The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
f ir / a ffo cj FEDERAL RESERVE BANK OF NEW YORK May 18, 1987 INTERAGENCY POLICY STATEM ENT REGARDING BASIC FINANCIAL SERVICES To All State Member Banks and Bank Holding Companies in the Second Federal Reserve District: Printed below is the text of a joint policy statement issued by the five Federal financial institu tion regulatory agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insur ance Corporation, Federal Home Loan Bank Board, National Credit Union Administration, and Comptroller of the Currency) and the three associations of State supervisors. The statement encour ages efforts by trade associations and individual depository institutions to offer “basic financial services” for low- and moderate-income consumers. Also included is a copy of the letter sent by the Federal Financial Institutions Examination Council to several trade associations last month announcing the adoption of that policy statement. Questions regarding the policy statement may be directed, at this Bank, to our Compliance Examinations Department (Tel. No. 212-720-5921). Additional copies of the policy statement will be furnished upon request directed to the Circulars Division (Tel. No. 212-720-5215 or 5216). E . G e r a l d C o r r ig a n , President. institutions toward the offering of basic financial services that would be accessible to low- and moderate-income consumers. It was prompted by iP@IH!ey Statement @n ©tel© concerns that have been raised about Fto@n?©te(! SeFvtoes the potential impact of financial industry changes on the continued Board of Governors of the availability of basic services. The Federal Reserve System. Federal Deposit Insurance Corporation, Federal Council recommended to the Federal Home Loan Bank Board, National Credit Financial institution regulatory agencies Union Administration, and Office of the that they jointly adopt the policy statement The Council’s State Liaison Comptroller of the Currency. Committee also recommended that the Issuance of a joint policy. policy statement be joined in by the suwimasv: The Federal Financial Conference of State Bank Supervisors, Institutions Examination Council in National Association of State Credit October 1986 approved a policy Union Supervisors, and National statement encouraging efforts of trade Association of State Savings and Loan associations and individual depository Supervisors. The five Federal agencies FEDERAL FINANCIAL iM STnUTlOM i EXAMINATION COUNCIL and the three associations of State supervisors have approved the statement and are joining together in Its issuance. The policy statement identifies in broad terms the basic financial need© that should be considered: A safe place to keep money, a way to get cash, and a way to make third-party payments. The statement also states that any programs offered should be consistent with safe and sound business practices. EFFICTIVE March 3,1987. contact : Ellen Maland, Federal Reserve Board (202) 452-3037; Louise Kotoshirodo, Federal Deposit Insurance Corporation (202) 098-3545; Peggy Spohn, Federal Home Loan Bank Board (202) 377-6974; Michael Riley, National Credit Union PRINTED IN NEW YORK, FROM FED E RA L R E G ISTE R , VOL. 52, NO. 44, pp. 7024-7025 Federal Register / Voi. 52, No. 44 / Friday, March 0, 1987 / Notieea Association (202) 357-1085: and Roland G. Ullrich, Office of the Comptroller of the Currency (202) 287-4205. gymjsBsiKTAOv inform ation : Joint Policy Statement @a lad® Financial S®ms©s The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Horn® Loan Bank Board, National Credit Union Administration, Office of the Comptroller of the Currency, Conference of State Bank Supervisors, National Association of State Credit Union Supervisors, and National Association of State Savings and Loan Supemsors are issuing this Joint policy statement to encourage the efforts of trad® associations and individual depository institutions regarding the offering of “basic financial services." 1 The economic environment in which financial institutions operate has changed over the past few years, due in part to increased competition from outside the traditional depository institution structure, increased cost of funds following deregulation of interest rates, and interest rate volatility. As a consequence, many institutions have had to adopt new strategies to market their services, generate income, manage risk, and reduce costs. Some institutions have begun to explicitly price their products, consolidate or eliminate services they believe to be unprofitable, and close branch offices. In many instances, institutions have increased service charges, imposed new fees, and raised minimum balance requirements. While such adaptation may be © necessary response to competitive markets, considerable concern has developed about the potential impact of these changes in effectively denying or reducing convenient access of many individual® to the payments system and to safe depositories for small savings. Because credit availability is ©fees ‘ The of fej Cisreesiiey psertfeaf# issued a basking circular on this subject to aM national banks in August 19S5. dependent ©a m account relationship with a financial institution, access 6© credit for low-income or young; consumers may also b® adversely affected. While a significant number of consumers have never had ®deposit account, some research studies reflect declines in account ownership that may b© cause for concern. For example, between 1977 and 1883 the proportion @f families headed by a younger person having checking accounts decreased, as did the number of families from the lowest income group, regardless of age. The proportion of young families having either a savings or a checking account also declined. While the cause of these declines is not always clear, the surveys do suggest that a significant number of individuals or families do not have a deposit relationship of any kind. Legislation dealing with basic financial services has been introduced at both th® federal and state level as a result of th®®© concerns. The industry has also responded. Many financial institutions have independently undertaken t© develop and implement new measures to meet minimum consumer needs. They are offering basic services, such as Sow-cost transaction and savings accounts with low or no minimum balances, accounts for consumers who us® a limited number of checks or drafts, and other accounts on which minimal charges are made for account maintenance. Institutions that have for years offered such services to particular group® of customers are now advertising their availability more widely. Other institutions are exploring and finding ways to maintain a physical presence in low- and moderate-income neighborhoods even while reducing the expense normally associated with full branch facilities. Trade groups too have Joined in these efforts to encourage the offering of such services at affordable prices. The American Bankers Association and Consumer Bankers Association, for example, have called upon their members to address the 2 continuing interest in bask banking services. The member agencies of the Federal Financial Institutions Examination Council and the associations of state supervisors wish t© encourage such efforts by frad© associations aad individual depository Institutions that promote the offering of basic financial services, consistent with safe and sound business practices. While &© specific type of services will, of course, vary because ©f differences aa local needs and in the characteristics of individual institutions, we encourage efforts to meet certain minimum needs of all consumers, in particular. ° The ae©d for a safe and accessible place to k@®p money: 0 The atsed for a way to obtain cash (including, for example, the sashing of government checks); 0 The need for a way to make third party payments. We belisv® that Industry trad® associations have a key role to gky La this effort, and are is a position to encourage a constructive response without the rigidities ©£ legiststioa m regulation. W® realise that some associations have each programs already underway. These programs could usaMly: 1. Encourage members to offer and appropriately publicize low-cost basic financial service® such as those listed above. 2. Survey the current availability of such services among member institutions. 3. Make available to members not providing g«ch ©ervisM material reflecting the successful experiences--of other organizations. March 3.1987. Robsft J. LawEvSffig©, Executive Secretary, ^dem J Hmancial Institutions ExamJmsUw CotmsiL [FR Doc. 87-4704 Filed 3-S-S7; 8:45 aea] StLUKJQ ©S®a G230-®<3-£3 Federal Financial Institutions Exam ination Council 1776 G Street, NW, Suite 701 • Washington, DC 20006 We want to bring to your attention the joint action of our agencies and associations in adopting the enclosed policy statement on basic financial sendees* As you knowa concerns have been raised about the potential impact of financial industry changes on the continued access of all individuals to the payments mechanism, a safe depository for small savings9 and a way to get cash* We believe that trade associations have an important role to play in encouraging a constructive response to these concerns8 without the rigidities of legislation or regulation. Trade associations can assist by encouraging the offering of low cost basic financial services9 surveying the current availability of such services„ and providing their members with material reflecting successful basic financial service offerings. We are asking that you join in this effort. Since we would expect the issue of basic financial services to receive continuing interests it would be very useful to know of the actions taken to date* or in response to the policy statements to address the concerns being expressed. If you wish to do so you might provide a report on your efforts by the end of June9 1987 to Robert J. Lawrence# Executive Secretary9 Federal Financial Institutions Examination Councils 1776 G Streets N W 9 Suite 7019 Washir* " — Federal Reserve Board Federal Deposit Insurance Corporation Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, National Credit Union Administration, Office of the Comptroller of the Currency 3
@FedFRASER