Good morning. I am Congressman Jose Serrano from New York, the Chairman of the House Appropriations Financial Services Subcommittee.
This week, I held a hearing about financial services for disadvantaged communities. As the Congressman who represents the South Bronx, the poorest Congressional district in the nation, and as a former bank employee myself, I have always been deeply interested in increasing the availability of low-cost financial services in underprivileged communities.
Economic disparity is a serious problem in our county. According to a recent study, the median net worth of Latino households is 91 percent less than their White counterparts. In a nation founded on the ideals of equality of opportunity, this reality is unacceptable.
Having access to banking or credit union services is extremely important for working families. It provides a secure place to deposit paychecks and it makes it easier to build up the funds needed to take steps up toward a better economic future.
Far too many families in communities all across America do not have access to basic bank accounts, and instead rely far too often on expensive check cashing services and high-interest loans. In New York alone, tax preparation companies collected more than $300 million in fees and interest from New Yorkers between 2002 and 2005, according to a recent study.
The vast majority of these funds came from low-income neighborhoods in my district in the South Bronx and the rest of New York. Communities like ours - minority communities, are often aggressively victimized by unscrupulous financial businesses. These scammers operate check cashing businesses, "easy credit" companies including predatory pay-day lenders, and companies offering rapid tax refunds, which are refund anticipation loans with excessively high interest rates. For many, the danger of being caught in a debt trap is a constant danger. This is unacceptable.
Latinos are particularly affected by these issues, and more. Those who send remittances generally end up using high-cost wire transfer services, rather than lower-cost mainstream financial alternatives. Additionally, because some financial institutions do not offer enough information or services in Spanish, we sometimes cannot take advantage of their cheaper alternatives.
Part of my mission as a member of Congress is to create public policy that improves the ability of low income families move up the economic ladder. Democrats have been in power in Congress for only eight weeks now. We have a lot of work to do. But by conducting hearings and bringing immediate attention to the urgent need of improved access to financial services for our families, we can start to understand the problem and find solutions.
Democrats are exploring how both government and the private and nonprofit sectors can improve the availability of low-cost financial services in disadvantaged communities. In our hearing, we found that by supporting the efforts of low-income credit unions, community development institutions, and financial education, basic financial services can be provided at a low cost to families and as a result, increased financial activity stimulates economic development in our communities.
But the first step is for families to be aware that mainstream financial institutions are the safest and cheapest place to do their financial business, whether it be saving your money or sending remittances.
We all have a role to play in achieving these goals.
This is Congressman Jose Serrano from New York. Thank you for listening.