CURRENCY Committee on Banking and Financial Services
James A. Leach, Chairman
For Immediate Release:	Contact: David Runkel or
Tuesday, June 27, 2000	Brookly McLaughlin (202) 226-0471

The Committee meets today to hear testimony on H.R. 4490, the First Accounts proposal which Ranking Member John LaFalce and I have introduced and which would authorize a $30 million program advanced by the Administration in its budget submission to the Congress.

The goal of this legislation is laudable: to extend traditional banking services to those Americans who, for various reasons, do not now have checking or savings accounts or any other relationship with a bank, a savings and loan, a credit union or other financial services firm, and rely upon usually higher-cost alternatives to cash checks or make payments and higher-risk methods of savings.

In the past decade, we have seen the number of people not using financial institutions decline by nearly 50 percent, but still, the Federal Reserve Board found in a 1998 survey, that 9.5 percent of Americans are without a transaction account. While almost three out of ten of these persons said they don’t write enough checks to warrant opening an account, another fifth of the responders said they don’t like dealing with banks.

In this regard, the legislation before the Committee requires the Secretary of the Treasury to establish programs to (1) educate low and moderate income people and banks on the availability and use of financial services; (2) encourage development of new products and services to meet the needs of low and moderate income persons; and (3) expand access to financial services for these persons.

Treasury is also given authority to enter into grants, cooperative agreements and contracts -- as well as provide technical and financial assistance -- with depository institutions to expand services.

In addition to hearing more about this proposal, the Committee has asked witnesses to address two collateral issues:

• How this First Accounts proposal will interact with the EFT ’99 plan requiring that all federal payments be made by electronic funds transfers and the low cost electronic bank account system which has been established to assist in carrying out this mandate.
• How Treasury’s program to place Automatic Teller Machines (ATMs) in low and moderate income neighborhoods has progressed.

We will hear from Under Secretary Gensler from Treasury and representatives of the industry, consumer groups and academia. Before we welcome Mr. Gensler back to the Committee for his third appearance in as many weeks, Mr. LaFalce is recognized for a statement.

###########