FDIC Inspector General gives thumbs-up to economic inclusion strategy

The Federal Deposit Insurance Corp. Office of the Inspector General said in a report last week that the agency’s efforts to boost economic inclusion is satisfactory, but highlighted some areas where those efforts could be improved.

Bloomberg News

WASHINGTON — A recent report by the Office of the Inspector General for the Federal Deposit Insurance Corp. found that the regulator’s strategic plan for expanding economic inclusion was satisfactory, but said there is still room for improvement.

The OIG said the FDIC could improve its results by formally enshrining procedures for such plans going forward, performing self-evaluations and incorporating more feedback from banks.

“These actions would help management make the best use of Agency resources, ensure accountability, monitor progress, and make its strategic plan more effective in promoting economic inclusion,” the report noted.

The FDIC’s Division of Depositor and Consumer Protection is the branch of the agency charged with addressing economic inclusion and it focuses on strengthening positive connections between banks and their communities. The FDIC’s OIG report evaluated the DCP’s Economic Inclusion Strategic Plan, which the division published in June 2019.

FDIC’s website notes the 2019 EISP was intended to promote the usage of affordable and sustainable products and services that can help consumers work successfully with banks to meet their financial goals. Overall, the FDIC’s OIG made 14 recommendations the agency could utilize to sharpen their EISPs in the future.

The OIG suggested the FDIC create clear rules and guidelines for making future plans related to economic inclusion. They also recommended the agency start collecting input from banks through surveys or other means which would be used in the FDIC’s future efforts to promote economic inclusion.

The OIG noted the FDIC should develop a consistent framework for assessing and reporting on how well the agency is doing with their economic inclusion goals and objectives. They also said the agency should make sure that the yearly economic inclusion goals they set for themselves match what they’ve planned for in their strategy. The report also noted the FDIC should check if they need to move resources around to meet their economic inclusion goals. The OIG also said the FDIC should evaluate the clarity and efficacy of strategies it uses to reduce risks in its economic inclusion plans.

The FDIC has placed a particular focus on addressing the issue of unbanked and underbanked consumers — the former being individuals without banking services, the latter those who rely on nonbanks for financial services — after its own statistics underscored a dearth in domestic financial inclusion. 

The FDIC’s 2021 National Survey of Unbanked and Underbanked Households revealed that an estimated 4.5% of U.S. households had no checking or savings and 14.1% of households still relied partially on nonbanks for financial services. The report notes the FDIC concurred with all 14 recommendations and proposed corrective actions from the OIG, and the regulator plans to complete all corrective actions by December 30, 2024.

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