PUBLIC POLICY

Akaka introduces financial services access bill

U.S. Senator Daniel Akaka introduced the Improving Access to Mainstream Financial Institutions Act of 2008 on July 31. The bill’s cosponsors include Senator Dan Inouye, and Senators Charles Schumer of New York and Joseph Lieberman of Connecticut. Supporters include the National Association of Federal Credit Unions, the Hawaii Credit Union League, the Council for Native Hawaiian Advancement, and the Hawaii Alliance for Community-Based Economic Development.

“About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services,” said Akaka.  “With these federal resources, mainstream institutions will be better able to bank the unbanked.  This bill will also encourage banks and credit unions to provide an affordable alternative to predatory payday loans which typically carry exploitative fees.”

The bill would create two grant programs within the Department of the Treasury:

  • The first authorizes grants intended to help low- and moderate- income individuals establish bank or credit union accounts, providing alternatives to rapid-refund loans and check-cashing services. These accounts provide access to savings and affordable borrowing opportunities. 
  • The second provides a lower cost alternative to payday loans. It encourages mainstream financial institutions to develop affordable loan alternatives that would include financial literacy educational opportunities for consumers who apply for these loans, which would be subject to the National Credit Union Administration’s loan interest rates, currently capped at an annual percentage rate of 18 percent.

“I believe this bill will help many families build savings and improve their credit-risk profiles.  That will lower the cost of payment services, and eliminate a common source of personal stress.  Enabling more people to be a part of our mainstream financial system, whether through a credit union or a bank, will build the right financial foundation for many families,” said Senator Inouye.