As Prepared for Delivery on October 19, 2020
Thank you very much for the introduction. It’s great to be here today, and I extend my welcome and thanks to everyone joining us from around the world.
I’m especially pleased to be here because I’m a longtime believer in the work that Operation HOPE does. Not only in terms of your mission, but also in terms of your effectiveness: I’ve seen firsthand the difference you all are making when it comes to financial literacy education and financial empowerment.
In fact, last year, just a few weeks after I had been sworn in as the chair of the National Credit Union Administration, I attended an event at Destinations Credit Union in Parkville, Maryland. They were opening an “Operation HOPE Inside” office at the credit union, where a financial well-being coach would be housed to lead workshops and counsel individual members on how to build savings; improve their credit scores; and manage debt wisely.
Let me tell you, if we could figure out a way to package the energy, confidence, and optimism I saw at that event, we’d be well on our way to creating a world truly committed to expanding opportunity and shared prosperity.
I point to that example because, based on what we’ve experienced in the last eight months, energy, confidence, and optimism are certainly what we need to confront the challenges we’re facing. I’m speaking from the United States, where this year alone we’ve faced the persistent COVID-19 pandemic; a severe economic contraction; and civil unrest in the form of widespread protests against injustice. For our participants around the world, I know you all have seen similar challenges.
When we look at those challenges, we see they are connected by a common threat: They all have served to heighten our awareness of the inequities that continue to plague our societies, even in a time of relative plenty. And those inequities have had a disproportionate impact on minority and marginalized communities.
Consider the COVID-19 pandemic: According to the CDC, Black and Hispanic Americans face an increased risk of getting sick and dying from COVID-19. That stems, the CDC notes, from a variety of complex, inter-related factors, including health care access, discrimination, educational and housing disparities, and economic opportunity.
Meanwhile, the National Bureau of Economic Research has detailed how the small business sector was hit hard by the events of this year. And minority-owned businesses were especially hurt: the researchers found that between February and April, the number of African-American-owned small businesses fell by 41 percent, and Hispanic-owned businesses fell by 32 percent. We can hope that many of those businesses may ultimately recover, but those initial numbers are just devastating.
Expanding Economic Opportunity: Financial Inclusion for All
Even for those of us who have been working on bringing more attention and investment to overlooked communities, these numbers should be a wake-up call. They should force us to look very hard at what we’re doing, and to redouble our efforts toward expanding economic opportunity more widely.
That’s why, over the last several months, I have been making the case to leaders in the financial services industry that we need to make expanding economic opportunity and financial inclusion for all Americans our top priority.
As someone who has spent his career in the financial services industry, and now as the head of a financial regulatory agency, I’ve long focused on inclusion for underserved communities. That’s because I know how transformative it can be when people gain access to quality, affordable financial services and credit.
That’s why I encourage fresh thinking among my colleagues in the financial services industry about how we can lead the way to fostering greater financial inclusion among minority communities. Making that happen will require a constructive partnership between the financial services industry and community-based organizations like Operation HOPE and your counterparts in the non-profit sector.
We need a comprehensive agenda to address financial inclusion in these communities where it’s needed most. The question is, what would that agenda look like? I believe our financial inclusion agenda should be built upon a foundation of five key pillars:
First, we need to invest in financial literacy and capability training. Just last month, the U.S. Treasury Department published its 2020 U.S. National Strategy for Financial Literacy, which my agency helped to craft. That strategy makes the case for more financial education to help families and workers save and build wealth while avoiding financial traps like predatory lending. Private-sector financial partners should take the lead in expanding financial literacy training in minority communities. However, I’ve encouraged them to collaborate with community and faith-based organizations—Operation HOPE is one example, but there are many others—to make these programs more widely available.
Second, we need to expand access to quality financial services. A 2018 study of “unbanked” Americans by the FDIC reported that about 8.4 million U.S. households — more than 14 million adults — lack a checking or savings account at an insured financial institution. An even larger number, 24.2 million households, have accounts at an insured institution, but still rely on alternative financial services, like payday lenders or check-cashing services, to make ends meet. Minority households are more likely to be among the unbanked, and thus, more likely to be targeted by predatory lenders. I’ve urged financial services leaders to make it a priority to create and market financial products and lending opportunities that will help us to reach these under-served Americans.
Third, we need more support for community institutions and institutions that serve marginalized communities. The credit union industry has made great strides in supporting minority depository institutions, which provide much-needed financial services in underserved communities. But such approaches shouldn’t be limited to credit unions; financial services providers of all kinds should examine ways to invest more in local communities.
Fourth, we need for support for small business. As I noted, the pandemic-driven economic contraction has been hard on small businesses, especially minority-owned enterprises. Financial services providers can help these businesses recover and thrive by providing mentorship, entrepreneurial training, and alternative lending options geared toward helping these small enterprises get access to the capital they need. Again, this is an area where organizations like Operation HOPE and your counterparts can help to make a big difference, by counseling entrepreneurs and helping them during the vulnerable early stages of launching a business.
Fifth and finally, we need to leverage the promise of financial technology, or fintech, as it’s known in the financial industry. Fintech shows great promise for improving efficiency and customer service, especially as the pandemic has driven increasing numbers of banking customers into a digital world. Those same fintech tools, like mobile banking apps and micro-lending solutions, can be used to connect with minority and rural communities and increase access to financial services. These are areas where the financial services industry is already doing a lot of good work, and I encourage them to continue those efforts.
This is just a partial list, and certainly, we could generate additional ideas. In fact, I suspect that some additional ideas could come out of this forum. Most importantly, we should recognize there’s no “silver bullet” to combating inequity. Instead, we need a multifaceted, comprehensive agenda that puts financial inclusion for underserved minority communities at its core – because as I tell everyone who will listen, financial inclusion is truly the civil rights issue of our time.
Focus on Partnerships
As Chairman of the NCUA, I have directed the agency to support the goal of financial inclusion within NCUA and the credit union system. NCUA can report concrete results in this effort. In 2019, NCUA expanded access to safe, small dollar loans following approval of the PALS II rule. NCUA expanded employment opportunities at credit unions for individuals convicted of minor offenses following approval of the Second Chance interpretive rule. In 2020, NCUA provided support to minority depository institutions with a two-day MDI Forum as well as loans and grants through NCUA’s MDI Preservation Program.
However, the current moment demands that NCUA redouble its efforts to ensure all Americans have access to safe, affordable financial products, financial literacy tools as well as opportunities for employment in the credit union system. I am pleased today to announce a new financial inclusion initiative, ACCESS: Advancing Communities through Credit, Education, Stability & Support. This initiative will bring together leaders across NCUA to develop policies and programs in support of financial inclusion within the agency and the credit union system. ACCESS will build on the earlier successes I mentioned and expand to address the financial services and financial literacy needs of underserved and diverse communities, as well as expand opportunities for employment. I look forward to working with you all in this effort.
One reason I’m glad we’re having this discussion through the HOPE Global Forum is because I believe that the most effective leadership for this cause is going to come from the financial sector working in close partnership with civil society organizations.
Government agencies can make a vital contribution in terms of coordinating efforts, helping to set appropriate standards and directing resources where they can make the most difference. That’s certainly what we’ve been doing at the National Credit Union Administration, and what we’ll continue to do.
Organizations like Operation HOPE, faith-based organizations and so many others—can help us make the greatest impact. You all have the on-the-ground knowledge and community roots that we need to make a difference.
And most of all, you all have the energy, confidence, and optimism to make these aspirations into a reality. I’m reminded of the famous quote from Helen Keller: “Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.” Let’s hold tight to our sense of hope, our sense of confidence, and our sense of optimism as we confront our shared challenges.
I began by noting how the events of 2020 have heightened our awareness of the inequities that persist in our society. The challenge for all of us, as the years nears its end, is to think about how we can go beyond awareness and focus on actions – actions that will set us on a positive course toward ending those inequities once and for all. I look forward to working with all of you on that mission. Thank you.