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America's great unbanked

BIScom Subsection: 
Editorial Staff

It's long been an issue in the USA and it's spreading across the world as dozens of small towns in the UK can testify. Banks, which are not a public service, are closing (or not opening) branches in poor or small communities. The irony, some say, is that those are the very communities that most need physical banks. In the USA, several states are once more tackling the problem.

The Attorneys General of 14 states have written to US President Donald Trump urging him not to allow a relaxation or repeal of federal requirements that banks take active steps to serve low and moderate income communities. In the past, starting in New York, this was seen as an argument centring on race but in the continuing aftermath of the US generated Global Financial Crisis, it's clear that the issue is poor returns on investment and that is not race-related.

The AGs say that the Office of the Comptroller of the Currency is making efforts to weaken supervision of the compliance, by banks, of rules under the Community Reinvestment Act which, a statement says, "encourages banks to help meet credit needs of all segments of the population. "

The letter says that the changes proposed by the OCC
"* Fails to recognize the importance of community benefit agreements, which have led to billions of dollars in local community investment.
* Allows banks to achieve CRA compliance through lending and investments made in non-CRA communities.
* Fails to fix the loophole that allows bank affiliates, such as mortgage lenders, to escape CRA examination.

The AGs are from a broad range of states: , California, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Virginia, and the District of Columbia.

As entire areas of the UK become banking wastelands, with no branches and barely any ATMs, there is a need for a similar measure in the UK or for the re-creation of something like the old National Savings Bank operated via post-offices (which are, themselves, becoming increasingly rare and require government intervention to support this public service).