Present:

Dr. J Otis Smith                                             Symposium Moderator
Cynthia Amador
The Honorable Spencer Bachus
Sheila C. Bair
James Ballentine
Michael S. Barr, Esq.
Chiquita D. Board
Kelvin Boston
John Bryant
Evelyn Edwards
The Rev. Dr. Floyd H. Flake
The Honorable Ruben Hinojosa
Judith A. Kennedy
Dr. Angela C. Lyons
Clara Martinez
The Honorable Michael G. Oxley
Dory Rand, Esq.
The Honorable David Scott
Ellen Seidman
Ernest Skinner
Joseph A. Smith, Jr.
Yman Vien

Also Present:
Donald E. Powell                                               Chairman, FDIC
Judy Chapa
Donna J. Gambrell
Arthur Murton
Michael J. Zamorski

Agenda Item

Welcome

DR. SMITH: Well, good morning, everyone. My name is J Otis Smith, and I'm here to welcome you to "Tapping the Unbanked Market: Helping People Enter the Financial Mainstream." Now you're here because you're already involved in that process, and you're already committed to it. So let us move quickly into what is going to be a power packed and hopefully information packed day for you, and a great opportunity for exchange.

Now to begin the process. I want to welcome to the stage, Mr. Michael Zamorski, who's the Director of the Division of Supervision and Consumer Protection for FDIC. Michael.

DR. ZAMORSKI: Thanks a lot, Dr. Smith. Good morning and welcome to the FDIC's Symposium on "Tapping the Unbanked Market: Helping People Enter the Financial Mainstream." Financial education for every American is a corporate commitment at the FDIC. We developed Money Smart as a basic curriculum to improve financial literacy, and the Community Affairs Team that developed the program was recently presented with a Service to America medal to honor their achievement.

We continue to develop alliances with financial institutions, bank trade associations, national non profit organizations, community and consumer based groups, and federal, state, and local agencies to achieve our five year goal of reaching 1 million consumers with the Money Smart Program.

Financial education is a major issue relating to the reasons why people are unbanked. Accordingly, this symposium will begin with a Congressional Panel, and we anticipate that they will discuss financial education and the unbanked. The primary focus of the symposium is to discuss success stories with products and programs to bank the unbanked, and explore those situations where new products and programs might be helpful.

There are a variety of estimates on the number of unbanked in the country, but 10 million unbanked households is pretty much agreed to by all parties. Banks on their own or with community groups, have already begun a variety of programs and products to reach the unbanked. Representatives from some of those banks and community groups, as well as academicians who have studied the unbanked, will discuss success stories and opportunities for new initiatives during the three panel discussions.

Each panel is focused on a specific reason why people are unbanked, and will include time for audience questions. And we have four main panels, as Dr. Smith alluded to; "Financial Literacy and Reaching the Unbanked: Perspectives from Congress"; "Laying out the Welcome Mat: How to Attract and Retain the Unbanked"; "Beyond Toasters: Account Incentives That Really Work and Why"; "Thinking Outside the Bank: How Groups in Your Community Can Help You Reach the Unbanked".

We hope and believe that we have created an exciting program, and I think that the forum, as has been mentioned, is very conducive to having interaction and dialogue, and that's our goal today to have a constructive dialogue on how we might reach out and expand opportunities to the unbanked.

So without further delay, or by way of introduction, the first speaker is Donald E. Powell, the Chairman of the FDIC. We're very pleased he could be here. At the staff level at the FDIC, we certainly appreciate his support in sponsoring forums such as this that reach out and have a public dialogue on various very important public policy issues.

Chairman Powell came to the FDIC as its 18th Chairman on August 29th, 2001. He has 30 years experience in the financial services industry, and a long history of community service. Let me please introduce Chairman Powell.

Keynote Speaker

CHAIRMAN POWELL: Thank you, Mike. What a wonderful crowd. Thank you for being here. You honor us with your attendance. I'm delighted to be here.

I first want to acknowledge the hard work of the folks here at the FDIC in creating this forum and getting us here today. I'm often reminded that these things do not happen without the work of many people. I know there were several folks working here last night and again early this morning. Thanks to each of you, for putting forth the effort and enabling us to make sure that this forum is successful.

Today's topic and issues are very important to America. They're important to the banking industry. And they're important to the FDIC.

A few weeks ago, I was in the great state of Texas, driving from Dallas to Houston. Those of you who know Texas know that there are a lot of small communities between Dallas and Houston. I was not dressed like I am today. I was wearing jeans - Levis, boots and shirt. My wife was with me, and we stopped for a break, either in Corsicana or Ennis, to get some gasoline and a soda. As we pulled into town, my wife looked at me and said, "Now you're not going to go to a bank, are you?" She asked this because my habit has always been, when I'm in areas like that, to visit a bank. I enjoy visiting banks. I like to go in the lobby and see how they're set-up, how much business they're doing, and other things. I've been doing this for years. I don't go just because I'm affiliated with the FDIC, though sometimes that's what I tell my wife. To be honest, I like being in a bank and I always learn something about the bank, the people running it, and the community when I go into a bank.

But that day was different because when I went in to pay for my gas at the convenience store, I happened to notice that over to the right was a check cashing facility. We were there about 5:30, maybe 6:00, in the evening. My wife saw me standing back and observing what was happening. There must have been 10 or 11 folks in line that day. She looked at me and said, "You're not going to do it, are you?" I said, "Oh yes, I am."

So I got in line and had an opportunity to visit with the folks in the line. I visited with a few of them. I said to the first gentleman, "You know, there is a bank about a block from here where you can cash your check." I didn't know this, but I was assuming - and going on faith - that the bank would cash his check, if not for free, then less than what this check-cashing facility was charging. He said, "I know that. I know that."

I said to the second fellow, "Sir, do you know what you're paying here today, what your real cost is?" He said, "Yeah, it's six dollars." I said, "Do you know what the annual percentage rate is?" He said, "No, I don't. And I don't care."

I said to the third gentleman, "Why don't you just go down to the bank?" He looked at me and said, "That's the bank that foreclosed on my uncle's automobile. He doesn't have an automobile today." I visited with him about some other issues, and several things he said stayed with me. As I got in the car, I thought about what we're doing at the FDIC as it relates to financial literacy. And I thought about how it's extremely important, critically important, that we educate all Americans and help get them into the financial mainstream.

Having said that, I discovered - at least that day - that the unbanked folks know more than we think they know about what they're being charged. And since it's not a cost issue, it's more what I refer to as "soft issues" that are perhaps keeping the unbanked from the mainstream. What I'm really talking about, is that these folks are not welcome. They're not welcome in the lobby of a lot of our institutions. You can say, "Wait a minute. That's not true." But I don't think those folks in Texas were lying to me. They didn't have any reason to lie to me.

The whole notion of trust is critically important, so bankers must find a way to make sure that all are welcome in the lobbies. And it may be important that banks get out into the community, go to the plant and other facilities. Visit them and offer educational programs like we're attempting to do through our Money Smart program. We're forming partnerships throughout America with all types of entities, all types of organizations. It's critically important that we go out to where these folks are, and make sure that they understand that banking is easy and bankers are real people - people just like them.

I promise you that if I had been wearing a suit and tie, like I am today, those folks waiting in line to cash their check would not have been as candid or forthright with me as they were. First of all, they would probably have clammed up, thinking that I was trying to find something out about them.

Now some folks have different backgrounds than you and I do, and they're attempting to get into the mainstream of society. I say to bankers - and I talk to the bankers a lot about this - that, clearly, bankers in their community are a lighthouse of everything that's good. Banks are about more than making a buck. I'm a former banker, and sure I wanted to make money - we had to make money to survive. But we stood for more in the community. Banks are the lighthouse of the community - and our roles convey responsibility. Making sure that the unbanked get into the mainstream in America is a worthy goal. If we help these folks become average Americans, middle class Americans - let me tell you what middle class Americans do. They pay taxes. They teach Sunday School classes. They attend PTA meetings. They assist the homeless. They make contributions to charity.

All products that bankers offer are not necessarily profitable at the beginning. Serving the unbanked may not be profitable at the very beginning. I assure you that bankers understand there are a lot of ways to make money when you get these folks into the mainstream - being part of America. It's critically important.

So I hope today the panels focus on economic literacy, making sure that all are educated. But I hope that we also focus a lot on what I refer to as the soft issues, because I think they are really what keep a lot of Americans out of the mainstream of America.

I'm delighted to be here today. I'm anxious to hear from our panelists. We have some distinguished panel members. We have some folks who are dear friends of the FDIC. Ellen Seidman, who was the Director of the Office of Thrift Supervision, is a tireless worker on some of these initiatives. I told her just this morning that while I see a lot in the press about what people do, I think the world is quick to recognize a counterfeit, a phony. Ellen is no phony. Once when she and I were meeting about something, she asked me about my weekend and I said, "Well, I watched football and went shopping with my wife." Then I asked Ellen what she had done over the weekend. She said, "I spent Saturday over at the library helping some folks prepare their income tax returns." She didn't know how much she was telling me about herself. Like I said, Ellen is not a phony. Ellen walks the talk.

We're also joined today by two distinguished members of the FDIC Advisory Committee. I saw Sheila Bair. Where are you, Sheila? Sheila was formerly with the government, now she's with academia. Among her many accomplishments, one of the most important things about Sheila is that she's a mom. She's a mom, who happens to be a professor. In addition to these incredibly demanding responsibilities, she also assists the FDIC by serving on our Advisory Committee on Banking Policy. And let me tell you something, she is not timid. I'm glad she's here.

And this afternoon, we're going to be joined by the Reverend Flake -- a distinguished American. I'm so proud that he is serving on the FDIC Advisory Committee, because he has lots of moxie. I love to sit and talk with him. I remember going to New York and just sitting with him and talking about his mission, his vision for what his church is doing in New York City.

And then we're honored to have among the panelists three distinguished Congressmen. One hails from the great state of Texas, Representative Hinojosa comes from the great state of Texas. We're delighted you're here with us today.

And we're also delighted that Chairman Bachus is here today with us. I got to know him a couple of years ago when we were working on deposit insurance reform. I found him to be not only a conscientious representative, but someone who extended the hand of friendship to me as a new person in Washington. He made me feel very comfortable. You know, going into a Congressman's office is sort of like going into a bank lobby. It could be very intimidating for a guy like me, new to Washington. He and his staff were very generous and made me feel extremely welcome. Thank you, Congressman, for being here.

Congressman Scott is also on the panel today, and if you haven't heard his story, if you haven't been able to visit with him about his life, it's a remarkable story. I found him to be a gentle spirit. He has a velvet hand. He's very, very bright and very, very sharp. He hails from Georgia, and he represents the people of Georgia, but he also went to Florida A&M. There you go. I got it in, Florida A&M.

So we're delighted that you three gentlemen could take away from your very busy schedules to be with us today. We look forward to hearing what you have on your minds.

Now, the first panel will be moderated by Judy Kennedy. And we're delighted you're here, Judy. She, too, is a tireless worker. She is President and CEO of the National Association of Affordable Housing Lenders, and undoubtedly has one of the toughest jobs this morning being the moderator of this distinguished panel.

Congressional Panel

MS. KENNEDY: I'm tickled to be here to facilitate a session with these three distinguished Members of Congress. What I like to say about the issue of mainstreaming the unbanked is that it's one of the few issues in Washington, I think, where everything seems counter intuitive.

In other words, every time I'm asked to do something, brief someone on the issue of mainstreaming the unbanked, what hits me between the eyes is that the issue defies the stereotypes. For example, it brings out the creativity in bankers, seriously. The National Association of Affordable Housing Lenders are America's leaders in bringing private capital to low and moderate income communities. About half of them are bankers. And, of course, ShoreBank has been in the forefront for decades of trying to mainstream the unbanked.

It's come more recently to some other institutions. But, for example, imagine Bank of America taking that wonderful Money Smart product and saying, you know, we could sweeten this up a little. It's a great product, but they hand it out with candy. And a spoonful of sugar from Bank of America makes people take the product easier.

I'm particularly impressed by the video that I've seen and you probably have too trying in a sort of a Sesame Street for Adults way, to make people feel at ease at the beginning of a financial literacy session, where nobody really wants to talk about their own money, and how badly they've managed it. I know I don't. And the video sort of gives everybody something to laugh about and talk about.

I'm particularly impressed at new partnerships. For example, Bank One, working with employers to send that check cashing truck away on Fridays, finding a new truck from a bank that's not that intimidating lobby. My favorite, Washington Mutual with materials that speak to Native Americans in their own lingo. And now you see financial literacy products in Farsi, Russian, Bosnian, so creativeness in bankers is something that I think this issue brings out.

I also think that this issue is curiously bipartisan. I could say that the gentlemen up here give partisanship a bad name, because they have approached this issue in such a consistent work together way. I don't want to ruin your reputation, Chairman Bachus, but Barney Frank says great things about your bills. And so, if you read the biographies of these gentlemen, these are lawyers and CEOs of businesses who are preoccupied with helping consumers. And you see it in the work of Chairman Bachus's subcommittee. You see it today when the subcommittee will be working with the housing subcommittee on solutions to predatory lending. So enjoy with me today the fact that this issue defies stereotypes, it crosses partisan bounds.

Senator Sarbanes had a hearing on this issue about a year ago. And the other senator who was there listening to Michael Barr and ShoreBank, and other people who knew this issue well, was Senator Crapo of Idaho, whose influx of Vietnamese immigrants has created a huge unbanked problem that that state never saw.

So I want to hear what these gentlemen have to offer, and then we'll be glad to take questions about what the future holds. With that, I guess, Chairman Bachus, would you like to lead off.

REP. BACHUS: I appreciate those kind words, Ms. Kennedy. I'm tempted to lapse into talking about football and go back to what Chairman Powell did, but although that debate is real tempting, I'm going to focus on today's subject.

First of all, let me say that having Congressman Hinojosa and Congressman Scott on this panel I think is very fitting. We have worked together, we've had hearings together. They are two of the members who have really both requested a hearing we had earlier on serving the under served, and many of you all in the room I know were at that hearing. And I think it was a very good hearing.

Congressman Hinojosa has legislation which you can discuss. Congressman Scott and Congresswoman Biggert have introduced legislation which will establish a Financial Literacy Commission. I think that's important legislation.

The three of us have all co sponsored legislation that Congressman Dreier introduced providing funding to develop a program at the Treasury Department, a national ad campaign on Financial Literacy.

When you look at the unbanked, and I appreciate what other speakers before me said, it's not a simple issue. Many of the unbanked, half of them at one time had a bank account. I think that's one thing we shouldn't forget. And for one reason or another, they choose not to maintain a bank account. They go to check cashers, they go to payday lenders, and more often than not, they go not once, but they continue to go. So this, at least, indicates they're making a choice. And I don't think we ought to look down on people and say well, they just don't know any better. In fact, I think Jerry Hawke, in his testimony in Baltimore and I think we need to lay all the cards out on the table he actually said that for many people it made economic sense to go to check cashers.

Now I can tell you that as a practicing attorney, and I have been Assistant Attorney General in the State of Alabama, I've been on the prosecution side and the defense side, some of the people that needed the most help were people that had a bank account, and had basically gotten in trouble criminally because they had written bad checks, and had gone to jail simply because they were not able to maintain a balance in that bank account. They got in trouble in that bank account, so at times opening a bank account can actually if you don't have financial literacy to go with it, if there's not some mechanisms in place it can lead to some serious problems. And it's an issue that I think all your bank regulators are concerned about. I think Freddie and Fannie are concerned about it.

That's two names you're maybe not supposed to mention in the last two or three months, but at least I can tell you that in our state, they have participated in a lot of programs which reached out to people that needed banking services. The consumer groups, I think have been the forefront of advocating that we need to include people.

Let me just close by saying something, and this is very fundamental. But I think that as Americans, we need to be committed to the dream of America. And if you look at our Constitution, you might think, if you just looked at it, that when the Constitution started, that everybody participated. But you'd be very wrong if you thought that. It was only a small segment. And then we had Amendments to the Constitution, which said that no matter what race, what gender, what national origin, they participated.

But the biggest change since I've been in Congress is the number of women in Congress. You know, I don't know if it was 1917 or 1920, that an amendment gave women the right to vote in the United States. That's less than 100 years ago. And our history, thank goodness, has been saying that everyone is included. Everyone has an opportunity, and everyone has a level playing field. And we've only realized that I think, with the inclusion of women's right to vote, have we actually had a constitutional basis for that.

And even when I got to Congress 10 years ago, the first three new women in Congress were all there because of one thing. I don't know if you all recall what that was their husbands died in office, and they were put in. And it took about 80 years, or 70 years, or 60 years for people at first, women had the right to vote, but they didn't serve. And it took 50 and 60 years before people began to say it doesn't matter what your sex is, that's not the basis. And we still have people that economically are not participating. They have the right to participate.

And I want to commend Chairman Powell. I think that he has recognized that there are different solutions for different people. And one thing we do in America, is we don't use our own opinions to tell people that they can't do something. If something is labeled, we found out during Prohibition that a lot of people felt like you shouldn't drink. Well, we found out that didn't work that you can't make the rules for everybody else. What we can do is we can have legal businesses. We can see that they're regulated, and see that there are controls in place.

I can tell you that in Alabama, there have always been payday lenders in Alabama. They didn't have a store front, and at times they were the sheriff of the county. At times, the probate judge operated the business. There were times when they were standing at the gate on payday, and I could tell you that their methods of collecting debts were a whole lot more severe than your check cashers or your payday lenders today. So I, for one, believe as long as a business is legitimate, as long as it's legal, and as long as people are choosing to use that business, that that's the American system. It's also the American system for us to address abuses.

We're going to have a hearing in a few minutes. It's going to start in about, I guess, an hour on predatory lending and sub prime lending. Now there's a difference. There are a lot of people that can't get a loan to buy a house or to finance a house at a prime rate. That's just a fact, so there is sub prime lending. A lot of people have financed things using sub prime lending. But at the same time, there are a lot of predatory practices. The practices shouldn't go on, we shouldn't tolerate them.

But a lot of people, when I talk to them, they equate all sub prime lending is bad. And that's simply not true. It's an opportunity for some people, but we have to regulate and make sure that the abuses and the predatory lending stop. And I appreciate the invitation here today. Thank you.

REP. HINOJOSA: Good morning. Chairman Powell and Director Zamorski, I want to thank you for inviting me here today to give you my views on how we can tap into the unbanked market, or as I call it "bank the unbanked."

Chairman Powell, I want you to know how much I enjoyed our personal meeting in my office earlier this year to discuss the FDIC's Money Smart financial literacy program. I applaud the FDIC for creating and disseminating in multiple languages such an effective adult financial literacy program. It has been widely disseminated throughout my district and appears to be having a very positive effect.

The Money Smart program is but one of several financial literacy programs available to the general public, and that is the problem. So many financial literacy programs have been created by both the public and private sector that Congress needs to form a Commission to review all of these programs and make formal recommendations as to which program to recommend for all life stages that the states and localities should adopt.

To address this situation, Congresswoman Judy Biggert (R-IL), my colleague here David Scott (D-AL) and I introduced the "CENTS" Act that will create a National Commission on Financial Education and Literacy. The Commission will recommend how to integrate finance education and financial literacy into primary, secondary and postsecondary curricula. It will identify and recommend best practices for the teaching of economics and personal finance. It will also recommend how to better coordinate Federal, State, local and private sector efforts to develop financial literacy.

All three of us are more than willing to consider altering the Commission's charter and to create subdivisions within the Commission to increase the scope of the bill to include economic and financial literacy education to teach individuals how to avoid credit card scams, predatory lenders, and how to move into the mainstream financial services system. We would also consider expanding the scope of the bill to include economic and financial literacy education for all life stages, including K-12, college, young adult, adult and senior citizen.

Once I started researching the various financial literacy programs that have been created and are offered across the United States, I became acutely aware of the amount of time, money and effort the private and public sectors have put into creating their individual financial literacy programs. I commend them for all their efforts. Consequently, I want to ensure that everyone is given the opportunity to provide their opinion and present their programs on this important topic.

The CENTS Act would give these groups the access and input they need into the financial literacy program the Commission will recommend to Congress. For these reasons, I hope that the financial literacy commission that is ultimately adopted by Congress acknowledges the time and effort that the public and private sector have put into creating financial literacy programs in both English and in Spanish, and, in some cases, multiple languages.

Too often access to traditional financial literacy programs is limited by scarce government resources. Consequently, taking advantage of partnerships using community groups and private industry can be a tremendous advantage. For example, in my district in South Texas, and nationwide, at tax time H&R Block provides their clients with free, actionable advice on savings, tax planning, and referrals to government benefit programs like children's health insurance.

In the non-profit sector, local community groups across the country provide targeted education for people about to buy their first home.

Our overall financial literacy strategy should combine coordinated government efforts, like those I am advocating on the Financial Services Committee, with the best of these targeted non-government programs to provide a continuum of education that starts in the schools, but continues into adult life as people's financial needs change.

I come from a family of Mexican immigrants. I am a first generation college graduate, first of seven brothers to graduate, and eighth of eleven children. My father and mother came to the United States when they were children at the turn of the 20th Century, right after the beginning of the Mexican Revolution in 1910.

They came as children. My mother was five, and my father was nine years old. And they settled on the border of Texas, and that's where they grew up one in McAllen, and the other one in Penitas. And my dad grew up learning how to farm, and how to become a young entrepreneur.

They met when my dad was 28, and they married, had eleven children. And they taught us good work ethics. They taught us how to be respectful, they taught us the importance of education, and that if we worked hard, that we could enjoy a better quality of life.

I came to Congress. I was elected in 1996, and I had been the President of a food processing company that processes Whopper Hamburgers for the Burger King Corporation. And it supplies other large companies like Walmart, and HEB, and others. And I came to Congress because I couldn't quite understand in that part of the region that I grew up, why we were so neglected, and why, as a Hispanic, oftentimes I felt that I was not accepted, even though I worked as hard as some of my counterparts, Anglo businessmen with whom I dealt with.

I came to Congress and found that the problem was not just in South Texas, it's all over the United States. So to look into this room of so many people of so many different colors, I'm pleased to be able to talk to you the way I'm talking to you, because banking is something that is very important to the Hispanic community.

I have an area that I represent that is one of the fastest growing regions in the country. It's the third fastest growing region, and it's 88 percent Hispanic. In the classrooms, Region I Education Service Center represents and serves 350,000 children, of which 97 percent are Hispanic. Twenty years ago, I think that number was like 75 percent.

So there's no doubt that the Hispanic community is a very fast growing, dynamic group of people. And why is it that so many are unbanked? Why is it that they don't trust the federal government?

All of this to say that the same thing was happening throughout the area that I represent. And so helping the unbanked is something that is very easy for me, because I know who many of the working persons are who do not bank. They carry a wad of money to go make their payments, and they pay in cash. And they carry a wad of money to be sure that they don't miss paying their rent. Or if they're lucky enough to own a home, that they don't miss the monthly payment.

Just two days ago, I was listening to some of the folks who help us in making microloans through SBA programs or SBA sponsored programs, and it's interesting that in my area, two thirds of the new businesses created in an area that for 35 years was a double digit unemployment rate. I'm not talking about 10 and 11 percent, I'm talking of 21 percent. And why was it so neglected? That's why I ran for Congress, that's why I came here to find out why the federal government had neglected an area like ours, where there's so much potential.

We are the door to Mexico, where my parents were born. We are the front door. We have more trade going with Mexico, that soon we will overpass Canada. We've already passed Japan. We have thousands of 18 wheelers crossing across Laredo, and McAllen, Far, Brownsville, so there is a lot of money exchanging hands. And why is it that we still have so many of my people unbanked?

Well, you could list probably 10 or 15 reasons, and it's people like Bank of America that in Fortune Magazine just a few months ago, I remember reading an article where they have the Hispanic Initiative, because they have gotten smart. And they know that if they could reach and tap into just 25 percent of the unbanked, they could probably be tapping $10 billion a month that is unbanked. And that just like Chairman Powell was saying, that they go and they exchange their check, or they send their remittances back to their families, and don't care that they have to pay the $6 to exchange the check. Or maybe in some cases pay $25 and $50 to send a Western Union remittance to their family, because they don't ask questions. And there is no intimidation, there is no possible way that they're going to be reported because they are here working to try to help the families back home.

These are the most courageous people. I'll bet you that half of you would not leave your home, and leave your support system to go to another country to work, and send back as much of that money as you could to your relatives. These folks that are coming across from different countries, be it Central America, or Mexico, or South America, are, indeed, probably the most hardworking and courageous people to be able to do that.

Look at the U.S. Census of 2000, and try to guess how many were not counted because they didn't want to fill out the application, and they simply did not trust the federal government.

Earlier this year, I introduced legislation to help Mexican nationals access the U.S. Banking System. H.R. 773, the "21st Century Access to Banking Act" would allow Mexican nationals with specialized identification, otherwise known as matricula consulars, issued by Mexican Consulates to gain access to U.S. financial institutions for the purposes of opening accounts.

Opening a bank account is often impossible for Mexican nationals who lack the generally required 2 forms of identification. As a consequence, Mexican nationals are often forced to use expensive check-cashing services to cash payroll checks and wire services to send money to relatives in Mexico. In addition, these same "unbanked" Mexican nationals have had to carry large sums of cash, which has increasingly made them targets of crime.

The matricula consular is a water-sealed photo identification card issued by the Government of Mexico to Mexican nationals who complete an application form in person at any of the 47 consulate offices of the Government of Mexico within the United States. These cards are over 130 years old and have been accepted in the United States for quite some time.

And so, by introducing my legislation and by promoting financial literacy, I want to help all working families, especially the low income working persons. I know how to reach them. I know how to earn their trust, and I know how to help them become bank customers. And so would you, if you just spend a little bit of time listening to those of us who represent women and minorities in areas that are like the regions that I represent.

Again, thank you for inviting me to appear here today.

REP SCOTT: Thank you very much. It is, indeed, a pleasure for me to be here in this very prestigious room, National Press Club. I wish my grandmother from back on the farm in Anyor, South Carolina could see me now. But it is, indeed, an honor to be here, and on this most worthy of issues.

You know the great Prophet Isaiah said once that, "A people without vision will surely perish." And I hope that with this symposium, that we in this room unite with a vision. And that is a vision of America that is a financially literate America. We need that. We don't have that now. And on the bleached bones of many, many great civilizations, are written those prophetic words, "Too late." We could be too late.

This country is changing rapidly. This country is changing very rapidly from being an overwhelmingly majority white country, to becoming gradually a very balanced white black Asian Hispanic country. I daresay that your two most rapidly growing groups are Hispanic and African Americans. So when I make that statement about on the bleached bones of many civilizations, there is those prophetic words of "Too Late", it could be.

We were very fortunate as a country to have a great many very bright people come together at a particular time between 1776 and 1783, and we called them our Founding Fathers. Two of those Founding Fathers, Thomas Jefferson and Alexander Hamilton, had some of the most monumental intellectual debates, and many people referred to them as intellectual shouting matches.

I think because of that energy, we are where we are today free democracy, and a free enterprise system. One of the great arguments that happened between Hamilton and Jefferson was, this urgency with Hamilton to have a centralized financial system for this country not 13 or 14 different individual states, different individual currencies, different other things.

And in exasperation one time, Hamilton said, "We will never survive as an illiterate backward country when it comes to the function and the commerce of our money." And we're still grasping that. And I think that I would like for that to sort of set the tone for what I have to say today, because I find myself in a very unique position.

As a member of Congress, as a member of the Financial Service Committee, who also has an MBA from the Wharton School of Finance, I have learned and I believe that there are three essential steps that Americans can take to gain access to the financial mainstream.

First, fundamental financial literacy. Without that, without knowing about money, handling money, how can we even move to the next step. Financial literacy is the first important step. It is important in order to increase basic saving rates, and improve access to good credit.

The second step is access to homeownership. That is the centerpiece, which is often itself based on good credit. And third, investing money to build wealth, and also for retirement security.

About half of a typical family's wealth is in home equity, yet many communities are clearly missing out on one of the basic assets of wealth building. And my distinguished colleague, Congressman Hinojosa, very well articulated the point in terms of the Hispanic community, and the African American community.

From 1998 to 2002, African American homeownership rates rose only from 45.6 percent to 47.3 percent, compared with the average for whites, which increased from 72.6 percent to 74.5 percent. And the Hispanics were lower than that. And as a matter of fact, in this last year alone, the homeownership rate of African Americans has actually decreased. So I believe that we must push even harder to help increase minority homeownership rates through programs that provide downpayment assistance, and affordable housing incentives.

And we must also bring home our buyer education directly to communities to help stop predatory lending practices. There's no greater need for us to understand the urgency of financial literacy, and financial education programs than this monster called "predatory lending". This is a targeted effort that's going after our very weakness of not providing financial literacy programs.

There are industries out there, there are groups of people out there who are taking advantage of our inability to understand this vision that I talked about a little earlier for financial literacy, and they're going right to it.

When I served in the Georgia legislature some years back as a State Senator, I served on the Banks and Banking Committee there. We had a very, very significant case of predatory lending from a group called "Fleet Finance." I hope there's nobody from Fleet Finance, and maybe there is but I assume they've been bought up with the merger. But some of you may remember that in Georgia. And Fleet Finance came down into Georgia. We had no financial literacy program, no financial education program. As a matter of fact, we were wide open, and they came in and took advantage of usury laws. And our usury law had a interest rate of 5 percent on the unpaid balance per month, which comes to 60 percent. And they started putting on second home mortgages for 60 percent per year, targeting people, people having second agents, going into African American communities where there were senior, older folks living on fixed incomes. They know them. They knew exactly where to go. And they would go by, and particularly picking rainy weather, and size out whose roof was leaking. Anyway, they would go in and they would cut a deal to fix their leaky roof. And before they knew it, they had their home.

You all know the story there. So I learned early, we put a massive amount of legislation out. We put out legislation that would outlaw balloon payments, high loans values, loan flipping, loan steering, a whole lot of things, but we began to understand two important things. We had to do a balance, because if you move too much, if you move too aggressive, you're going to dry up credit for folks that need that credit very severely.

And secondly, the people that you're trying to help, didn't know in the first place. They wouldn't know balloon payments or loan flipping from the man in the moon. So I began to grasp the need for how can we really go at this? What is the foremost thing? And my mind flipped back to that shouting match between Alexander Hamilton and Thomas Jefferson. We will never make it as long as our people are financially illiterate. So I began developing some ideas on how to approach this as one approach. You have loan flipping, balloon payments, all of these things that we have come to know and identify as predatory lending practice should be abolished. We should make sure. But if we follow the existing laws we have on the books right now, there would be no really predatory lending if everybody, you know.

It's sort of like murder is illegal, but folks are still killing people. Stealing from banks is illegal, but they still steal. So how do you really go at it as a beginning area? And I believe you go at it by using the old adage, that you prepare for the storm before the hurricane is raging. And an ounce of prevention is certainly worth a pound of cure. Education.

And so with that experience and that background, in coming up to Congress and working with folks like Chairman Bachus, and Chairman Oxley, and Chairman Ney and Ranking Member Frank and Kanjorski, and my good friend here, Congressman Hinojosa, I've come to realize that we can put forward a bill that can really make a difference here. And we've come up with a bill, and I'd like to share the parts of this bill with you.

We call this bill "The Prevention of Predatory Lending Through Education Act". It's H.R. 1865. And it would work to prevent predatory lending by building greater awareness of such practices through better coordination and delivery of consumer education counseling.

There are four basic components of this bill. And let me say at the outset, that I don't see this bill as a cure all. There's so much we need to do. This bill, I think, has four components of four specific things that we need to do, and we need to do right away.

One, provide grants to the states. They're the ones on the front lines, to the local levels, and to non profit agencies. They're the ones that are there on the grassroots, on the battlefields, dealing day to day with predatory lending, your AARPS, your community action groups, your NAACPs, all of these folks are out there, senior citizens groups, many of our local banks, and companies, and firms that deal with that. But these would be grants for programs that educate consumers, especially low income borrowers and senior citizens about lending laws, counseling programs for homeowners, and prospective homeowners regarding unscrupulous lending practices, and referral services for homeowners and prospective homeowners. That's the first thing getting some grants, getting some resources down to the grassroots folks so that they can work with developing these education programs, and setting up this counseling.

And then the second thing, which I think is the kernel of this bill create a nationwide toll free number to receive consumer complaints regarding predatory lending, to provide information about unscrupulous lending practices, refer victims to help, to consumer protection agencies or organizations, and create a database of information for consumers. This 1 800 number, I think, as I said, is the cornerstone of this bill, because it is the Help Line. And to get grants down, these grants would also help to market this number.

You have ministers that can say it from the pulpit, that these senior citizens and others who are targeted folks for predatory lending, can say hey, before you sign on the dotted line, just call this number. We put money in this program for billboards, for targeted radio advertisements. When in doubt, call this number. Before you sign on the dotted line, call this number. You're dealing with a targeted group without the literacy. They're not going to come to you and me. They're going to go to those undereducated people who don't understand the language, people that may not have had the education, the lower income, on fixed incomes. That's why they call it predatory lending. It is targeted to these folks. And if we get this 1 800 number and target it to the targeted communities, and put something in the hands of these grassroots communities, then we've got a Help Line out there. And that's why I feel so strongly about the toll free number.

The other two points that it would do, it would coordinate government agencies and non profit organizations that provide education and counseling to consumers who have been victims of predatory lending practices. And fourthly, it would establish a Predatory Lending Advisory Council under the Department of Housing and Urban Development, comprised of community based groups, homeowners, government officials and private industry. And the council will advise the HUD Secretary, and conduct studies on the root causes of default and foreclosure of home loans.

So we set up an ongoing infrastructure in targeted states where this is going on. There's some states that don't have this problem, as other states. We know the states that have this problem are states where you have a lot of minorities, where you have older people on fixed incomes, and I think we can give them this help.

Where are we now? I'm working with Chairman Bob Ney to pass the legislation. I understand I'm a freshman and I'm a Democrat on this Committee, and I know that this bill isn't going to pass because David Scott wants this bill to pass. I'm a freshman. I realize that. I understand that.

So I went to Chairman Ney, and I said, "Chairman Ney, you're working on housing bill." He said, "You're working on this". He said, "David, I like what you're doing." And I said, "Well, look, can we ride along together on this in a good old bipartisan way?" And Ney said, "Yes", and so this bill that I've just outlined for you has been incorporated as a part of Chairman Ney's bill. And in about an hour from now, or less than that, it will be discussed before the Financial Services Committee, and I know you all know a lot of the people on that Committee. We've got something here, I think, that we can at least grab our hands around and move forward on.

Also, I have come to recognize the importance of integrating economics and personal finance in the K 12 curriculum. And Congresswoman Biggert has a good bill. We are going to set up a Commission with her bill and I'm a co sponsor on it, and certainly Chairman Bachus is on, all of us are working to get literacy programs age specific to K 12 to start our children early. Thank you.

It can have an impact on millions of future investors. Remember the vision, remember what Alexander Hamilton said we will not survive if we're not financially literate. Our way of life, our whole free enterprise system, the whole nine yards, is based upon having a financially literate generation to come. By having a good understanding of finances, Americans can help prevent identity theft, protect themselves from being victims of predatory lending.

The House has passed legislation that will allow also any American to receive a free copy of their credit report. I think the free credit report, that's one of the great things we did in the Fair Credit Reporting Act that we passed. This tool will help consumers give their credit a checkup before they apply for the loan.

Understanding finances also helps consumers know how to start saving money for retirement and for education, and that's why I, of course, have joined with Congressman Drier, another of my Republican friends, to introduce H.R. 3294, the Financial Literacy Enhancement Act. This measure directs the Secretary of the Treasury to implement a national public service multimedia campaign to highlight the importance of financial literacy for all Americans.

We need to provide fundamental knowledge for tomorrow's investors that will allow them to make sound investment decisions in a variety of market and economic conditions. And the best way to prevent future economic scandals and predatory lending is to create a smarter group of investors and a more literate country.

On July 10th, I introduced a Financial Literacy Program, as I said, with Congresswoman Judy Biggert, which was successfully amended into H.R. 2179 in Subcommittee. And the Biggert Scott Amendment encourages the creation of a $5 million grant program to be directed through grants to non profit organizations involved with K 12 economics education, using the Security Exchange Commission's $80 million Global Research Analyst Settlement. H.R. 2179 passed out of the Subcommittee by a vote of 28 to 24 with the Biggert Scott language attached. The legislation must now be considered by the Full Financial Services Committee.

And then finally, any effort to reach the unbanked market must balance the need to expand access to credit with the need to protect consumers. And the FDIC has done exactly this in its recent guidance to examiners on payday lending. The agency was able to strike a difficult but appropriate balance in expanding access to small denomination short term credit, while protecting consumers from unscrupulous lending practice.

In summary and in conclusion, we in Congress must continue to help expand financial awareness in consumers from K 12 students, to adults who want to buy a house. And we must raise awareness about predatory lending practices, and explain the importance of credit scores and provide investor protection. And we must work with the financial industry to open the doors to financial security and independence.

In short, this is our vision, and we must reach out and grab this vision, and bring true those haunting words, and answer the warning of Alexander Hamilton. And that is, we must not fail in this vision to have a very literate, financially literate America. Thank you very much.

MS. KENNEDY: Well, you can see why these great minds think alike, and why there is much more bipartisanship on these issues than I think most people read about outside the beltway.

These leaders have a lot of information to share with us, and I'm afraid they've got to get to a hearing on Solutions to Predatory Lending, so just join me again in thanking this distinguished group, and support them.

DR. SMITH: As the Members of Congress leave, we once again thank them not only for what they said today, but we thank them for all they do behind the scenes to make it work.

You'll notice this panel dealt with the thought, the feeling, some of the comments of folks who are in Congress what they felt. The next panel is going to go to a different approach to this issue. The next panel is going to say how in the world do we develop, and what have we developed that are successful roots to resolving these issues not just what's been thought about, but what are we actually doing in banks and with community organizations? What are the issues that have been accomplished?

Let me bring to the podium a person who was the Assistant Secretary of the Treasury at Treasury, who has worked astutely and creatively for consumer protection, and also for making sure we have terrorism insurance for our security. She now is the Dean's Professor for Financial Regulatory Policy at the University of Massachusetts at Amherst. Let me bring to you Sheila Bair as the moderator.

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 d