The Community Reinvestment Act has never caught on to the swift and rapid ascension of the prepaid debit card into the personal finances of low-to-moderate income households.
The Community Reinvestment Act should encourage banks to serve low-to-moderate income consumers. It is
generally silent on how that should be done, save for outline three areas for those activities: services, investments, and lending.
Historically, the CRA has been a robust force that has brought about all kinds of investment in affordable housing, small business lending, and services aimed at helping people get on their financial feet.
Unfortunately, all regulations suffer from the same shortcoming. They are slow to adapt to change. We saw this a few years ago, when regulators were unable to find a basis in the CRA to address the new innovation of subprime lending.
Well, I believe that the prepaid card presents a similar problem. We know that it is a powerful force these days. Dan Henry, the CEO of NetSpend, has been among the most vocal of people in asserting that the prepaid debit card should be viewed not as an alternative to a regular bank account and instead as a better choice than cash. It is hard to argue that a prepaid debit card gives people a better platform for conducting transactions than does cash. Moreover, the prepaid debit card is capable of doing things that are largely lost on the people who construct a traditional checking account.
I was able to make a presentation to the National Community Reinvestment Coalition at their annual conference in Washington, DC last week. Here is my presentation:
This is a Prezi presentation. Unfortunately, there is no audio. However, you can scroll through the various slides and pick up most of the ideas from the text and the accompanying visuals.