When I testified last July at a high-profile hearing on financial inclusion, I urged members of the House Financial Services Committee to liberalize regulations preventing banks, credit, unions, and emerging FinTech firms from serving the underbanked. I also warned against heavy-handed mandates and schemes for government-run or government-subsidized banking, such as postal banking. I testified that Congress “should clear away existing regulation that is either outdated or—in a term my colleagues and I have used to describe red some red tape that was cleared away as a hindrance to combating the pandemic—was never-needed”
Nine months later, I am pleased to say that members of the Committee of both parties are advancing deregulatory legislation that clears away red tape. A prime example is the Committee’s markup tomorrow of the Expanding Financial Access for Underserved Communities Act (H.R. 7003), which lifts regulatory barriers to help credit unions serve rural and underserved areas. As I testified at the hearing when the bill was introduced:
The “Expanding Financial Access for Underserved Communities Act” allows, but does not mandate, credit unions to expand their fields of membership to include a variety of underserved areas. This lifts regulatory barriers to individual credit unions that decide it makes good business sense to add new customers based on their mission of service. And the credit union supervisory agency, the National Credit Union Administration, will review such plans by credit unions for safety and soundness.
In CEI’s view, deregulation of banks, credit unions, or any financial services business is always superior in advancing financial inclusion to more government programs such as public banking and postal banking. HR 7003 is a targeted free-market approach to addressing the problem of the underbanked.