Underbanked Study Commission Set for Final Legislative Approval

State legislation (A4835) to create an “Unbanked and Underbanked Consumers Study Commission” is set for final Assembly approval Monday. The Senate companion (S3206) passed the in the upper chamber (40-0) December 17 last year.

The study commission would consist of nine members. Of the nine members, five will be appointed by the governor upon the recommendation of the following organizations or entities: United Ways in NJ; the NJ Credit Union League; the NJ Bankers Association; the NJ Coalition for Financial Education and the president of Rutgers, The State University of NJ. The additional four members will be the mayors of Camden, Paterson, and Newark or their designee and the commissioner of Banking and Insurance or their designee.

The purpose of the study commission is evaluating the inclusiveness of the banking system in New Jersey and reviewing access to credit enhancement services for unbanked and underbanked New Jerseyans.

The study commission would:

  • Evaluate how to create better access to financial services;
  • Review changes, if any, needed to address predatory banking practices;
  • Examine the availability of banking locations in underserved areas;
  • Evaluate potential business models and regulatory economic incentives that could serve to transition consumers from sub-prime to prime credit;
  • Assess whether lending processes are understandable, fair, and efficient and what would constitute optimum disclosures to consumers so that consumers can understand the products being offered and make reasoned decisions;
  • Analyze the economic impact of requiring wider reporting and creditor consideration of payments for alternative credit-like account;
  • Evaluate the costs, potential benefits, and impact of providing free or reasonably priced financial counseling services through a state agency;
  • Develop strategies to work with financial institutions to offer basic checking accounts and other low interest, no minimum products;
  • Evaluate the Department of Banking and Insurance financial literacy program; and
  • Consult with the academic community, federal and state agencies, and for-profit and non-profit entities for expertise and input on its work.

The bill directs the study commission to issue a final report of its findings, conclusions, and recommendations to the governor and the Legislature no later than one year after the commission organizes. The study commission would expire 30 days after submitting its final report.