NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, December 3, 2015

The Obama administration launched a new initiative this week to boost banking access for millions of Americans who don’t currently have checking or savings accounts.

The Treasury Department announced plans to partner with nonprofits and companies such J.P. Morgan Chase & Co., PayPal Holdings Inc., Coca-Cola and the Gates Foundation to reach low-income and other underserved populations in the U.S. and emerging countries through a series of pilot programs, grants, and other initiatives.

“For many, it is hard to imagine how it would be possible manage financial affairs without basic products like a checking account or a credit card,” said Treasury Secretary Jacob Lew at a forum on Tuesday. “But the consequences of exclusion are real, and expanding access to financial services is important at every level of the global economy.”

A growing body of work has found significant volatility in household earnings, particularly in the aftermath of the 2008 financial crisis, highlighting the need for rainy-day savings. The crisis has also highlighted the risks for consumers in paying higher rates and fees for access to nontraditional credit through auto-title or payday loans.