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For Immediate Release: June 4, 2004

International Remittance Services Qualify for CRA Credit: Committee Members Welcome Bank Regulators' Agreement on Remittances

WASHINGTON--Several Democratic Members of the House Financial Services Committee today welcomed federal banking regulators' agreement that financial institutions should receive Community Reinvestment Act (CRA) credit for offering international remittance services. CRA requires federal banking agencies to evaluate how regulated institutions meet the credit needs of their entire communities, including low-and moderate-income neighborhoods.

In March, Committee members Reps. Barney Frank (D-MA), the committee's top Democrat, Luis Gutierrez (D-IL), Ruben Hinojosa, (D-TX), and Joe Baca (D-CA), asked the federal banking regulators to determine whether CRA regulations could permit remittance services to be favorably considered during an institution's CRA evaluation. The members expressed concern that despite the rapid growth in the remittances market, remittance customers--most of whom are low- to moderate-income wage earners in immigrant communities--still pay high costs to send money to their home countries.

In a letter dated June 3, 2004, the Federal Reserve Board of Governors (the Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) said institutions would receive favorable consideration during CRA evaluation for providing this service.

Millions of consumers, including foreign-born workers residing in the U.S., send billions of dollars to relatives and friends abroad. According to the Inter-American Development Bank, remittances to Latin America and the Caribbean will reach nearly $40 billion by the end of 2004. Of this $40 billion, approximately $30 billion originates in the United States. According to a joint study of the Inter-American Development Bank and the Pew Hispanic Center, more than 10 million Latin American immigrants send remittances to their home countries on a regular basis. Immigrants in various regions of the world send additional billions in remittances to countries in Asia, Europe, and Africa.

"I appreciate the responsiveness of the federal regulators to our concerns," said Rep. Frank. "I hope that banks will take full advantage of this because an expansion of remittance services through the banking system is important in itself and can also lead individuals to better understand the advantages to them of establishing a banking relationship."

"I am pleased that the regulators have recognized the importance of remittance services in our communities," said Rep. Luis Gutierrez (D-IL), the lead democrat of the Oversight and Investigations Subcommittee. "I believe their actions will encourage additional efforts by financial institutions to provide low-cost remittance services. The people who send remittances work hard, often for very low wages. The less money wasted in transaction costs, the greater the impact these funds can have on the people who depend on this income throughout the world."

"It is good that the regulators see how fitting it is to grant CRA credit to financial institutions that offer remittance services. This action will help break down some of the barriers to bringing more individuals into the mainstream financial system," said Rep. Hinojosa (D-TX).

"I am pleased that the federal banking agencies have affirmed our belief that banks can receive CRA credit for offering remittances services," said Rep. Joe Baca (D-CA). "Regulated financial institutions like banks and credit unions control less than 10 percent of the remittances market. By encouraging them to expand their share of the market, we increase competition in the industry and provide remittances services and access to financial institutions to millions of Americans. It gives people a choice."

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.