HOUSE OF REPRESENTATIVES

H.C.R. NO.

16

TWENTY-FIFTH LEGISLATURE, 2009

 

STATE OF HAWAII

 

 

 

 

 

HOUSE CONCURRENT

RESOLUTION

 

 

encouraging state and county action to stimulate individual savings and development of credit and to formulate an inventory of banking services available to low-income persons and those with no credit history in the state.

 

 

 


     WHEREAS, in the United States, forty million households are financially underserved, comprising about twenty-eight million unbanked individuals and almost forty-five million underbanked individuals; and

 

     WHEREAS, the unbanked consist of diverse groups of people who do not have checking or savings accounts and who remain outside the banking mainstream for many reasons; and

 

     WHEREAS, the underbanked consist of people or businesses that have poor access to mainstream financial services such as banks and so rely upon alternative financial services targeted at poor people such as check cashers, loan sharks, and pawnbrokers.  The underbanked are distinct from the unbanked who have no banking facilities at all; and

 

     WHEREAS, thirty-six per cent of unbanked consumers have never opened or maintained a bank account; and

 

     WHEREAS, the unbanked and underbanked populations face various barriers to entry including:

 

     (1)  Lack of understanding about the United States banking system;

 

     (2)  Expectations for having a bank account;

 

     (3)  Past negative banking experience in the United States or in their homeland;

 

     (4)  Lack of appropriate identification or documentation needed to open a bank account;

 

     (5)  Unstable living situation;

 

     (6)  Cultural conflict including bank practices that vary with personal beliefs;

 

     (7)  Cultural bias within financial institutions against the unbanked population;

 

     (8)  Financial institutions' lack of market data and the need for high volumes of unbanked business;

 

     (9)  Difficulty of forming partnerships to facilitate the delivery of banking services to the unbanked population; and

 

    (10)  Regulatory restraints; and

 

     WHEREAS, the most common groups of unbanked people in the United States include:

 

     (1)  Low-income individuals and families;

 

     (2)  The less educated;

 

     (3)  Female-headed households;

 

     (4)  Young adults;

 

     (5)  Families living in rural communities and select urban areas; and

 

     (6)  Immigrants; and

 

     WHEREAS, because the underbanked may move in and out of the banking system over time, this population can consist of educated immigrants, middle-income individuals with bad credit, and even military personnel.  In one survey, of the thirty per cent of the people identified as being unbanked, half had a bank account in the past; and

 

     WHEREAS, it is estimated that African Americans are four times more likely to be unbanked that whites in America, and the unbanked population also includes the "formerly banked" who have negative credit histories that prevent them from opening financial accounts; and

 

     WHEREAS, handling payments through a bank account provides a gateway for households to enter the financial mainstream and become owners of financial assets; and

 

     WHEREAS, those who own bank accounts are more likely to own other assets, including accounts related to savings, credit, and insurance, while those without financial accounts are less likely to own a home and a car; and

 

     WHEREAS, consumers without a relationship with a mainstream financial institution also pay high transaction fees for services, such as check cashing, and pay interest rates to purchase items through rent-to-own companies; and

 

     WHEREAS, in the American economy, banked people have the tools to save, build assets, and become part of what has recently been called the ownership society, which includes those who, through a lifetime of bank account ownership, enhance their ability to manage money and make significant financial decisions regarding education, homeownership, health care, self-employment, and retirement; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2009, the Senate concurring, that the State and the counties are encouraged to take action to stimulate individual savings and development of credit and to formulate an inventory of banking services available to low-income persons and those with no credit history in the State; and

 

     BE IT FURTHER RESOLVED that the State and the counties are encouraged to take steps to accurately identify the unbanked and the underbanked populations in Hawaii; and

 

     BE IT FURTHER RESOLVED that the State and the counties are further encouraged to collaborate with local financial institutions to integrate the unbanked and underbanked populations into the financial mainstream and to encourage local financial institutions to redouble their efforts to recognize and pursue the potentially huge and previously untapped unbanked and underbanked markets; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, the mayors of the counties of Kauai, Maui, Hawaii, and the city and county of Honolulu, and the Commissioner of Financial Institutions who, in turn, is requested to transmit additional copies to all state financial institutions.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title: 

Unbanked; Underbanked; Action to Stimulate Savings