Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities. These actions leave marginalized Americans underserved and left behind. Without access to checking and savings accounts or small loans, consumers are vulnerable to a host of financial abuses.
In response, this paper argues for the public provision of household financial services: directly providing households with basic transaction services and customer credit, as well as creating a marketplace that would help regulate sellers and prioritize consumer safety.
Nearly 27 percent of U.S. households are unbanked or underbanked. But these numbers are worse for the most marginalized: Nearly half (49.1 percent) of households whose head does not have a high school degree are unbanked or underbanked; similarly, households whose income is $30,000 or under being financially excluded at a rate of 42.1 percent.
Black households are nearly six times more likely to be unbanked than white households, while Hispanic households are nearly five times more likely to be unbanked.
Even when the analysis is restricted to households with the greatest resources—those who own a home, have a college degree, and have incomes above $75,000—the data still indicates that black households are 2.5 times more likely to be unbanked and underbanked than their white peers.