Treasury Department is Seeking Comment on Financial Inclusion Strategy

Last year’s omnibus appropriations bill required Treasury to develop an inclusion plan

The Biden Administration last month took the first steps toward developing a framework for broadening access to financial services among underserved communities, asking for public comment on ways to develop a financial inclusion strategy.

“Improving inclusion in the financial system is a critical part of fostering financial security, expanding opportunities to build wealth, and closing the racial wealth gap,” the Treasury Department said, in soliciting comments.

The department added, “Financial inclusion can meaningfully enhance consumers' ability to transact and save, as well as enable investments that bolster income and wealth, which can ultimately have positive impacts on the overall economy.”

Last year’s omnibus appropriations bill, H.R. 2617, required the department, working with other regulators, to develop the framework. “The strategy should establish national objectives for financial inclusion; set benchmarks for measuring progress; and offer recommendations for advancing financial inclusion through public policy, government programs, financial products and services, technology, and other tools and infrastructure,” the conference report on the omnibus spending bill stated.

In announcing that the department is asking for public comment, Assistant Secretary for Financial Institutions Graham Steele said the blueprint will be an opportunity for the department to advance a strategic vision and a roadmap for future action.

In soliciting comments, the Treasury Department said that discrimination has resulted in significant disparities in access to financial services, even though the nation has a well-developed financial system.

The department said that while new developments in the provision of financial products could make it easier for the unbanked to gain access to the financial system, some of those services may engage in predatory practices. “Providing financial services to certain households on unfair, deceptive, or abusive terms, or in a way that exposes consumers to inappropriate levels of risk can result in financial harm to consumers and communities and may also undermine trust in financial service providers,” the department noted.

The department is asking for comments on how to define financial inclusion, barriers that may block more people from gaining access to the financial system and solutions to that problem. Comments on those issues are due by Feb. 20.

For many years, credit union trade groups have argued that credit unions could provide more assistance to communities if they were permitted to expand their fields of service to underserved areas. Under current law, only multiple common bond credit unions may expand their fields of membership in that manner.

Legislation designed to allow credit unions to expand their fields of membership has been introduced in Congress in the past, but banking trade groups have opposed it and the measures have died.