Bill Overview
Title: Promoting New and Diverse Depository Institutions Act
Description: This bill requires federal banking agencies to study and report on the challenges faced by entities attempting to become chartered depository institutions and to develop a strategic plan to assist in the application process. The strategic plan must (1) promote the chartering of minority depository institutions and entities that could be certified as community development financial institutions, and (2) describe actions to increase the number of depository institutions located in underserved areas. The bill also decreases, beginning September 30, 2022, the cap on the surplus funds of the Federal Reserve banks. (Amounts exceeding this cap are deposited in the general fund of the Treasury.)
Sponsors: Rep. Auchincloss, Jake [D-MA-4]
Target Audience
Population: People in underserved and minority communities affected by improved access to financial services
Estimated Size: 30000000
- The bill focuses on promoting new and diverse depository institutions, such as minority depository institutions and community development financial institutions.
- The success of the bill could lead to a broader banking infrastructure, which could affect people who are currently underserved by existing financial institutions.
- Underserved areas often include low-income communities and regions with few financial services, so residents of these areas would be directly impacted.
- The operation of new depository institutions in underserved areas could lead to improved access to financial services like loans, savings accounts, and financial education.
- Individuals looking to start or expand depository institutions, particularly those aiming for charters, would be directly impacted.
Reasoning
- The policy is designed to increase the number and diversity of depository institutions, especially in underserved and minority areas. This implies that people in such areas will likely receive new financial services options. As a result, their financial wellbeing could potentially improve due to increased access to loans, savings, and fair banking services.
- The budget constraints suggest that the policy will start with a relatively small impact, expanding gradually over ten years. This means that initial improvements may not be substantial, but they could become more pronounced with time as more institutions are established.
- Those directly attempting to charter new institutions will see a more immediate and direct impact as the policy is crafted to support them specifically. Their wellbeing scores might increase due to the new opportunities the policy provides.
- Not everyone in underserved areas will initially benefit from the policy. Some will remain unaffected in the short term, resulting in 'none' as the impact level for certain individuals.
- Commonness levels are designed to reflect the typicality of interviewed subjects in the target demographic, focusing on diversity in perspectives and levels of impact experienced.
Simulated Interviews
Small business owner (Detroit, MI)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I'm hopeful that the increased competition from new financial institutions will lead to better services for my business.
- Access to easier loans could be crucial for my business expansion.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Community development worker (San Antonio, TX)
Age: 32 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- The policy might help bring more financial education and services to our community.
- If more institutions are chartered here, it could bring jobs and growth.
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 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Retired coal miner (Appalachia, WV)
Age: 60 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- I'm skeptical about whether this policy will reach our remote communities.
- If banks do set up here, it might finally provide a place to save money safely.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Aspiring entrepreneur (Chicago, IL)
Age: 25 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- If this policy helps me get a loan, it's a game-changer.
- Access to better bank services can help launch my startup.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 10 | 6 |
| Year 20 | 9 | 6 |
Banker (New Orleans, LA)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- This policy might be disruptive initially, but it brings opportunity for partnerships.
- Building relationships with new institutions could bring us good business.
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 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Freelance artist (Phoenix, AZ)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- I'm excited about having more banking choices available.
- Improved services could help me manage my finances better.
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 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Farmer (Rural Nebraska)
Age: 65 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- New local banks might offer better deals on farm loans.
- Accessibility improvements would save me time traveling.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Non-profit director (Jacksonville, FL)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This policy aligns with our goals of education and financial empowerment.
- I hope more resources will lead to greater financial literacy among youth.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Startup founder (Portland, OR)
Age: 39 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- This is an exciting opportunity for partnerships.
- We need diverse banks to innovate alongside fintech.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Finance officer (Atlanta, GA)
Age: 30 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- The policy should offer us the backing we need to expand.
- We can potentially reach more people and offer better services.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 10 | 8 |
| Year 20 | 9 | 8 |
Cost Estimates
Year 1: $12000000 (Low: $8000000, High: $15000000)
Year 2: $11000000 (Low: $7000000, High: $14000000)
Year 3: $10000000 (Low: $6000000, High: $13000000)
Year 5: $8000000 (Low: $5000000, High: $10000000)
Year 10: $5000000 (Low: $4000000, High: $7000000)
Year 100: $500000 (Low: $300000, High: $1000000)
Key Considerations
- Support for minority and community depository institutions is critical to achieve financial equality goals.
- Potential resistance from existing financial institutions may arise due to increased competition.
- Federal agencies must ensure efficient management to prevent unnecessary administrative cost overruns.