Bill Overview
Title: Federal Reserve Racial and Economic Equity Act
Description: This bill address access to financial services, diversity in various financial institutions and establishments, and other related issues. Access to credit, mortgages, and banking services are expanded, including by prohibiting discrimination with respect to credit transactions on the basis of an applicant's sexual orientation, gender identity, or location based on zip code or census tract; establishing language translation requirements for residential mortgage applications; and providing funding set-asides for minority lending institutions. The bill expands the support of, and access to, minority depository institutions and community development financial institutions and establishes an impact bank designation for small institutions that predominately lend to low-income borrowers. Further, the Federal Reserve Board must carry out its duties in a manner that supports the elimination of racial and ethnic disparities in employment, income, wealth, and access to affordable credit. Additionally, the bill requires financial institutions to report information relating to diversity policies and lending practices. Retail businesses must accept cash as a form of payment for sales in amounts less than $2,000 and are prohibited from charging cash-paying customers a higher price. Finally, the bill commissions various reports and studies, including a report from the Government Accountability Office on public housing for the homeless.
Sponsors: Rep. Waters, Maxine [D-CA-43]
Target Audience
Population: Individual consumers of financial services
Estimated Size: 250000000
- The bill addresses issues related to financial services, particularly targeting racial and economic equity.
- It aims to expand access to credit and banking services by prohibiting discrimination based on sexual orientation, gender identity, or location.
- The bill focuses on enhancing resources and support for minority and low-income communities.
- It aims to benefit low-income individuals by supporting minority depository institutions and community development financial institutions.
- Mandating retail businesses to accept cash payments up to $2,000 without charging extra helps individuals who rely on cash transactions.
- It requires financial institutions to report diversity and lending practices, which indicates a focus on increasing transparency and accountability.
Reasoning
- The population distribution was considered to include both urban and rural areas, with different levels of access to financial services currently.
- The policy budget constrains the scale by focusing on initiatives that do not require extensive infrastructure changes but rather regulatory and financial adjustments.
- The range of perspectives includes those who could benefit significantly from the policy due to current limited access, as well as individuals who may see no significant change.
Simulated Interviews
Small Business Owner (Austin, TX)
Age: 45 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I have experienced discrimination when it comes to accessing credit because my business is in a lower-income area.
- I think this policy could really help my business get the necessary financial backing to expand and serve more customers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Freelance Graphic Designer (New York, NY)
Age: 30 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- I often face hurdles when I try to open bank accounts, and cash is the main way I transact.
- Being able to pay with cash everywhere without extra charges would definitely ease my day-to-day life.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 6 |
| Year 20 | 5 | 6 |
Retired (Chicago, IL)
Age: 65 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I think this policy could be a lifeline because access to affordable credit and bills in cash is tough right now.
- With my limited income, every little transparency and easier access help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Mechanic (Detroit, MI)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I've been trying to get a mortgage for a better home for my family, but my applications keep getting declined for unclear reasons.
- This policy feels like it could finally remove some of the barriers I've been facing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
College Student (Montgomery, AL)
Age: 24 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I often feel discriminated against in financial institutions because of my gender identity.
- Knowing that this policy would enforce non-discrimination gives me a sense of optimism for my financial future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Bank Teller (Portland, OR)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- I think this bill will bring more awareness and equity into financial spaces, which is much needed.
- My work already aligns with these values, so I'd be excited to see it on a larger scale.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Software Engineer (Denver, CO)
Age: 29 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 14/20
Statement of Opinion:
- As someone who uses digital banking, this policy won't change my financial habits.
- I appreciate the effort towards racial equity, but it's not something I directly face.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Nurse (Miami, FL)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- If this policy ensures fair access to financial services, it will relieve some of the stress related to managing finances on a single income.
- Banking transparency could mean better opportunities to secure loans or savings options.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Farmer (Rural Nebraska)
Age: 60 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- Being in a rural area, getting to the bank is a hassle, and credit access is limited.
- Funding support for community banks could be beneficial, but slow internet still limits digital access.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Teacher (Baltimore, MD)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- I'm hoping this policy might include more inclusive financial education strategies.
- More access to resources for retirement and investment planning could benefit many people like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 7 |
Cost Estimates
Year 1: $300000000 (Low: $250000000, High: $350000000)
Year 2: $290000000 (Low: $240000000, High: $340000000)
Year 3: $280000000 (Low: $230000000, High: $330000000)
Year 5: $270000000 (Low: $220000000, High: $320000000)
Year 10: $260000000 (Low: $210000000, High: $310000000)
Year 100: $130000000 (Low: $100000000, High: $150000000)
Key Considerations
- Implementation costs for new regulatory measures and compliance requirements.
- Potential economic benefits from increased financial inclusion and decreased discrimination.
- Need for ongoing monitoring and evaluation of the impact on financial disparities.
- Impact on businesses of requiring cash acceptance up to $2,000, particularly in terms of compliance.
- Budget impact of funding set-asides for minority lending institutions.