2007-07

Making Credit Products and Financial Services Available to Unbanked and Underbanked Hispanic and Financially Undeserved Consumers

Pedro Marin (GA)

WHEREAS, there is substantial population in the United States that does not have access to traditional sources of consumer credit, financial services, or bank checking accounts;

WHEREAS, the majority of financial institutions rely on the scoring system of the Fair Isaac Corporation (FICO) and other credit reporting agencies to determine the creditworthiness of consumers;

WHEREAS, the FDIC considers consumers with FICO scores 660 and below to be “sub- prime” credit consumers;

WHEREAS, there are an estimated 80 million people in the United States with FICO scores of 660 and below;

WHEREAS, there are an estimated 54 million people in the United States that have no credit score or a “thin” credit file;

WHEREAS, individuals that do not have or maintain traditional bank accounts are “unbanked”;

WHEREAS, individuals that do no have access to a full range of financial services are considered “underbanked”;

WHEREAS, “financial services providers” for purposes of this Resolution, consists of federal and state chartered banks, credit unions, and consumer finance companies, whether individually or in partnership with other financial services providers;

WHEREAS, this “unbanked” or “underbanked” group can have difficulty accessing credit and financial products that are generally available to others in the United States;

WHEREAS, more than one-half (51%) of the unbanked and the underbanked population consists of Hispanics and African-Americans;

WHEREAS, the National Hispanic Caucus of State Legislators (NHCSL) understands and recognizes that consumers with low FICO scores represent a higher cost to service due to the associated risk;

WHEREAS, a key objective of NHCSL is to assist underserved financial consumers, particularly Hispanic consumers, in obtaining equal access to consumer credit and financial opportunities that build wealth in our communities;

WHEREAS, it is the purpose of this Resolution to recognize and support the efforts of the financial services providers to make mainstream credit products and financial services available to Hispanic and underserved financial consumers on terms that are fair and equitable; and

WHEREAS, all consumers deserve to know the terms, conditions and costs of obtaining credit;

THEREFORE BE IT RESOLVED BY THE NATIONAL HISPANIC CAUCUS OF STATE LEGISLATORS EXECUTIVE COMMITTEE ASSEMBLED IN MIAMI, FLORIDA, ON THIS 17TH DAY OF NOVEMBER 2007 that NHCSL does hereby recognize, support and promote efforts, and legislation where necessary, to provide mainstream banking services and products that assist consumers who need access to mainstream financial services;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote working with all applicable State and Federal agencies, policymakers and legislative caucuses to maintain a stable regulatory environment for financial services providers to serve underserved and unserved consumers;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, and support and promote financial services providers that provide financial services and credit products to Hispanic and African-American consumers and financially underserved communities on fair and equitable terms;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, and support financial services providers that promote and enhance the availability and accessibility of mainstream financial products and services to the financially undeserved in their communities;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote financial services providers that provide consumer education to the unbanked and underbanked consumer so that they are aware of the various financial services that are available;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote financial services providers that develop relationships with national credit bureaus to accept all credit payment history equitably;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote financial services providers that provide a credit delivery platform that includes risk-based pricing for consumers and incorporates guaranteed graduation to better credit terms and lower prices for underserved consumers who demonstrate creditworthiness;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote financial services providers that provide mainstream banking services for the unbanked and underbanked consumer;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote financial services providers that provide full, accurate and understandable disclosure of agreement terms, conditions and the costs of obtaining credit as provided under applicable federal and state laws;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote a regulatory and legislative framework for financial services providers to provide mainstream banking services and credit products to the unbanked and underbanked that will result in new product innovation, enhanced delivery mechanism, lower prices and better terms which will bridge financially underserved consumers and underprovided communities to financial empowerment;

BE IT FURTHER RESOLVED that NHCSL does hereby recognize, support and promote the need for a regulatory framework that will continue to allow financial services providers to provide mainstream financial services and credit products to the unbanked and underbanked consumer;

BE IT FURTHER RESOLVED, that NHCSL will recognize, support and promote the efforts of financial services providers that join in partnership with NHCSL to educate NHCSL members as to the availability and accessibility of financial services and credit products for the unbanked and underbanked consumer; and

BE IT FURTHER RESOLVED, that NHCSL will recognize, support and promote the efforts of financial services providers that incorporate and implement the objectives detailed in this Resolution to equitably provide mainstream financial services and credit products to the financially undeserved consumer.

This resolution was adopted on November 17, 2007, at the National Hispanic Caucus of State Legislators Executive Committee Annual Meeting held in Miami, Florida.

Assemblyman Felix W. Ortiz, (NY), NHCSL president

Sponsor: State Representative Pedro Marin (GA)