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tv   House Hearing on the Impacts of a Cashless Economy  CSPAN  October 18, 2021 9:54am-11:28am EDT

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live video coverage, live streams from the house and senate floor and key congressional hearings and white house events and supreme court oral arguments and our live interactive morning program washington journal where we hear your voices every day. c-span now has your covered. download the app for free today. >> today the atlantic council hosted a discussion on u.s. military power, we're covering it live at 2 p.m. eastern on c-span2. c-span.org, or our video app, c-span now. >> next, a look at the impact a cashless economy can have on low income and disadvantaged communities. members of the house subcommittee heard from a panel of experts on equal access to banking, fraud protection and the use of cryptocurrency. >> without objection, the chair is authorized to declare a
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recess of the subcommittee at any time. without objection, members of the full committee, not on the subcommittee, are authorized to participate in today's hearing. as a reminder, i ask all members to keep themselves muted when they're not being recognized to minimize the disturbance while members are asking questions of our witnesses. the staff have been instructed not to mute members except where a member is not being recognized and there is inadvertent background noise. members are reminded that all house rules relating to order and decorum apply to this remote hearing. members of also reminded that they are or may participate in only one remote proceeding at a time. if you're participating today, please keep your camera on and if you choose to attend a different remote proceeding,
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please turn your camera off. if members wish to be recognized during the hearing, please, identify yourself by name to facilitate your recognition. members are reminded that your questioning is limited to five minutes. you should be able to see a timer on your screen that will indicate how much time you have left, and a chime will sound at the end of your time. the title of today's hearing is, cashed out, how a cashless economy impacts disadvantaged communities and people. i now recognize myself for five minutes. make that-- >> this meeting is being recorded. >> four minutes, to give an opening statement. two things--
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few things are fundamental to the sustenance of life than buying a bag of groceries. yet in recent years, the emergence of so-called crashless businesses a trend accelerated by the pandemic, has caused me to ask just how simple that act really is, if a merchant refuses to accept the u.s. dollar as payment. the inability to access food is, but one example of how a cashless economy would adversely impact many, including persons who are unbanked, of low wealth, desperately abled, homeless or otherwise advantaged. as today's expert witnesses will illuminate, cashless commerce hampers equal access to other essential goods, services, and transactions that many of us take for granted.
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unequal access to full economic participation is not the only downside. there are serious privacy and security threats of cashless commerce for virtually all consumers. and very real consequences about which we will learn more today. but against this dispiriting background, there is good news to be found. it's the overwhelming bipartisanship, bipartisan agreement, if you will, by leaders in states, localities, and even here in congress that a totally cashless economy should not become reality. in purple, blue, and red states alike, policy makers agree that the u.s. dollar in its physical form must continue to be accepted as legal tender. and with our witnesses today to the jurisdiction that have
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enacted cashless at the state and local levels. i look forward to hearing from each of them regarding the lessons learned from the frontline experiences that they've shared. and we hope that in so doing, we will get a better understanding of what a cashless economy could do to persons who are not as fortunate as some of us are. in closing, i thank subcommittee member sylvia garcia for her leadership on the payment choice act of 2021. i'm honored to join many of my colleagues on both sides of the aisle as a co-sponsor of the bill and the proposed solution to many of the ills about which we will learn more today. the chair now recognizes the ranking member for an opening statement for five minutes. >> thank you, chairman green,
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and thank you for holding this thoughtful hearing as we consider the implications of a cashless society and how those implications affect certain communities, small businesses, and how they do so in an open and free society. in a world without cash, transactions are mediated by financial institutions. ... stress that cash is a tool used even by ancient civilizations to specifically avoid intermediation and preserve values of individual liberty and privacy. cash is an essential to an cash is essential to an openan and free society. 4.7% of the united states adult population is unbanked meaning they don't have credit, they don't have a credit card or a debit card. a larger population is under bank. the fdic found one of the
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primary reason people are underbanked or unbanked is because they do not trust their institutions. while electronic transactions have exponential increase during the pandemic, americans are also storing physical cash on their cells at a higher rate than in previous years. to say caches cleared an important tool to any open and free society but we are also in a digital age were electronic transactions often just make more sense. with that being said, government should never be in the business of telling people and businesses, large or small, what forms of payment they should accept. sometimes holding cash could put the business and its employees in danger or it can be more expensive. my office has received feedback from small businesses across the country that for the most part prefer not to hold cash and
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would oppose any federal law requiring them to accept cash as a payment. so how do we adapt to the digital economy while maintaining the privacy elements of cash? decentralized technology like crypto curtsy and stable coins can offer the solution. becauseus of these tools run are distributed later technology, they are open, permission was and private. this allows citizens to continue to live in an open society while that society becomes more and more digitized. i implore my colleagues to look to financial technology as a solution. financial technology is a solution to extending financial services to the unbanked and the under bank. it's a solution to adopting to an increasingly digital society while maintaining individual liberty and autonomy. and it'ss also solution that nobleer only offers more affordability to consumers but keeps consumers small business and employees safe. mr. chairman, again i appreciate
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the opportunity to engage in the discussion today and i look forward to our witnesses testimonies. thank you and i yield back the remainder of my time. >> the gentleman yields. the chair now recognizes the vice chair of the subcommittee, the gentlewoman from georgia, for one minute, ms. williams. pr me. i'm a congresswoman has been unbanked and i been the person trying to make it to pay day. i've been the person when you did a couple hundred bucks but couldn't get access to landing. i've been that person was had to rely on cash to get by. too many of my constituents remain unbanked or underbanked and this is an equity issue. in 2019 the fdic reported 13.8% of black individuals were unbanked while only 2.5% of white individuals were. we have to do all that we can to help those most marginalized get access to responsible financial services. we have a lot of work to do on this issue but meanwhile we
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can't take a step backward by cutting off the only option that some people have, cash. today i look forward to discussing how we can preserve financial inclusion as the digital economy expands. our constituents are counting on us to get this right and i'm determined to hold the door open for more people like me to make it from a place of financial hardship to a place like congress. mr. chairman, i yield back. >> the gentlelady yields back. please allow me now to welcome each of our witnesses, and i'm pleased to introduce this panel. we have with us today john breyault who is the vice president of public policy, telecommunications, and fraud at the national consumers league. next we have norma garcia who is a policy counsel and director at the nation economic development agency, san francisco. next we have beverly brown
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ruggia. she is a financial justice program director at new jersey citizen action. next we have representative alex valdez who is a member of the colorado house of representatives. and finally we have todd zywicki who is a professor of law at george mason university antonin scalia school of law, in senior fellow at cato. and i do apologize if i don't get your name correctly when at the next opportunity to pronounce. our witnesses are reminded that your oral testimony would be limited to five minutes. you should be able to see the timer on your screen that will indicate how much time you have left and a chime will go off at the end of your time. i would ask that you be mindful
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of the timer and quickly wrap up your testimony if you hear the chime so we may be respectful of both the witnesses and the committee members time. without objection your written statement will be made a a paf the record. once the witnesses finish their statements, their testimony, each member will have five minutes to ask questions. i do want to remind the members that you should ask a question and receive your answer within this five-minute period, irrespective of the time of others. ask questions and receive answers within the five-minute period to the extent that you can, please. mr. breyault, you are now recognized for five minutes to give your oral presentation of your testimony. >> good afternoon, mr. chairman, mr. ranking member and members of the subcommittee. my name is john breyault and on
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the vice president of public policy, telecommunications, and fraud at the national consumers league. founded in 1899, ncl is nations pioneering consumer advocacy organization. our nonprofit mission is to advocate on behalf of consumers and workers in the united states and abroad. i appreciate the opportunity to provide the subcommittee with ncl perspective on the growing use of peer-to-peer payment apps and the need for stronger consumer protections for fraud and erroneous payments for users of the services. as you have for my fellow witnesses a cashless economy is one with far too many consumers particularly those of low incomes especially those who come from historically marginalized communities are likely to be left behind. to be clear, a cashless economy is one that comes with real costs for these mobile consumers with fewer retail choices, higher prices for everyday goods and services, more surveillance and less access to the banking system. emblematic of the impact of a cashless economy on probable consumers is the explosive
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growth of peer-to-peer or p2p payment apps like paypal, square cash and the banks service. by one estimate roughly four and five or 79% of americans have used mobile payment apps. by 2023 more than $1 trillion will likely be transacted by these platforms. unfortunately the features that make p2p services appealing, low cost them nearly instantaneous payments are made via a mobile app are also key contributors to high fraud rates. in 2020 the ftc received nearly 62,000 complaints from consumers who sent money to fraudsters via payment after similar services of the total reported loss of $87 million. these complaints statistics so because he may be are just the typical iceberg. analysts estimate fraud rates on these platforms are three to four times higher than for traditional payment methods such
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as debit or credit cards. p2p services are aware that scammers use their services to obtain funds from the victims and what p2p services do -- consumer education messaging to try and stop fraudulent transactions there is a business incentive not to introduce too many security roadblocks in the payment process. if these platforms are making the decision to skew their services toward speed and -- they must take responsibility for those businesses. while no financial services is a man from fraud protection for consumers who lose money on p2p apps to scan or even simple errors are sorely lacking. a big reason for this is a loophole in electronic fund transfer act that excludes payments initiated either consumer from the protection for unauthorized charges. this is also known as fraud inducement or victimless -- avoid liability for payment sent
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from consumers to scammers even when such payments are the result of fraud. similarly when he consumers since a payment in error such as by entering the wrong e-mail address into the app the p2p platforms are not obligated to correct the error. instead they simply encouraged the consumer to ask the unintended recipient to voluntarily send the money back. and surprisingly this is no substitute for strong anti-fraud and error resolution protections. the end result of the loophole is that the liability risk for fraud is transferred from the platform and banks to consumers themselves. the only recourse for many victims of fraud or errors committed deities apps is to throw themselves at the mercy of the banks or platforms and begged to be made whole. unfortunately banks lack legal protections it is far to easy for the banks and p2p platforms to simply tell fraud victims that they are out of luck. this state of affairs is acceptable for consumers.
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billion-dollar banks and payment platforms are able to spread the cost of protecting consumers from errors and fraud across the system. by comparison a single-payer or instance of fraud could be devastating to individual consumer. to ensure the p2p app is secure and did not become a powerful tools by fraudsters action is urgently needed. my written testimony includes a number of legislative actions to strengthen protection for consumers using p2p apps. particular i would like to urge congress to pass legislation that expands the definition of unauthorized electronic fund transfer to cover fraudulently induced payments with ultimate liability resting with the institution that received the payment. doing so would do consumers confidence they will be made whole if they are induced to send money to scammers via p2p services that you would also create a strong incentive for all stakeholders in the p2p payment ecosystem to make security make security a priority just as it is in the
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debit and credit card space. chairman green, ranking member emmer, other half of the national consumers league thank you for your work to protect consumers and for holding this hearing. i look forward to answering your questions. >> thank you, mr. breyaul. ms. garcia, you are recognized for five minutes to give an oral presentation of your testimony. >> that you very much, chairman green, members of the committee. my name is norma garcia. i am counsel for mission economic development agency san francisco, california. since 1973 1973 the nationc to the agency has been advancing mission towards great equity for latino and immigrant seeking a better life. we are an latino led nonprofit organization that invest in the life of or under some latino through direct services, community development initiatives and policy advocacy. you've asked me just focus by testimony on a few questions and never get to those now. you've asked a policy recommendation to protect consumers in march was
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communities and i will say that because many of the committee members we serve fall into several categories of vulnerability as outlined in my testimony, written testimony, we do not support the idea of moving to a cashless economy. to do so to perpetuate a growing income inequality by making this hard for people to use cash and don't have access to credit and technically to effectually a cashless payment. we cannot exclude a portion of the population of the economy and it's quite a large portion of the population. that's the good for our communities. asset good for our country and we must remain vigilant in ensuring that our economy is inclusion or an excess of one. i committee is asking the right questions to get asking us to consider the impact on the most vulnerable populations and that's what we call potentially and equity impact analysis. it's kind of a corollary to an environmental impact analysis and we think it's an essential
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piece of any policy proposal that is coming before us for consideration. what is the impact on the most vulnerable communities? we can tell you that in san francisco my organization serves highly vulnerable populations but is not sure equally in the economic boom that is san francisco and silicon valley. in fact, due to growing income inequality san francisco latino community lives in one of the nation's ground zeros for displacement of latinos, community they had called home for generations. we believe equity impact analysis demands once determined a particular policy proposal of a negative adverse impact, we will need to figure out like if this is not working and it's going to adversely impact the most vulnerable we should move on to other ideas. and ideally if there are other mitigating circumstances are being considered to determine if there's a path forward, the
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committee's that are most effective must be at the table. we need to find new ways to coexist with existing practices like electronic payment options in addition to cash payments. it's one way to protect consumers in those communities that are marginalized from having outsize implications. we are doing this in san francisco. we passed an ordinance in 2019 and essentially it's something that can serve as a model and other parts of the country. essentially what talk about preserving cash as a payment option which can coexist with other payment options. we have identified the universe of businesses. we have created parameters throughout any exception. we educating businesses and committee members on the rights and obligations, and we are creating effective mechanisms to monitoring and enforcing this new ordinance. this is super important and we are happy to share this with
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you. effects of the cashless society, i think think other witnesses have clearly said this in very effective ways. we know that those who suffer most in and a cashless sociee immigrant communities, senior citizens, unbanked or i'm housed persons, and others who are -- think one constituency that hasn't been mentioned our young people who may not be able to get a bank account that need to be able to transact in cash. let's see, i think i would like to move on because my time is running out. there's some of the considerations that need to be taken into account, and one that hasn't been mentioned is that non-cash assistance are not always inherently reliable. they require connectivity. power outages occur with regularity here in california. we know that when the power goes out, merchants are not taking electronic payments, cash only is a way to pay.
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mobile wallets, paid by the minute accounts need to be topped off. that means people need to have the resources to keep this going and for low-income communities this may be particularly burdensome. the implications for small businesses particularly minority owned small businesses, i can tell you in san francisco mission district the merchants that serve our community, they are used to dealing in cash because our kindred is used to getting in cash. and so if these merchants know they want to have a successful business they need to meet customers where they are. they may well have intent is to deal in cash themselves as merchants to avoid any costs associate with electronic receipt of payment. they are able to keep prices low and that way. they are not passing those costs onto the consumer if they're not in position would have to eat the costs and celtic some businesses -- >> the gentlelady will have an opportunity to give additional comment. i'm going to have to move on.
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thank you for your testimony. thank you. beverly brown ruggia you are now recognized to give oral presentation of your testimony. >> thank you, chairman green and members of this committee for the opportunity to testify. my name is beverly brown ruggia and i'm the financial justice director for new jersey citizen action, statewide nonprofit organization working since 1984 for social racial and economic justice through adversity, organizing and committee of public programs for the and moderate income new jerseyans. i will be a discrete much of what has been said and it is based on what we are experiencing estate. in 2019, new jersey passed by partisan legislation to protect consumers choice to use gaseous payments for most retail purchases. the legislature acted because the nine cash as a form of payment for goods and services discriminates against people who
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cannot afford or are unable to obtain non-cash payment options. additionally the practice potentially subjects consumers to unnecessary cost, violations of privacy and cybersecurity risks. cashless payment policies discriminate against communities of color and low income customers disproportionally as has been cited the fdic found showed 7.1 million americans are unbanked or live in households where no one has a bank account according to the study almost 50% african-american households and about 13% latino households are unbanked compared with the just two to 3% of white house hopes. another 24 million households million households are underbanked meaning at least one household member has a bank account but does not generally use credit cards or other traditional bank or credit products. indigenous and working age disabled household in households with volatile income are also among the unbanked and underbanked at high rates. a 2018 report demonstrated
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redlining denies millions of low and moderate income people a special black and brown people access to banking services and accounts. even more possible opening a banking account requires documents which many low income and elderly people do not have. people expressing homelessness cannot provide utility bills or other proof of address need to open a bank account. online banking services require as has been said reliable and affordable internet access here which low in fixed income people often cannot afford and people for whom english is not the first language are more likely to be unbanked in english, native english speakers. the main reason cited by 20% of the fdic surveys respondents did not have enough money to maintain a minimum balance required to open and maintain a bank account. cashless policy specifically penalize individuals and households who cannot afford a bank account, credit card at the consumer credit product needed
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to make a cash payment. the alternatives to credit cards such as prepaid cards and mobile devices are costly. a study found in 2018 unbanked and underbanked households spent $180 billion in fees and interest on non-bank financial products. cashless payment policies can also pose practical barriers. one board chair is blind, she cannot use bank cards because the terminals are not accessible in design. lacking braille keypads and appropriate and security for example. in other words, tash was policies exclude the most vulnerable individuals and households among us who are not able or cannot afford to use anything but cash. the second most popular reason cited in the fdic survey of unbanked household was a distrust of the banking system. bank card payments are not as private as cash payments. point-of-sale systems businesses and large companies access to personal and financial information to cashless payments also force customers to expose themselves to potential identity
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theft and other forms of cyber fraud so it should be no surprise that another national study found that cash has been the preferred method for daily transactions among commuters of color whether their bank or unbanked. technology and banking finance must expand financial equity and inclusion by providing choices and options that make personal financial management easier more efficient and safer for all consumers. technology must not -- perpetuate inequities in a financial system that exclude and discriminate. cashless payment policies about to discriminatory retail redlining. instead of a red light around a neighborhood there are dungeons of redlined about individual customers shopping on main street everyday which deny them access to goods and services despite having perfectly sufficient u.s. legal tender to spend. thank you. >> thank you for your testimony. representative valdez, you are now recognized for five minutes
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to give an oral presentation of your testimony. >> good morning, mr. chairman. >> mr. valdez, we are having some technical issues. we'll ask our technician to help with you. >> can you hear me now? my apologies. hopefully my audit is coming through clearly. >> it is. >> okay, thank you, sir. again thank you, mr. chairman. thank you members of the committee. my name is alex valdez, i missed mistake person from colorado house district five which encompasses downtown denver. my district is heavily latina l.
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my district is 40% latino and colors population as a whole is nearly 22% latino. as latino representative that you're of the latino caucus and chair of the lgbtq caucus as well as chair of the energy environment committee i am more than familiar with how minority communities are affected by the policies we make on her everyday life. during colorado's 2021 2021 legislates session i sponsored house bill 1028 titled concerning a requirement that regional astonishment except retail currency for purchases. house bill 211040 record retail intelligence offering goods or services to accept united states currency as a form of payment for in person transactions. retail establishments the delectable and may be fined up to $250 per transaction. throughout the process some exceptions were established. however, certain instances the retail establishment need not comply if the transaction is for security deposit in place on a credit card or if the rico
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statute is a bank or a credit union. this was important for rental cars, et cetera. this came directly from the committee. marginalize committees within house district five and underbanked and underbanked coloradans were struggling to survive as a myth that covid-19 spread on cash. but not on credit or debit cards. spread throughout the state country in the world this war on cash is not a new concept but one we saw growing during the global health pandemic add even more strained to families having to navigate through to mulches time. this attack on cash as long affected and we committees creating inequalities. in 2017, 4.2% coloradans didn't have any sort of bank account and 17.3% 17.3% of colorae underbanked which resulted in many having to use cash or a basis no cities. according to a 2017 fdic report it was estimated 25% of all
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american households are either underbanked or underserved. this is roughly 32 million households without a bank account or access traditional banking systems including debit and credit cards. to deny summary people a full method of purchasing power is wrong especially when a third of low income qualifying individuals and 17% of latinos countrywide use cash for all purchases. cash is still prevalent and important throughout our society. there are large swaths of coloradans who still prefer to use cash. when cracking this bill i spoke with a bright the folks about how this would impact them. some were not able to buy the groceries at a local store and were forced to travel long distances to find establishment that accepted cash. others had undocumented relatives who face yet another barrier we deny cash purchases. on one occasion i attempted to pay with cash after having dinner with a friend and was told by the restaurant they did not accept cash. i was lucky. i had a credit card i could use
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to pay but those who don't are no less deserving having a a l combined groceries or purchasing goods. in situations such as this no person should be made to feel embarrassed, rejected or judged based on the purchasing method. this policy solution to address this crisis is laid out in the sponsored bill. putting it into the ban on cash support on the of society especially people of color, the elderly, undocumented folks and the un-housed. i thought economy continues to navigate recover from the covid-19 pandemic it is critical to ensure every person can fully persistent in our economy. cashless systems prevent this, stifling economic recovery in hindering healthy communities. banning one of the simplest ways to pay, cash, is inequitable. those who don't have a credit or debit card or bank account should not be excluded. indulgence port and a bank have the right to respect in our economy to meet the basic needs. our currency states it is good
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for all debts public and private. it is my hope you will advance legislation making that statement a reality. thank you very much for your time today. i'm excited to answer any questions the committee may have. >> thank you very much, representative. we will now hear from professor zywicki. you have now five minutes to give get your oral presentation of your testimony. >> thank you, chairman green, ranking member emmer and members of the committee. i am todd zywicki, george mason university foundation professor of law at antonin scalia law school come senior fellow at the cato institute, entering the 2020. i serve as the chair of the cfpb task force on consumer financial law which gave me a unique perspective on these issues. a unique perspective on consumer finance and financial protection during a a time of unprecedend challenges and unprecedented acceleration of these trends that we've seen with respect to
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the migration towards electronic payments over the last several years. let me make clear at the outset i am neither in favor of banning cash no mi in favor of requiring cash. i am sensitive to the issues, very sensitive to the issues of financial inclusion and that was the centerpiece of our cfpb task force report, was how to increase financial inclusion so that nobody is left behind and as we see this transition port towards a more cashless society to make sure nobody is left behind here also. but i am also aware of the advantages to consumers, to businesses and the economy from the developments that we have seen and the development suites on this past year. it is been said that six months of time was telescoped into maybe three years of accelerated transition during the past year during the pandemic with respect to electronic payments. but but i think this like manr things dealing with this is
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presumptively left to the market and to voluntary choice of consumers and businesses and less this compelling evidence to the contrary. we saw a similar transition during my own lifetime with the virtual elimination of checks which were a very popular and ubiquitous and maybe the most important payment system for most people during our lifetime we saw phasing out of checks set the because of the cost of checks and the preferred convenience and cost of electronic payments. let's make a couple things clear at the outset which is first i think these trends we've seen during the past year are inevitable. they're going to continue at a think over time are going to continue to see a decline in use of cash and an increase in use of electronic payments. generational changes supporting this. new interest by businesses are supporting this especially because a lot of the cost accepting cash are fixed cost, the legacy businesses have in terms of installing fault
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security systems, cash registers and the like but at the same time we also know a lot of consumers lot of consumers are going to continue to want to use cash. a lot of businesses are going to continue to want to accept cash especially larger legacy businesses who have made these investments. as i think at this point there's a reason to intervene to either compel the use of cash or prohibit it. i think the reason for these trends are clear. there are benefits to businesses which clearly will trickle through to consumers. i detailed these in my testimony but the first is simply to be less expensive. the primary cost of cash in addition to the capital startup costs that image in our labor costs. as labor costs go up cash is very labor intensive and so as labor becomes more expensive and we know we are in an economy right now with labor shortages, that increases relatively cost of handling cash. payments are becoming more faster and more convenient. also just did an obvious observation, cash is less
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hygienic, especially in food establishments and that's why i lot of them, places ban or chose not to take cash, sandwich shops and the like because also benefits to consumers in terms of crime concerns and the like. there's benefits to society in terms of reduce crime and tax evasion, and small business and do interest can probably benefit the most. we should all survey does there benefits to even unbanked consumers, excluded consumers from trying to increase access to electronic payments. cash is not free. we have a lot of check cashes. they charge a lot. their concerns about crime. cash can be inconvenient, can be difficult to obtain cash. they can have trouble, it's difficult to make online purchases and the like. so my view is that rather than popping up cash, it may be better to look at what are the
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factors that excluding consumers and promote greater competition and innovation to open and expand electronic payments to other consumers. i list several in my testimony. i think we should have brought a credit union chartering to serve underserved communities. i think we need more industrial loan company chartering. i think fintech can help solve this problem. i think better competition and portability and bank accounts can do this and i also think i faster payment system that would allow checks to clear faster will help consumers very much as well. thank you for your time and i look forward to answering your questions. >> thank you, professor. it's not on it to recognize the gentleman from california, the chair of the full committee for five minutes for questions. madam chair, you recognize. >> thank you so very much, and i'm certainly appreciate this hearing. this is very important. millions of americans still use cash as primary method of
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payment, including disproportionately commuters of color, on houston versus, the unbanked and on to become elderly persons and immigrants without documentation among others. many businesses such as said compass, restaurants and stores are moving towards going cashless. some committees such as communities with low income or migrant populations, many stores are cash only. use the potential for economic -- where some consumers are economically shut out while making purchases in certain communities, possibly even when the liver work? now let me just segue a bit and say something. i am very much in support of innovation and looking to the future and how we can expedite, how we can use the electronic opportunities that are available to us however, let's talk about what's happening in the real
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world. i just referred to the under bank and unbanked. let me tell you about the millions of people who work every day in different ways, some of whom are still cashing checks, you know, at these check-cashing places. they cost them money but they don't have banking accounts. they are under bank. they are not bank at all. but in addition to that do you know that there is an underground economy where we have so-called handymen? i like to think of it handymen and handy women who are taking care of communities all across this country. they are doing odd jobs. they're painting, taking care of lawns, et cetera, et cetera, and they want cash. they want to be paid in cash and i allow people to do that. we pay them in cash. these are people taking care of the families. these are people who have children. these are people who depend on
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the cash that the make on a daily basis don't have decent quality of life. i do not want to be in a position where we all move so heavily against cash as a form of payment. as a matter of fact of course i have credit cards and, of course, i use the database system in order to pay bills, et cetera, et cetera. but i still resent people who can't get a hotel room if they don't have credit cards and hotels don't take cash. so having said that, mr. breyaul, what do you say about those people that i'm referring to that unbanked or under bank? and how cash systems are the only thing they know and the only thing that use? are we to forget about them? >> chair waters, no, not at all and they couldn't agree more with your statements. the need for cash to be a viable payment method for consumers is
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one that remains with us and will continue to remain with us for many years. unfortunately as you mentioned more and more establishment are choosing to only accept digital payments. that's a real cost in terms of access to the marketplace for low income consumers who are often marginalized community. and as low cost in terms of greater surveillance. when you pay with a digital payment you necessarily have to give your data to the bank, maybe two banks, the merchant, maybe even a payment process and that data is shared with advertisers, others who build often discriminatory profiles on millions of consumers. cash is an anonymous way for millions of consumers to bet d to think they should continue to have that right. >> thank you so very much. and i'm going to yield back so that -- i know you have members have a lot of questions. thank you very much and i get back the balance of my time -- i
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yield back. >> the gentlelady yields. the chair now recognizes the ranking member, mr. emmer, for five minutes of question. >> thank you, chairman green. and again thank you to our witnesses for your time and prospectus today as we examine the implications of a cashless economy. while some cities and some states have enacted laws that require businesses to accept cash, there are also businesses that have experimented with a cashless model. there is no one size fits all of course, and cash is certainly essential to democracy in an open and free society. that said, professor zywicki, i want to dive into the reasons a business might not want to accept cash and i'll ask some questions, i would appreciate as quick response as you can give to each. first, retailers have to pay employees to account for cash in the register and at the back of
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the store. count the drawer nightly, package it up and either higher occur your or send an employee to transport it to a bank. and then they have to pay fees for processing and handling. did i leave anything out, professor? >> i think that pretty much covers all of it. it's very labor-intensive way to do thanks. >> and is also some risk that's associated with handling all that cash. the business can be exposed to that and employees can be exposed to danger in the form of robberies. professor zywicki, are the costs associated with these types of risks? >> absolutely. mr. emmer, there are security costs. there are the cost to hire armored cars, and as you said there's a cost of, there's a risk to employees who work on the front lines who have a lot of cash on hand. >> so professor, is it fair to say that a federal requirement
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to accept cash is effectively a tax in any business that might otherwise prefer to go cashless? >> absolutely, yes. >> businesses the stop accepting cash might boost their bottom line by reducing overhead costs, saving time in creating some operational efficiencies, no doubt. refresh is a wiki, do you agree that for some small business that may be struggling during the ongoing pandemic, those savings might actually be the difference between staying open versus going out of business? >> i think that's exactly right and they think one of the points here is that legacy businesses are already incurred a lot of these costs, surveillance, secret he systems, safes come all the sorts of things. new businesses are completely unnecessary in many cases for a lot of these businesses and so it's just a costs that is a tax imposed on them by, set blocks new entrance of new businesses and so could really make the difference for many of these businesses. >> well, thank you. i appreciate your perspective.
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technology and payment innovation provide more convenience and affordability for the consumer certainly. the privacy implications of a cashless economy, however, cannot be emphasized enough as far as i'm concerned. as we grapple with preserving privacy and transition to a digital economy, i believe we must look to technology solutions in payments that preserve the privacy elements of cash and again i said at the beginning of this hearing and i'll say it again, stable coins and decentralized technology innovations are the first things that come to my mind. these are solutions that are actually open, permission was an private. i thank you again, mr. chair and all the witness for your time. i yield back the remainder of my time. >> the gentleman yield back. the chair now recognizes that chair of the house homeland subcommittee for five minutes,
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mr. cleaver for your questions, please. >> mr. cleaver, you may be muted. i don't see mr. cleaver. with that we will move on to -- >> i'm back. >> okay. mr. cleaver, you are now recognized for five minutes. >> sorry, mr. chairman. i was having some technical problems. let me first of all say i'm not some cro-magnon member of congress, and you know, in 1970 -- i would like to turn back the hands of time. i'm not davis either.
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however, i'm very concerned about a lot of the issues surrounding the whole crypto currency. so let me start by just saying that, you know, i'm concerned about security. we don't have a chance, professor, apparently there's no know how how to trace bitcoin. when we start using this invisible currency and then we still can't figure how trade bitcoin, is that something we should continue to allow in the marketplace in terms of monetary policy? >> is this for me? >> yes, sir. >> yeah, i think that, i think it's a great question and i think the issue that i think is raised by the izzy issue of privacy, and i think one of the things we'll deal with in this area is privacy is a double-edge
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sword. the privacy of cash is a double-edged sword in the sense that we know widespread use of cash facilitates tax evasion, the shadow economy and the like one of the same time it preserve legitimate privacy. that's the same questions that are raised by bitcoin. and i think it's going to be a long time before bitcoin is widely used in crypto currency and that's one of the reasons it's kind of get it with a straight up of the good and bad that's associated with privacy with these payment mechanisms. >> thank you. somebody else they want to chime income some the other witnesses. it's been traced after the exchange, the problem. would any of the other witnesses like to respond to this? >> thank you very much for the question. certainly in a written statement i talked about the lack of regulations on things like
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digital payment apps like zelle venmo. when we talk about cryptocurrencies in terms of consumer protections is basically a wild west. consumers really have no protections in place when, for example, someone hacks their coin base account and steals all of their bitcoins. consumers can we hear stories of this constantly happening so i think it's a space where there needs to much stronger consumer protection regulation, but to the point about the anonymity of crypto currency i would just have to add that an important distinction to make between crypto currency and cash is that cash is backed by the full faith and credit of the united states government. it's heavily regulated by its production and the bureau printing and engraving. cryptocurrencies are only based on the faith of people who create them and who had them in their wallets.
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i hesitate to sort of compare apples to apples. >> let me stay with you on that. creating this cashless economy, and i really try not to hang back in time, but you know, it is chilling to think that somebody, somebody's hard-earned money can be wiped out. wouldn't it be better if -- let me ask you, do you believe that we should perhaps hold up on things like bitcoin and we figure out how can we trace at least the exchanges? because right now people can get wiped out and there's no recourse. they can't even, i don't even think the fbi right now, has the
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technology to figure out where the money went. >> well, congressman, i certainly think greater scrutiny of bitcoin and other cryptocurrencies is needed. i know the and various regulatory bodies and executive branch are currently looking at that. but in terms of whether the spread of these cryptocurrencies can be held up as you put it, i think the cut is out of the bag. i think it's very easy to great new cryptocurrencies by anybody in the united states or abroad, and i think we need to look at regulating them to make sure that they are as safe as possible rather than trying to prevent the use altogether. >> that was going to be my next question. is it time for congress to start thinking about regulations? i mean, we can't just sit and watch this take place without doing doing anything, understand the poorest people in the country are going to be the prime targets for the
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unscrupulous -- >> time has expired. >> thank you, mr. chairman. >> that chair will now recognize -- for five minutes. >> thank you, mr. chairman. thank you to the witness were appearing this afternoon. if i i could i was looking ata study from the federal reserve entitled findings of the consumer payment choice that found in the year 2020, last year, that cash payments decreased by roughly 7%. credit cards share payments increased from 24% in 2019 to 27% last year. that's the percentage of the payments. square which we all know as a digital payment system also found that the number of cashless transactions last year increased significantly. professor zywicki, first to you.
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can you project, if congress did nothing, regulators did nothing, in five years what do you think that make up of payment types will be? roughly what will the percentages be? if that makes any sense. >> yes, it does. i think that these trends are clear. obviously we had an acceleration last year both because a lot of places just started doing remote order, on my order, for example, restaurant that did sort of curbside pickup, that sort of thing. ..
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a lot of people who didn't draw on my thinking have done online banking. a lot of people have done it and there's a huge generational change going on where younger people really some use cash but a lot don't. we can look forward to five or six percent growth per year in these electronic payments and dwindling share of cash as well >> professor, you used an interesting term a moment ago, generational. we talked a lot about urban districts, i have a rural district which is slower to change. can you inject generational and apply it to districts that are more urban or more rural that are slower to change or may not have the resources to change?
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does generational make a difference in those types of areas ? >> absolutely and we've documented this in our cfpb task force. there are things going on with generation which is that jen z are the first generation that does more mobile banking and you have to go all the way back essentially to the baby boomers to find a generation where people do much in person banking . but you're right there are very poor issues involving rural populations that are understudied and we called for our research in the cfpb task force report which is rural populations face unique challenges with respect to access to theinternet, high-speed internet service and that sort of thing . i think it's worth exploring in greater detail what the unique challenges are if you have rural populations to promote financial inclusion and access to electronic payments. >> thank you professor.
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ms. herrera if i could go back and ask you generally thesame question . five years from now if congress doesn't take any action, can you forecast what you think the percentage for the various payment methods would be, digital versus cash ? >> i'm sorry congressman, are you directing that to me? i don't have any reason to dispute mister zywicki's numbers in terms of the trend lines but i would say that the trend lines hold, there will be millions of consumers who depend on cash who will find it harder to continue to do so. there are real societal harms that occurred if that continues without adequate
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safeguards being put in place and i think that congress has a role to play in making sure that the seniors, the immigrants, the low income consumers, the handymen and women's that congresswoman waters talkedabout are not left behind . i would point out that the access to the infrastructure. the banks have been dwindling. between 2014 and 2018 more than 1900 banks were shut down in low income areas that were open and i think that's emblematic of the financial industry's embrace of a cashless economy that unfortunately does tend to harm customers at low income rates. >> my time is expired and i yelled back. >> the chair now recognizes the gentlewoman miss adams from north carolina for five minutes for questions. >> thank you chair green, ranking member emmer and chairwoman waters holding this hearing today.
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thank you to our witnessesfor your testimony . this question is for mister brown. just joining congress in 2014 adjusting food insecurity and hunger has been one of my top priorities. it's heartbreaking for me that 177,000 of my neighbors in north carolina are food insecure and i've seen the worst nationwide over 22 million americans are struggling with food insecurity. so my question is what would a cashless economy in your city or state mean or access to food and growing food deserts? >> thank you for that question. and i think you have highlighted a very important issue. when we're talking about cashless economies and their impact on communities, the idea that one cannot use cash , legal tender to purchase food for them self worth for
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their family is absolutely devastating. and when we're talking about creating greater access, we have to leave open the avenues for people to be able to do that with what they have. and with what if what they have in their pocket is cash that should be the method by which they should be able to access what they need. it's interesting, we're talking about people who want to pay for what theyneed . they're not asking for space and not being able to use your money is a form of economic exclusion and as ms. waters said, its economic discrimination and segregation. >> miss brown i would say that by definition of food desert is where people lack access to healthy food. by definition it means they have limited choices so if you have a community where there are already few store outlets, food outlets and
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then many of those stores or any of those stores moved to cash only, then you are limiting the choices even more and that means you will have less access to healthy food that they need for their families. >> where all too familiar with the downside of a cashless economy as we just discussed but at the same time we know the benefits of getting our neighbors access to banking services. earlier this year our committee discussed what we could do to drive down the under banked rate so based off of your experience, how would you say congress can be most helpful in ensuring that are under banked neighbors access tothose services ? >> go ahead. >> one way they can do this is by looking at alternative models for banking. perhaps others can look at
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public banking as an option. another idea is considering the notion of hopeful banking because the infrastructure is already there and in neighborhoods that don't have banks and it's maybe a way to keep workers potentially working, keep those jobs alive. >> i would say exactly that, the postal banking pilot has taken off and it would be great to see that expanded and made permanent so communities where they don't have banks would have access to at least retail banking and also congress is already considering a number of policies that would help get more people banked. number one all the human infrastructure policies being debated right now would lead to greater financial security which we know is the number one reason people can't get bank accounts . human infrastructure is critical. also expanding and enforcing cra. community reinvestment act
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with all banks that have an obligation to provide access to services in the communities where they do business. finally making sure that we have financial protection policies in place we restore trust in the banking system that we make sure people are not victims of unfair deceptive and abusive practices in banks and nonbanks. we could start with making sure that we have for instance i would say a race for consumer loans. that we don't have these serious practices like ga lending that continue. allthese things can help get more people banks . >> mister chairman i will yield back. >> the gentle lady yields back. the chair recognizes mister kim's of south carolina for five minutes for questions .
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>> thank you mister chairman. i must say i'm a bit perplexed by all of this . we want to help on banked and the under banked become more banked but this proposal once to make it easier to stay under banks by removing an incentive to increase americans trust in the banking system. some of my colleagues want to track everyone's bank account in an attempt to get people to pay more taxes but we also have to make it easier to get , to use cash. i guess the last thing is as a small business owner, some of the biggest challenges we faced were withcash . there was one night, we have one coach, coaching a class and there's a class with people in it and i came by one night and there was like i don't know, $5700 in the cashregister . normally we kept i don't know, 100 two couples pay
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their entire annual membership. so i theoretically if that was going to happen on a regular basis i would have had to hire a person to sit outthere. i would have had to maintain security over it . that was a one-off thing and we made sure it never happened again but businesses make their own decisions. here we are trying to make it easier for people to stay on banked. we're going into this small business owners decisions on how to survive as a small business owner which is extremely challenging by the way. and if you want to attract people's money to get more taxes but we also want to avoid taxes so there's just a lot of things honestly maybe the most shocking thing about all of this is that this is a bipartisan proposal. so i guess i'm just going to start with professor zywicki, help me understand that. >> well, i'm not sure what i
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could say other than i think a policy would be one that eliminates barriers to people getting back accounts who want bank accounts. i think a sensible policy means creating regulatory reform to expand access to bank accounts for those who want it. and i think that we should be aware off these trade-offs that you're talking about with cash involving tax evasion and the risk of crime and the like. and i think this is one of those situations, representative, where one size fits all doesn't seem to fit very well for a lot of businesses, for a lot of consumers. >> i mean, let's just talk about the origins of this issue. i mean, what's the single biggest factor that is led to businesses decide to stop accepting cash payment? >> the pandemic, quite clearly. >> sure and i just find it ironic that the party of government-mandated
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lockdowns that have forced businesses to adapt or die now tell businesses what they can and cannot t accept. i mean, i appreciate that the in-person payments have declined, but i've never been anywhere inn my life that does not accept cash. i guess this could be a challenge in certain areas, and maybe that's a tate issue. maybee the state should start addressing it. the idea of not being able to buy groceries with cash is insane. if that is going on somewhere, we need to take measures to make sure that is not happening because people need to be able to buy groceries. this one-size-fits-all approach is going to create enormous burden on all businesses, not just grocery stores and gas stations. as aio business owner, i preferf cash or, honestly, the ach payment because i don't have to pay the 2 or 3% fee. so i think the free market's working here. the states want to address
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certain areas -- i mean, again, it's absolutely ridiculous somebody would not be able to buy groceries with cash. and we need to take steps to make sure that the basic necessitiess are provided and made available. i just think this is a solution in search of a problem at the federal level, and maybe if we drill down to the state level or maybe make this much more targeted, we could move it the right direction. >> i would agree with you, representative. i've not been able to find any evidence that businesses, the small number who have chosen to do this, i see no evidence that there's ill intent here. it's situations where people have been subject to robbery repeatedly, crime, situations in which they made investments after the pandemic, and it's very expensive to accept cash in new start-ups. i haven't seen any reason to believe -- >> professor, we're out of time. i appreciate it.
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mr. chairman, i yield back, thank you. >> thank you. the gentleman yields back. the chairge now recognizes the gentlewoman from began for five minutes of questions. >> thank you so much, chairman green, for always being so incredibly thoughtful in bringing especially many of my neighbors who are talking about this issue to washington, to congress so that we can remain connected to, again, the struggles and challenges of our families. i represent the 34th congressional district in the country. i mean, it is not free to bank in our country. so the federal reserve has found that 6% of the u.s. adults are unbanked, and another 15% are underbanked. i know one out of four in detroit, an 85% black city, you know, don't have access to a savings account or a checking account. many of these are, you know, unbanked or underbanked
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individuals experiencing economic distress, they're living check by check. their lack of access to banking compounds difficulties they have in accessing housing, credit and other essential services. so we need to understand there are structures in place right now, i think, to support working class individuals, again, majority being my neighbors in that regard. and i understand the struggle of trying to figure out what we're doing here. i think just talking about this issue and figuring out how do we fix it because as a result even though the pandemic has accelerated the trend toward digital the payment a, cash remains the primary payment method for 35 million americans. and that'se 14% of our population. we know that it is expensive to be poor in our country. peeven as financial institutions aoffer so-called low cost bank accounts, rechecking, it is rarely free, y'all, particularly for low income families and individuals who may struggle to maintain a balance, maintaining
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piece like overdraft penalties and so much more. sota how does the shift to cashless economy compound the effects of penalties like overdraft fees, and do you think we have add adequate overdraft protections in place for many of our neighbors, again, low income neighbors that are experiencing this? >> t thank you, congresswoman. i think that a cashless -- certainly in the case of cashless retail where people are required to have o some sort of credit or consumer credit card, definitely widens the field for the kinds of abuses you're talking about, the kind of, you know, hidden fees, overdraft charges. in many cases we have a coaching program, and we have a counseling program, housing counseling program, andli people are struggling to hang their budget and make sure that they are not doing things to make their credit worse. so, you know, to force people to
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move into situations where they're in danger of going into overdraft more often and by subjecting them to the kind of cybersecurity problems, identity theft would exacerbate the problem. >> yeah, no, i can tell, i mean, it can be the littlest things, you know? one day, you know, not being able to get your child to school, having to spend a little bit more on gas, having a flat tire. so many t things, various hedges can really impact -- emergencies can really impact the family, automatically set them back. ms. garcia, what role can creation of a public banking infrastructure play here such as coastal banking? i know you talked about offering debit credit cards, debit -- i'm sorry, debit cards automatically tied to individuals' accounts, you know, play in mitigating the effects of cashless economy and bridging that gap between the banked and the underbanked? >> yes. well, you definitely cited a
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very important element, certainly greater accessibility and creation of banks that are using community input into what the community really needs. that's really important. we these to make sure that whatever structures we create, that those structures are created with community, with community input. and another concept of public banking is that there's an understanding that exclusion is not economically efficient. all right, that's a really important underlying precept about, around public banks, the creation of a public if bank for the peoplee p. access is so important. i think there are so many neighborhoods that have been cut out of banking this part because banks just are not there -- >> no, absolutely. i agree. you know, or i'm also really concerned, mr. chair, and as i think you know, i'm very concerned about that shift
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toward the cashless economy placing more power and data in the hands of unaccountable technology canes. for example, google now has access 70% of the nation's credit and is debt. very scary, y'all. in 2019 amazon integrated with world play, a company that had already processed more than 1.7 trillion in payments annually. these are companies then that sell the biometric payment data that have collected to other third parties with little to no regulation. and, youou know, as corporations leverage their market power to keep consumers within their cosystem, consumers deserve -- >> gentlelady's time has expired. >> thank you, mr. chair. i'm so sorry. >> you may place your comments in the record -- >> thank you, sir. >> the gentlelady's time having expired, chair will now recognize the gentlewoman from texas,ex ms. garcia, for five minutes of questions.
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>> thank you, mr. chairman, and thank you so much for bringing this topic forward. i can tell you that just listening to some of the comments that are being made have, you know, i share mr. timmons' frustration, but for a different reason. because i just don't see why some of the remarks are are being made are being made because it seems to he that people are getting it. there are poor people that are not going to be able to act as the basic -- access the basic necessities of life. even something as simple of just handing the cash to a child to get their meal at the, at the school, you know, being able to pay a cash bond when one of their friends or loved ones may be in jail, being able to even just put the cash in an offer story basket at church, those things cannot be done with
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credit cards. not everybody has a credit card. so,ne to he, this sense of frustration, you know, peaked when someone called this a tax. i mean, let's be, let's put ourselves in the shoes of someone who can't get to a bank, can't get to a credit union, doesn't have an account and may not even have the capacity, the literacy capacity, the language capacity to understand and to be able to manage an account. so, yes, this is about making sure that we have financial inclusion, and our economic banking system needs it. it needs choices. choices for the consumer to make. and, mr. tim hones if, i'm surprised -- timmons, i'm vised you've not been to a place that says no cash taken, you know? i think probably half the vendors at most of the airports that i've been in in the last
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year, drive-throughs -- hi personal rule is if it's less than $20 the, i acin cash. i carry cash to give people cash tipsps because merchants not ony get their tips daily or monthly, sometimes they charge back to the waithe staff, and i don't wt them to do that. so i do my tips in cash to make sure people can put that money in their pocket the same day. and, you know, to put $8 on a credit card just because you went through a drive through to get some chicken? you know, we cannot do that to people.op and i'm fortunate, i've got the credit card. i've got the debit card. i rarely use the debit card. but access to banking the sec found between 2019 -- 13.8% of black households were unbanked, only 2.5% of white households
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were unbanked. the banking industry has made great strides to reach out to our communities, but they still have a long way to go particularly when it comes to financial literacy and access to banking and inclusion this people's own language are. so, has garcia, i wanted to -- ms. garcia, i wanted to ask you a question. we're not cousins, so this is an enobjective question. in your experience, you know, in san francisco it seems a lot of what you talked about also keyses in my district -- exists in my district, 77% latino. primary language is spanish for many people in my community. whatun additional challenges dos the banking system have when it comes to financial literacy and access to information in a language, in your own language? >> thank you very much for your question, and i'm sorry we're not cousins though we do share
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the same last name. there are many challenges for individuals suchal as you've described when it comes to banking. first of all, there are potentially cultural issues that arise with trusting banks. is a bank someplace i can trust or i can put my money. there are people who are used to keeping cash on hand as a heart of security -- as a matter of security and prefer to do that. they also know that banks aren't always the best place for them in terms of seeming welcomed. and it hay be hard for -- it may be hard for people who don't have that experience to understand what it feels like to be an outsider, but this is a very real perception for many members ofof our community. we talk at lot about the future here, but we also need to deal with the present. how do we help people now. leading to greater use of electronic means, how do we help
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people adjust to that? it's not going to be overnight. this is g not where we can just flip the switch and create a cashless economy that everyone can around in. so unless and until we can help people who are the most vulnerabling we need to make sure we make cash as an option as valid legal tender in this country. thank you. >> thank you. mr. chairman, id see my time is expired, but i just wanted to submit for the record a report on credit card fraud. this report highlights that credit card fraud is still the second biggest challenge in our economy and has the highest numbers. i might add that cash trade comes in at about, i think it's number six or number seven. i know there's a concern about security but -- >> the gentlelady's time has expired. >> -- is also a big concern for consumers with regard to fraud. thank you. >> the chair now recognizes has
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williams of georgia for five minutes of questions. >> thank you, mr. chairman. we've hearded today that there are clear racial disparities when it comes to who is unbanked oror underbanked. has garcia, if more of our economy were to go completely cashless, how would this deepen economic disparities for individuals whoo are unable to use digital payment methods? >> thank you very much for your question. i believe that itl would exacerbate an already huge inequity that many people of color, that many people this our communities -- in our communities experience on daily basis. and is we need to move away from that. that's exactly what is happening in society, that there is a human cry that we move towards equity and away from exclusion. and so this proposal that we moveo cashless, we really need to look at it in that light. and i fully understand your
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concerns and congress' concerns in looking at this very carefully from an equity perspective. >> thank you, ms. garcia. i'm determined to min minimize these types of disparities for my con stitch is wents and the younger formerly unbanked of the world. that's why i cosponsored the payment choice act which insures retail businessesnt continue to accept cash for payment. representative valdez, what impact would w passing this legislation have now while numerous businesses still do accept cash to insure financial inclusion while setting a predictable standard for businesses? >> well, thank you, congresswoman williams. this has been -- since we've passed it, we've heard a lot from constituents who have been able to shed light on this issue within their communities at local her chants. if we -- merchants. if we don't a pass this, i believe people will continue to move in the direction of excluding cash for a variety of
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reasons, but most importantly you would see people feel more and more marginalized and and, like i said, embarrassed at being refused the currency they have to spend. so i think what you have is just a widening gap in kind of the feeling of the haves and the have nots of the world. and i think it's something we're likely to see increase as the fallout from covid-19 and some of the financial difficulties that ordinary americans are experiencing as barnishments and those sorts of things start to happen, you'll see more and more folks looking to enter the cash economy. i also think we'll see things move in the other direction as well. >> thank you so much. what recommendations do you have to ease the transition for those whoto are unbanked and underband to maximize their financial inclusion and economic prosperity? >> as i said, the factors that keep people from bank are pretty clear. it's financial security, access and also the trust factor.
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so i think it's really important to make sure that all of the protections are in place so that as the general economy moves towards less of a cash environment, that everybody is protected from potential abuses and unfair practices. we know that in the unbanked -- i'm sorry, the nonbanks environment people are areed already or being abused with high interest rates and other forms of unfair practices. and so it's important that all of the protections and all of the factors are this place to create an environment where we can move towards implementing more technology into the banking and finance environment. as i said before, we need to make sure that people have access to bank accounts. even if it's online, they have to be able to have the internet access. so there's the access is factor,
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making sure that the community reinvestment act is expanded ask enforceded and making sure that all of the agencies have the tools to make sure there are not abusive, unfair and deceptive practices going on in the world of fin-tech and technical financial practices. >> thank you. and, mr. chairman, today we've heard that there are clear racial disparities when it comes to who is unbanked and underbanked. andit we as members of congress have an obligation to make sure that our economy works for everyone. i yield back the balance of my time. >> the gentlelady yields back. the chair now recognizes himself for five minutes. friends, it really costs to be poor in this country. i know poor people. i know people who live under overpasses and, unfortunately,
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there's an overpass just outside my office where people are residing. this is their home. and many are, they're not persons who can open bank accounts because, first of all, it costs to open a bank account itself. and then if you have an overdraft -- and if you're poor, having been poor in my life, i know what it's like to write a check that doesn't have the funds available to cover it. you've got the overdraft fees. and then you've got the cost of a credit card. credit cards, for me, are cost-free or so they say, but for host people in this country -- most people in this country, they pay some fee to have a credit card. but it really costs people to be poor, and it costs something that they can't afford, is the point that i'm trying to make. so i am concerned. so let's talk to mr. sa wiki. sir, are you still there?
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>> yes, sir. >> okay. let's you and i engage in a friendly colloquy. because i appreciate your position. you said you were neither for nor against initially. how do we deal with this if we have some degree of recalcitrance when it come toss opening up the system such that there is equity? there are many who oppose public banking, but at the same time they would have persons have bank accounts. how do we deal with this, in your opinion, having studied this? >> thank you. it's a great question. i appreciate the question. the way i think of this, first, this dichotomy between banked and unbanked is something i don't think reallyn works very welldo anymore. i think there are a lot of people whoa really need accesso payments who don't need the expense and complications of a bank account, and i think there are ways we can facilitate that.
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there's online payment platforms, parts can sort of merge into that -- >> as we do this, let me interrupt from time to time, but i'm going to do so respectfully. many persons don't have the technology to engage these platforms.rm how do you deal with that? >> and that's, obviously, the biggest challenge here, i would agree. i think that one of the things we should be looking at is expanding who can be a bank. for example, i think walmart tried to get a bank, start a wang about ten years ago -- bank about ten years ago, and the incumbent banks kept them from doing it. walmart could go a long way in providingd bank services in rul communities, for example. i think that expanding the payment system to, in general, to not banks might -- would also help people get access to payments -- >> let me interrupt again.
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you mentioned walmart. what about the idea that was brought up earlier of a post office being an institution that engages, allows those to bank? a what are your thought on that? >> i've look at that, and i don't have any strong view one way or the other on the post office, it's just my sense the post office based on the analysis we did in the task report, a post office is a solution to a non-problem. according to the fbi's study, the primary reason why -- very few people say the reason why they don't have access to a bank account is a lack of physical access, which is basically what the post office offers -- >>the i may, isn't that a what you're offering at walmart? it's similar to walmart. why would you think walmart work but a post office won't? >> yeah. so walmart provides a whole suite of banking service, also
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open to -- many more hours than the post office is, for example. >> well, many more hours can be beneficial, but what about the hours that that banks keep now? after 3 or 4:00, they're out. they don't have the window service that they used to have, the drive-through service. >> i agree completely with that, and i think we need more competition in bank. we need better bank account affordability, credit unions being able to do more, we need fin-tech. i think it's time to shake up the banking industry that's gotten too complacent in the way that they serve a lot of lower income consumers. >> thank you for the friendly colloquy. my time has expired. i want to be a good member, a good example for my friends on the committee. my time having expired, friends, i want to thank each of the witnesses for their testimony and for committing the time and
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resources to share their with this subcommittee. your testimony today will help to advance the important work of this subcommittee and us in congress. the chair notice that members may have additional questions for the panel which they may wish to submit in writing. without objection, the hearing record will remain open for five legislative days foror members o submit written questions to the witnesses to place their responses in the record. also, without objection, members will have five legislative days to submit extraneous materials to the chair for inclusion in the record. i remind members to submit written questions and materials for the record to the e-mail address provided to your staff. this hearing is now adjourned. chair is grateful to all who participated. >> colin powell died today from
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complications of covid-19. his life is marked by several firsts. he was the country's first black national security adviser, chairman of the joint chiefs of staff and, later, the first black secretary of state. he was a 35-year army veteran. colin powell died at the age of 84. ♪ >> c-span is your unfiltered view of government. weaver funded by these television companies and more, including comcast. >> you think this is just a community center? no, it's way more than that. >> comcast is partnering with a thousand community centers to create wi-fi-enabled areas to get the tools they need to be ready for anything. >> comcast supports c-span as a public service, giving you a front row seat to democracy. ♪ >> today the atlantic council

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