California Assembly Banking and Finance Committee

Making Markets an Asset for Lower Income, Working Families

Chairman Lieu, Vice Chairman Gaines, and other members of the committee, thank you for inviting me to talk with you today about this important opportunity to build wealth among California's lower income working families by expanding access to banking services. Building a relationship with a bank is one of the first crucial steps that families must take to have any meaningful chance to get ahead in today's economy, and I applaud the committee for striving to expand access to that opportunity. If you are successful, I am confident that you will be rewarded with more upwardly mobile working families, a growing California economy, and a more vibrant, robust banking industry.

In this testimony, I want to discuss relevant findings from a research project that I have been directing at the Brookings Institution over the past several years. I will make three major points:

  • Large shares of California's lower income families lack access to normally priced financial services, particularly among the nearly 1 million families that live below the poverty line in the state.
  • The lack of access to normally priced financial services erodes the ability of lower income, working families in the state to save for and invest in their future economic mobility, and may also erode the potential for economic development in lower income markets.
  • California policymakers can expand access to normally priced financial services by addressing the numerous market problems that curb access, including misplaced demand for financial services among working families and the lack of normal priced financial services in lower income markets.