The Latino Unbanked: A Wise New Investment For America

The Latino Unbanked: A Wise New Investment For America
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I'm eager to participate in this year's meeting of Clinton Global Initiative America and address a topic close to my heart: American Adaptability. Our adaptability and resilience as a nation is one of our greatest strengths and I see that same adaptability in the community I work with every day: the more than 50 million Latinos in the United States. Despite our community's considerable challenges - including lack of access to health care, economic uncertainty, and inadequate education - I am in awe of our ability to persevere.

This was brought home to me last week when the National Council of La Raza released a report on financial inclusion and the Latino community in California. We surveyed more than 1,000 low-income residents of the state. The average salary of these participants was $25,000 and more than a quarter lacked a bank account. Yet even among the "unbanked," the number of people who still find a way to save money is remarkable. More than 60 percent of those without an account put aside money on a consistent basis.

Not having a traditional account spurred these respondents to find nontraditional ways to save. Some put money on a prepaid card they then set aside. Others simply did not cash some of their paper checks to serve as a reserve. Many asked trusted family members and friends to hold money for them. Yet we learned that no matter their method, the vast majority of the "unbanked" pay their bills on time in cash.

Why, then, do people who seem to have the right financial attitude and behavior continue to be among America's "unbanked"? Our survey found several barriers to financial inclusion, including a lack of customer service in languages other than English, unaffordable fees, and requests for multiple identification documents that many of the "unbanked" do not have.

Instead of erecting obstacles, both the public and private sectors should be focusing on integrating the Latino "unbanked" into the mainstream. For banks and other financial institutions, this means improving service and outreach to Latinos, especially in Spanish. It also involves finding ways to help low-income customers today that will benefit both institutions and customers tomorrow as incomes and assets increase over time.

And our policies as a nation should be in the business of investing in these Latino "unbanked," who, by their current actions, demonstrate that they are a good investment. Education, workforce development, and financial literacy efforts are all ways for us to invest in this population in a way that will pay big dividends in the future. And in the short term, we should acknowledge yet another reason for enacting comprehensive immigration reform: the potential increase in productivity. Bringing these folks out of the economic shadows will allow them to contribute to both the economy and society as much as they can.
All of this is vital to our national interest, keeping our country as competitive as possible in a 21st century global economy. Why? Because when it comes to investing in American Adaptability - to borrow a phrase from the financial world - Latinos are a "sure thing."

This post is part of a series produced by The Huffington Post and the Clinton Global Initiative in recognition of the latter's third meeting of CGI America (June 13-14 in Chicago). CGI America convenes business, government, and civil society leaders each year to make commitments promoting domestic economic recovery and the long-term competitiveness of the United States. Since the meeting's launch, CGI America participants have made more than 200 new commitments, with an estimated value of more than $13.4 billion when fully funded and implemented. For more information, click here.

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