National banks entering certain low- and moderate-income census tracts will not have to pay branching or chartering fees, Comptroller of the Currency Eugene A. Ludwig said Monday.
To escape the fees, which range up to $17,400, a national bank must enter a market not already served by another depository institution, Mr. Ludwig explained.
"I believe there is an important chunk of our society that could benefit from greater interaction with your industry," Mr. Ludwig told 200 bank and thrift executives in Chicago for a conference sponsored by the Consumer Bankers Association. "The OCC should not put barriers in the way of that interaction."
Twelve million U.S. households, or 12.5% of the country's population, do not have deposit accounts with a financial institution, Mr. Ludwig said.
In Chicago, 178 of the 262 low- and moderate-income census tracts are not served by banking offices. (In a low-income census tract, the average household income is less than 80% of the region's median income; moderate- income households earn 80% to 100% of the median income.)
The banking industry must find ways to profitably reach this segment of the population to "fulfill the same role in the 21st century as it has for much of this century - center stage in financial services and the driving force for economic advancement," he said.
Waiving fees for new national bank branches or charters in low- and moderate-income census tracts is "a small step" toward this goal, Mr. Ludwig said.
The comptroller also announced an "educational forum" to help bankers understand the makeup of the 12.5% of American consumers who do not use financial institutions.
Bankers, technology experts, social scientists, and consumer representatives will be invited to the one-day meeting, which will be co- sponsored by the Consumer Bankers. While no date has been set, the Comptroller's Office is aiming for December.
"This is a very good opportunity to see if there's something that can be done in a profitable way to help more people enjoy the benefits of being in the financial mainstream," said the association's president Joe Belew.
"We don't know nearly as much as we should about these people," Mr. Ludwig said. While a sizable number are low-income people, "stereotypes can't help us understand who comprises these 12 million households."
One out of every six "Generation Xers" - people between the ages of 18 and 31 - don't use checking or savings accounts, the comptroller said.
In addition, 11% of businesses with assets of less than $25,000 do not pay their suppliers or employees with bank checks.
The working poor also are likely to make up a significant portion of the "unbanked," Mr. Ludwig said. Sixteen percent of American families earning between $10,000 and $25,000 do not use banks to cash their paychecks.
As an example of what his agency hoped to learn from the forum, Mr. Ludwig pointed out that for many immigrants, a key characteristic of a financial institution may be its ability to reliably transfer money to relatives in their native countries.
"Simple facts like that may provide insights into appropriate product and service design," he said.
"Perhaps the provision of fund transfer services to immigrant populations could prove an effective point of entry into a more robust relationship with a financial institution."
