U.S. Democrats push financial inclusion as 2020 election race heats up
By Pete Schroeder and Anna Irrera
WASHINGTON, March 22 (Reuters) - Boosting access to the U.S.
banking system is emerging as a prominent theme as Democrats tap
discontent over income inequality ahead of the 2020 presidential
Following the 2008 financial crisis, many banks pulled back
from their poorest customers. The shift has had lasting costs
for millions of Americans now struggling to access mainstream
financial services such as checking accounts and credit cards.
Ten years later, Democrats, driven by progressive firebrands
like Senators Bernie Sanders, Elizabeth Warren and
Representative Alexandria Ocasio-Cortez, see financial inclusion
as a draw for voters.
The three Democrats, along with Senator Kirsten Gillibrand,
have advocated for the U.S. Postal Service to provide banking
services. Senator Cory Booker has said he wants to ban overdraft
fees and Senator Kamala Harris has called for a crackdown on
Gillibrand, Booker, Harris, Sanders and Warren are all
running for president.
Humu Issifu, an African-American school worker from Chicago,
said overdraft debt led her to close her checking account.
Issifu, who now has a savings account, said she felt lawmakers
do not care about struggles like hers but they should.
"I think more young students, more people would vote,"
Issifu, 26, said.
Unlike other liberal issues such as affordable housing,
gun-control and taxing the rich, financial inclusion resonates
among two key demographic groups: minorities and the rural
Americans who powered Donald Trump into the White House, experts
"Candidates ... are looking for ways to raise issues that
are inherently about racial justice. They want to make sure they
are mobilizing black and Latino voters," said Maurice BP-Weeks,
co-executive director of Action Center on Race & the Economy.
"But they are also looking for things that are common themes
for people living in rural communities. Financial inclusion is
one of those things that ties together those people."
Nearly 85 million Americans, predominantly from low-income,
rural and minority backgrounds, do not have a bank account or
only have access to basic banking services, according to
Federal Deposit Insurance Corporation data compiled in 2017.
[See graphic https://tmsnrt.rs/2Ogvxwj]
Both "unbanked" and "underbanked" households spend on
average 10 percent of their annual income – as much as the
average household spends on food – to access basic services like
check cashing or credit, according to a 2014 government study.
"It's expensive to be poor," Warren told Reuters in a
statement. "We need a strong Consumer Financial Protection
Bureau that cracks down on payday lenders ... And we need postal
banking so people in every community in America have easy and
convenient access to basic banking products," she added.
Beyond overdraft charges, many Americans cannot afford
minimum balances, annual fees and ATM fees associated with many
bank accounts. The cost of accessing financial services
exacerbates the gap between the rich and the poor, a source of
rising anger among voters which Democrats have seized upon.
"The paradox is that the economy is doing great but there is
a disconnect between households and the economy," said Ida
Rademacher, executive director of nonprofit the Aspen
Institute's Financial Security Program. "A country's financial
system is a key determinant of whether an economy is fair or
A 2018 Pew Research Center poll found 63 percent of U.S.
adults believe the economy is unfairly tilted toward the rich
"Closing the wealth gap and helping underbanked Americans
achieve financial security are top priorities for Senator
Gillibrand," her campaign spokesman said.
Josh Orton, an adviser to Sanders' campaign, said Sanders
had long fought to curb payday lenders and introduce postal
Representatives for Ocasio-Cortez, Booker and Harris did not
respond to requests for comment.
Progressives like Warren and Sanders have pushed financial
inclusion for years but the issue is getting more traction as
progressives gain sway in the Democratic Party, said Mehrsa
Baradaran, professor at the University of Georgia who has
advised several campaigns.
Nationally, the unbanked and underbanked population has
declined since the crisis, driven mainly by wage gains spurred
by economic growth, the FDIC found. That improvement has been
uneven, with the percentage of unbanked in a dozen states
growing between 2013 and 2017, and could reverse if the economy
While rural households are more likely to encounter barriers
accessing financial services, many cities have higher rates of
unbanked than the national average, the data shows.
"I could see our life was getting harder and harder because
I didn't have an account," said Dasan King, 19, a San Francisco
movie-theater worker who spent up to 5 percent of his paychecks
cashing them until he was able to open a bank account.
King said he was angry about the fees but was skeptical
politicians would address the problem.
(Reporting Pete Schroeder in Washington and Anna Irrera in New
York; writing and additional reporting by Michelle Price;
editing by Neal Templin and Bill Trott)
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