The White House's Financial Reform Plan

Overview: The White House’s Financial Reform Plan

16% of African American and other minority households do not have bank accounts, compared with only 4% of non-Hispanic white households. Families without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, where there has been no federal supervisor to enforce fair rules of the road for consumers. [SCF]

African Americans, among other minorities, are more likely to use payday lending services. Based on analysis of the 2007 Survey of Consumer Finances, the Center for American Progress reported that “[t]hirty-eight percent of families who had borrowed a payday loan within the last year were nonwhite while just 22 percent of families who did not take out such a loan were nonwhite.” [Center for American Progress, “Who Borrows from Payday Lenders,” (March 2009)]

Reform Will Benefit African Americans Transparent and Fair Access to Financial Services

Fair markets for African Americans: One pillar of the new consumer financial protection agency’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all families, including African American families. The agency will enforce fair lending laws that protect African Americans from discriminatory lending practices. The agency will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.


For African Americans who want to buy a home: The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford. The new consumer financial protection agency will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The agency will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.

Check Cashing, Payday Lending, and Other Alternative Financial Services

For African American families using alternative financial services: The new consumer financial protection agency will be able to establish, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The agency will be able to combat abusive and predatory practices that harm consumers, helping families avoid hidden fees and keep more money in their pocketbooks.

Bank Accounts

For African Americans without bank accounts: In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). The new consumer financial protection agency will be able to rein in practices that may drive some African Americans away from banks–including by enforcing the rule that will stop banks from enrolling customers in expensive overdraft programs without their consent. [SCF]