the United States Treasury Department had the RFP for organizations, non profit particularly, as well as financial institutions, to pave the way to help the unbanked communities, we were certainly ecstatic because at that time, we only had eight people sitting at the table. Today I like to brag, we have 25 partners in my collaboration, so I am certainly honored by those who are working at the table. And I'll talk about Georgia Saves, IDA and homeownership a little later.

Certainly, just to give you a prospectus of where we're headed with our summary for First Accounts, our mission is to actually open for the State of Georgia 336 accounts. Treasury awarded 8.35 million to 15 awardees. Georgia received $271,000. On a national level, First Accounts will open, we hope to open 35,000 accounts, Georgia specific to only 336. Certainly, financial literacy is the key component to how successful, you know, we want to be in our summary or in our First Accounts project.

Here I have to recruit for employers, and that was really special to us, because as we sit here today, we certainly have a diverse group. But when you're in the field and meeting people where they are, the one component you can't forget is the employers. Because too often, we have folks that sit on jobs that are unproductive because they are dealing with financial literacy problems. They're dealing with financial problems, and bill collectors are calling. And they don't know what else to do, so it's one of these things we wanted to identify and recruit for employers, because the marketplace has changed in this 21st Century. It's ever evolving, it's ever changing.

There are so many sophisticated products now that those who are unbanked and choose to remain unbanked, they have a number of options. And with these options we certainly want to bring them back into the financial mainstream with insured financial depositories.

Scheduling supervised bank tours, I think as Yman mentioned so well, having that people friendly atmosphere for those who may be uncomfortable, whether they've had a bad experience in the past, or whether it's their first opportunity walking into that doorway. G, guys walking into the National Press Room today, I am. I'm even, you know, so it's one of these things that I even feel, you know, certainly the element of where I am today. But it's one of those things we have to take it back, because when I'm in the field, I definitely don't have to dress to impress, because I want that person to feel comfortable with communicating with me at any level. Certainly, we are looking at retaining a consultant to evaluate our progress.

First Account strategies, this is the piece that deals with how do we retain our customers. And in looking at that, one of the things which is so important you don't want to open the account today and then close it in 30 days. We want to look at the long term impact, or the long term effect of how to keep that person bankable.

The banks have decided and elected to, when they realized that there is let's say a "problem child", when that occurs, they actually follow up with that customer one on one. They make a phone call to determine early on if we can prevent this from happening in the future.

Certainly, with that particular one on one contact, they might also contact my agency to find out if we need to do another educational session, because sometimes you don't get it from that first shot. And it might take an opportunity where we are willing to also resit and revisit, to bring that person back into the scheme of the things.

Certainly, we also tap into not only adult and youth, the Latino market is certainly an influential market in the State of Georgia, so we also have to tap and touch those also, which we're having some challenges. So El Banco de Nuestra Communidad has stated that they want us to provide on site education workshops, because on Fridays, as you know, it's payday across the nation. And one of the one things that we know we can find, as Chairman Powell said today, they're either going to be in a line at a fringe service, or they're going to be in a line at a banking institution, so we really wanted to touch and be able to bring those who are in the Hispanic communities to the financial institutions, and El Banco has that target audience.

Certainly, we have a Youth IDA Program that is being funded by United Way. And the one thing with retaining youth, we also want to look at how can we begin to bridge and help the young people of our great nation. And in doing IDA Programs with the First Account, we have looked at holding a requirement for youths to satisfy 100 hours of community service. You know, it's a 2 to 1 match, but we just don't want to give you know, to lay out the welcome mat. We also want to have some requirements that keep them fully engaged throughout the process.

Again, this is pretty self explanatory, and it just tells you we have a three tier process. I must brag, most importantly, on my financial institutions who make it happen. Certainly, we have five financial institutions. We have one community chartered bank, and we have a credit union.

The one thing that I do like is, Decatur First, for example, is in the community. It's in DeKalb County and right in the heart of DeKalb County. When you look at banks like Wachovia, Wachovia is certainly a big bank, but we have specific locations that we can actually[refer people to], once the participants complete our workshop and they are given the FDIC Money Smart certificate, they could then take that certificate to one of the identified financial partners.

Now we don't want them going to just any branch. They actually have to go to specific branches, and they have points of contact at each of those branches. So when they walk in, they're familiar with that point of contact so that they don't feel uncomfortable, or it's less intimidating from that very first start.

Certainly, Washington Mutual, again, they have changed the element of banking because they're in a more casual environment. So again, we have three designated locations for Washington Mutual. Certainly, our regulators where would we be without them? And the one thing I must do, I can't say enough about the marriage with FDIC. I mean, we're going to be joined together forever.

Certainly, to give you a little ideal on best practices again, Georgia Saves was and is a new program that the State of Georgia has adopted. Effective October 27th, Governor Purdue signed a proclamation to make October 27th really a Georgia Saves day. This is a statewide launch to move, and to help those who are unfamiliar and don't have a habit of savings, to bring them also into the banking world, and to help them incorporate savings goals.

The one thing I like about the Georgia Saves Program is, we have financial partners who are providing volunteers that are going to serve as wealth coaches. So when a saver actually elects to save, let's say $100, and they said they need six months to do it, they're going to have a wealth coach or a financial advisor who is volunteering his or her time to walk that person through those incremental steps, so we're really excited. The goal for us for our first year is 3,000, and we're confident that we can do it, because we have nine major counties that are participating.

Georgia Perimeter College is certainly a wonderful opportunity, where we actually visit the campus, and we actually deliver Money Smart to not only college bound, but you have a college bound setting, and you have adults that register and pay to attend financial education workshops. Certainly, it's a modest fee, but it's one of those that we have found that if we want to separate and truly keep audience separated, at some point we might have to change the environment. And in changing the environment, it has proven to be very worthwhile, in addition to our students documenting on their surveys and requesting additional workshops. It's not enough. They want more, so this is really good, and it's really making us look very good across the board.

Certainly, on VITA and IDAs, Commissioner Smith, DeKalb County has always been home to VITA. But with First Accounts, and I didn't mention of that 330 goal, we have already opened 230 accounts in six months. I'm going to exceed that 330 goal, and it's not I, it's we. So we are very confident in what we're going to do by the end of December 31, 2004. But the key component to helping us reach that goal would certainly be through other initiatives, so with the VITA, and having bankers come to the locations where we're going to prepare taxes and have them open accounts right there on site, much as what I know Ellen might talk about with ShoreBank, some of the things we're going to replicate and duplicate to make our program very effective.

To give you an idea, I am one that loves showing photos, so just to give you an idea for Tom Stokes, who is not here with us today, but Jim is this is our First Accounts kickoff, and certainly we had two graduates who basically gave their testimonials at this event. This was an event, certainly, that was held on August the 16th, and Judy Chapa, who was with Treasury at the time, certainly came and enlightened us with our CEO, Vernon Jones, our Director and the President of the bank. So some of the times pictures can say what I can't say, but they are worth a thousand words when you can have them and incorporate them.

Again, I kind of talked about bank tools. That's important. That was on the previous bullet slide, which we really want to take and hold the customers by their hand. For whatever reason they choose, or they were not banked prior to knowing about our program, we will be very helpful and guide them along the process. So this is what we do, we get out into the field and we help them make that initial contact with representatives from the banks.

Certainly, we have program challenges. You know that's the one thing, the world would not be perfect if we didn't have challenges. Certainly they are here, and the one that I am going to kind of touch on is beyond 2004. You know, it was so enlightening to hear Congressman David Scott mention that there might be a bill that might also help and sustain programs as to what the grass root level organizations offer, so I'm very excited about wondering if that bill will pass. But beyond 2004, which pieces of what I mentioned will sustain themselves? And the two that would, would be the Youth IDA component because that's long term. The second program that would sustain itself will be VITA.

VITA will be an ever evolving program that will be available to those, you know, the low income working poor. But when you talk about education and the thrust of how many employees and educator professionals you need to deliver education, it's one of those things that unfortunately requires program dollars, so that's one of the things that we're going to look at.

I do want to close with a very quick quote, and I read: "Failure is, in a sense, the highway to success." And if we just ponder on that thought and think, if many of us had stopped when we failed at that first opportunity, where would we be? Let's lay out the welcome mat. Thank you.

Q&A FOR PANEL I

DR. SMITH:You've had the opportunity to listen to the speakers. Now it's time for you to challenge them just a little bit. They know that there's some bright questions in the audience, and this is the opportunity for you to raise them. So we have several people who are putting up their cards, and I'll take a couple so you won't know exactly which one came from the first person. And then some of you should be getting ready to ask questions yourselves.

How can your bank address the CIP Program, Section 326, I.D. requirement FAC check or for the Chinese wire? How do you do that? What makes that possible? Give us a little bit about, if we don't have the proper I.D. I assume this is the question how do you make sure that happens?

MS. VIEN: First of all, the CIP Program is only from the bank that we use to fund loans, so I'd like to clarify the question a little bit, because the Chinese immigrants can open an account with the Visa or the passport that they brought. And we are able to open a non interest bearing account until the time that we start the application for them to apply for the ITIN. Otherwise, we won't be able to open any interest bearing account.

Once they open the account and we only wire money for bank customers, so once the account is open, regardless how it was opened the first time, we will be able to wire money for them.

DR. SMITH: All right. Stay up there for just a minute if you will, because there's another question. How do you reconcile the labor intensity with profitable goals? You've got all this labor intensity of being out there greeting your folks everyday. You're only spending two hours in your office returning e mails, where the rest of us are in our office all the time. How do you turn a profit on this stuff? The question doesn't say it, but I know what they mean. They're being polite because they're here in the Press Club, but don't tell us that we've got to wait 20 years to get that profit turn. So you can join in on this also, Joseph, who said in the future we'll have profit. How do you get some profit today so I can convince my board that we ought to be doing this labor intensive stuff?

MS. VIEN: I guess this is a question to me again. My Chinatown branch, believe it or not, we only have five people in that branch. I have a CFO who joined me at the beginning of this year, January. The first thing he told me is this Yman, I am shocked that everybody here wears two or three hats, that they have to work two or three times harder than the other bank. But yet, they seem like they're not doing anything.

I guess, the staff see that as dedication, that they are able to help the customers. You know, it's something they are willing to do, and that is the key that you do have to have staff who are willing to help. You know, you have to be very patient. When I look at my staff provide the kind of service when I went to Chinatown myself, and you really have to sit down and do this and this. But then you need the cooperation from the customers. You've got customers waiting because when they see this banker is willing to spend this kind of time with my friend, or with the other customer, and she will be able to spend that kind of time with me, and I'm willing to wait.

DR. SMITH: I'm still waiting to hear the profitability point again. Yes, Joseph. Profit.

COMMISSIONER SMITH: I've written two articles about this that only my mother has read, and she didn't like them. I think there are two aspects here. One is, that it can be viewed, particularly with regard to minorities and new immigrants the Harvard Joint Center for Housing has predicted not just predicted but based on their studies, that the net growth in household formation, virtually all of it in the United States for the next 10 years will be new immigrants and minorities, period. So I think the investment in this activity can be viewed in part as a market building activity, where you will be left without if you don't engage in it.

The second thing I would point out is, my hope in these matters is and this is probably a hobby horse, not more than a hope is that by use of alternative delivery, what I was trying to get to before I ran out of time the use of electronic. A way to get the profitability, there are two to me. You raise fees, you charge the fees which everybody gets all bent out of shape about, to the point where it's economically profitable. And I'm talking now mainly for larger institutions as they grow, or you use lower cost delivery, which could be electronic. And my understanding with regard to the First Accounts Program, at least Mike Stegman's book on it, says that there was a lot of I hate to say political, but that's really what I mean.

There were some problems with advocates for the poor who felt that the use of alternative delivery was making their clients second class citizens, or they were unable to use it for some reason or other. It was unacceptable. And so I think the larger institutions, getting to profitability, to be candid, means charging money, or using low cost delivery methods, or both. But I think that requires, again, all the constituents, all the stakeholders in this issue to agree that that's what can be done, because no bank on earth, not a large bank, is going to want to walk into something where they're deemed by the charging of fees or the use of alternative methods to be predatory, or in some way demeaning a population. They just can't do it.

DR. SMITH: We have another Joseph here who is ready to ask a question.

MR. COLEMAN: Thank you. My name is Joseph Coleman, and I'm

DR. SMITH: You notice I'm holding the mic.

MR. COLEMAN: My name is Joseph Coleman and I'm a check casher. I was curious, and by the way, I want to compliment Ms. Vien on the way that she works with the customers. I almost thought you were a check casher with the way that you spent time with people helping them and so on. We see ourselves as doing that, and we see our profitability by charging by the transaction. But I'll get to my question; which is, did any of you reach out to some alternative or other financial kinds of providers, such as check cashers, in order to reach out to the unbanked where they're already coming? Did you look at any partnership ideas?

MS. BOARD: When we applied for the First Accounts grant, we did not look at alternative service venues. We strictly stayed in the insured financial institutions realm.

COMMISSIONER SMITH: I do have one large bank that is owned by a Canadian bank, which I guess shall remain nameless. But in Canada, there apparently are partnerships of this kind that are somewhat effective. I know that there are banks in the United States that have done ventures, and I think that is met with interesting reaction.

Well, the business is not profitable enough unless you charge to justify getting flamed, so again, advocates for people who are low and moderate income need to be involved in this process, I think, to make it feasible to many large institutions. I don't know how successful it's been. Union Bank in California did one I'm aware of, and I don't know how successful that's been.

DR. SMITH: All right. We have two more questions ready to go.

MS. NEUSTETER: Hi. My name is Susan Neusteter. I'm employed at a Work Force Development Agency in New York City, and we serve exclusively ex offenders. And we have surveyed our population, and less than 10 percent have ever had bank accounts. They're only using check cashing institutions. And I'm curious if you can speak at all about how to serve this segment of the population. As a second, these are individuals that have been in prison for check cashing crimes.

COMMISSIONER SMITH: I'll be happy to send you, by the way, our study that shows that low income people are about 10 times more likely to have bank accounts in North Carolina than they are in New York City. I didn't want to mention that in my prior discussion. It would have been deemed to be stiff necked Tarheelism or something.

Well, I think you need people like these and I was serious about not knowing anything, because the way to reach this market is to reach it through people who do understand them, and can work with them, and will take the time to work with them. And, regrettably, that crowd is in short supply. You do really good. I want to import you both, but I think particularly in the urban environment, it's tough, I would think.

MS. BOARD: And specific to Georgia, and DeKalb County specifically, actually we work with Work Force Development. And certainly, we've actually added drug court to our particular list of partnerships. The only thing that the banks really shun is a person that actually, when you're applying for a new account with the financial partners that I have if it was due to fraud, unfortunately, there won't be an account. The financial institutions won't serve that. But to deliver education, we will target any particular group that makes a request to our agency for us to come and deliver. But certainly, we have to follow what our regulatory agencies put in paper.

DR. SMITH: I have two from the cards, and we have two people who have already been identified as wanting to ask questions from the audience. Let me give you the two from the cards, and you can divide them up. One says, would American Metro Bank be interested in assisting customers to build a credit history with rent payments as homeowners do with mortgage payments? And they've got their phone number here for later in case your answer is yes.

And then another one says, how do we deal with issues of minorities who have disabilities also? What do we do about reaching out to folks who have disabilities, who may not be able to get into the bank, or who previously, because of their minority status, may feel separate from the bank?

I think we've answered part of that already, but would you like to try either of those? Don't forget the one about the building, for any of you would you let the fact that I've paid my rent every month on time for three years be the asset I need for getting into, for example, reasonable homeownership. Would you let that work for me?

PROF. BAIR: The University did a report last spring on improving Latino immigrant access to the U.S. banking system, and we did a lot of field visits. And one in particular, since it's in North Carolina and we have Joe here, the Self Help Credit Union, they're an affiliated Latino community credit union I do believe that you can use rent payments, utility payments, if you can show a steady record of making those payments, that will help you qualify for a loan, and they'll help you build a credit history from there, so I know that that is done. And I think they've had good success with it, and I'm sure there are other banks and credit unions that do, as well.

COMMISSIONER SMITH: There's a study that shows the ones they originate have a lower default rate than all loans, including prime loans. So there's a developing history that supports that very idea.

DR.SMITH: Don't forget about the disability question.

COMMISSIONER SMITH: Am I talking too much? Probably. Okay. I think a way to deal with it is through technology of various kinds. The problem I have in some ways with sending people into a bricks and mortar banking system, is it's like sending them to a buggy whip factory. I'm sorry, but I really do think the future of a lot of financial services is through alternative delivery, online, phone, and other things. And I think a way that this could be addressed, I mean, clearly there has to be an initial contact. And there has to be the other groundwork that needs to be done. But it seems to me, the use of even telephone you know, remember them, telephones and if people don't have personal computers or other alternative delivery, can bring people into the system.

This is heresy, I guess, but my mother can't live without a trip to the bank everyday. And I've been at one bank branch in about the last five years. I mean, I was a Bank General Counsel. I just never go, but it seems to me that that would be a way practically to address that problem.

DR. SMITH: We have our final two questions from the audience, then we need to give you a little bit of stretch.

MR. ULYSSE: My name is Jean Riguel Ulysse. I'm the Executive Director for the Community Development Assistance Corporation in Braintree, Massachusetts, and a former banker myself. I think mine is more comment instead of a question.

Talking to the bankers here, though, I hope when you go back today, especially those of you with power to make final decisions, there is no question about that. We force those people to go to check cashing. And I applaud the FDIC to bring this subject for discussion now.

We have to find a way through education, financial literacy that's what we do at CDAC. We teach adults financial education with emphasis on retail banking. Mainly as an immigrant myself, Haitian American, I've seen the abuses where, for example, one savings account with some local bank in Massachusetts charged $1, but those people were forced to go to check cash because, for whatever reason so I think when you go back today, not only talk about it, because yes, there is more than 10 million unbanked or under banked people throughout the country.

And the question I have for Mr. Smith, when you talk about the unbanked, in your opinion, who are those people? Who are those unbanked people we're talking about here, we're trying to reach?

COMMISSIONER SMITH: As far as I know, and I'm still learning, they are people and again, there's been a book written on it that's quite good but as a rule, you can characterize them. They are younger than average, then tend to be minorities or immigrants, on average. They tend to be surprise lower income, on average. I don't mean that to be sarcastic. I mean really, they have less money. I think what we're finding, and I agree with the Comptroller, by the way, that people use alternative delivery sometimes as a choice because there are people who spend most of what they earn, spend it quickly because they have to.

By the way, this isn't exclusively a low or moderate income problem. If you look at the consumer balances of the rest of the United States, it's a widespread problem. And so they are subject to check bounce fees, a lot of other fees the banks charge everybody. And so they go to alternative delivery I think sometimes, because to be frank, it's an economic decision. I mean, I regret to say that, but that's the fact of the matter.

Okay. I'll finish. Those to me, the reasons, are fundamentally they are groups of lower income, often minority, often young people to the extent we know it, but we still don't know. I mean, I don't know anyway.

PROF. BAIR: I would just add on the question on check cashers, and it kind of gets back to the earlier question asked by the gentleman who did have a check cashing operation. I think banks are learning that not everybody wants a checking account. Sometimes a savings account with debit card access is the right way to go. Providing check cashing services or money orders or things like that services, frankly, that check cashers have provided products that may be better suited to people and banks have not always offered those services in a low cost way, so I think banks are learning.

I think check cashers in terms of their geographic location, their hours of operation, their accessibility. Sometimes they're friendlier exterior, they hire from the neighborhood so you go in and you know the person who works there. I think those are all things that banks are now learning, that check cashers have done.

I think there are also some successful examples of banks and credit unions partnering with check cashers. We have a couple of them that were again written up in the IDB report, which is referenced in your materials, and you can find on the IDB website. So I think it's not black and white, and there are advantages to check cashers involved, or things that they've done that, frankly, banks could learn if they want to be more competitive in these markets.

MS. WYATT: I'm Gretchen Wyatt with the Maryland Bankers Association, and I'd like to direct this first to Commissioner Smith, and also to Ms. Board. We just yesterday launched a Financial Literacy Coalition in Maryland. And one of the goals, of course, for us is to increase awareness of financial literacy in the state. But the Maryland Bankers Association was successful in blocking a predatory lending bill in Baltimore.

Part of what I'd like to find out from the Commissioner, is with this new program that you're doing, you're looking at new products and services. Have you brought in the state legislature to guard against any mandate of introduction of those new products and services across the board? We live in a very consumer friendly state, and if we were to do any research on that, either through the coalition or through the association, probably the next year, legislation would be introduced saying that all state banks, or even national charter banks would need to introduce that type of product.

COMMISSIONER SMITH: The short answer to your question is no. We're updating our banking laws, anyway, and we may deal with this somewhat in banking. I tend to think this is more an issue about practice, rather than legislative mandate. The history of legislative mandates, to me, is not a happy one, and it's not something I want to do.

I mean, we have a fairly progressive banking group that will do, if they could be shown at least revenue neutral, profit neutral, they're willing to do it. So no, I intend to discuss the issue with members of the legislature as they may wish, but they've got plenty to say grace over with our budget and some other things, so we don't need to be worrying about that very much.

Congratulations on instituting your program. And, Chiquita, maybe you want to talk about financial literacy.

DR. SMITH: Before you answer on financial literacy, let me just say, there have been six questions on cards that we're not going to have a chance to fully respond to, but I just want to include it.

The heart of all six of these questions it's very interesting they're all on the same topic; is, make some comment about Homeland Security, the tightening of our need for documentation. And yet, this panel seems to be saying reach out to people who may very well be undocumented. How do we span the gap between what Homeland Security is demanding, and what the panel is suggesting? So since there's six questions on that, I want to try to, at least, get some response. And I know I'm eating partly into your break, but we'll make sure you get a full seven, eight minutes. Don't worry about it.

PROF. BAIR: I have a comment. When I was at Treasury, I was very involved with the early stages of the drafting of the Section 326 regs, and was very pleased with the final outcome at Treasury. And I think the purpose of the Patriot Act was to make sure that financial institutions were doing due diligence in terms of knowing who their customers actually were. It was not to make them immigration agents. We've never viewed the banking sector as part and parcel, and it's really not their role to enforce immigration laws. We look to the employment sector for that aspect of immigration policy. And it would be a fairly profound change in immigration policy to now require banks to start taking on this role, particularly when the Patriot Act did not speak to that at all. It spoke to making sure that you've done what you can to know the true identity of your customer.

Recognizing that, and a thousand different forms of documentation that are out there, passports, what have you, that have been long accepted by financial institutions to establish customer identity, the Treasury decided that it really should be left to the financial institution to determine what is reliable or not. Recognizing that a lot of banks this person may be your friend, your neighbor, it's a risk based process that you have to go through. And I think that was the right balance. I think it's one that the financial institutions are comfortable working with.

It's not an endorsement one way or the other of any form of identification, including Social Security cards. Again, it's up to the financial institutions to decide, but I think it was the right decision on the part of Treasury. And I think it is very compatible with these other policy goals that we are pursuing actively.

DR. SMITH: Let me just say, I'd like you to thank the panel. Not only did they present, but they responded to your questions, and they're not going to the rest room. They'll be here for the eight minutes to answer any other questions you have. Give them a round of applause.

Next page: Panel II