NEWS NEWS NEWS
FOR IMMEDIATE RELEASE: December 11th, 2009
MEDIA CONTACT: STEVEN ENGELHARDT (314) 504-4029

Clay Proposes Bridging Bank Institutions to Target Huge Disparities in Financial Services

New Banking Legislation Would Create Pathway Towards Restoring Credit and Financial Stability for Unbanked and Underbanked Consumers

-Washington, D.C.- A stunning new report by the Federal Deposit Insurance Corporation has prompted quick legislative action by Congressman Wm. Lacy Clay (D) Missouri, who is cosponsoring H.R. 3171, The Bridging Bank to Recovery Act of 2009. The legislation will establish a Bridging Bank depository institution to help struggling Americans who have been victimized by subprime financial services.

“We must break the cycle of predatory lending that unfairly targets people of color and wreaks havoc on everyday Americans,” said Mr. Clay. “Bridging Banks will offer a practical solution for individuals in need of banking services, loan assistance, credit counseling, and financial literacy.”

The Congressman cited alarming data in the FDIC report which dramatized the problems across the nation and in his own district in Missouri. According to the FDIC report, thirty-one percent of black St. Louis households are unbanked, compared to 1.1 percent of unbanked whites. Nationwide, the study found that nine million American households are completely unbanked, and an additional 21 million households are underbanked. “It is outrageous that the St. Louis area leads the nation in the highest percentage of unbanked African American residents and also has the largest disparity between unbanked minorities and the general public,” said Mr. Clay. “Until we fully address this gross disparity, minority consumers will be condemned to a life of debt, financial exploitation and little or no access to affordable credit.”

The Bridging Bank depository institution created by H.R. 3171 will serve a dual purpose. First, it will serve as a tool for mortgage loan restructuring, and attend to the foreclosure crisis that currently plagues the urban and rural housing markets. The institution will have the ability to restructure principal loan amounts, based on the homeowner’s ability to pay and on enhanced criteria created specifically for these targeted customers.
This new institution will also provide a full range of financial services and products to consumers lacking the adequate credit to enroll in mainstream banks. The bill includes mandatory financial literacy courses and counseling for consumers who partake in these services, allowing traditionally underserved customers to graduate to mainstream institutions.

“Access to a bank account and financial literacy are central to financial freedom,” said Mr. Clay. “This is exactly the kind of measure that will help St. Louis and the entire nation. I am proud to cosponsor this important legislation.”

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