An issue that received short shrift during the 2016 election was the urgent need to give all Americans access to the banking system — the system that we all pitched in to rescue after the economic bust of 2008.

Twenty-seven percent of U.S. households, or about one in four, do not have access to the full range of banking services. Meanwhile, 7 percent of Americans are considered "unbanked," meaning they don't have access to an insured bank account or to any banking services. And roughly 20 percent of American households are considered "underbanked": They have a bank account, but they do not use the banking system to meet transaction or credit needs.


In late October, the Federal Deposit Insurance Corp. released its biennial survey of unbanked and underbanked households. The survey, which looked at 2015, measures the inclusiveness of the banking system by determining the number of people with insured bank accounts over the previous 12 months.

Even with the FDIC's ever-expanding economic inclusion agenda, "fringe bank" customers are not making use of traditional banks. The financially excluded use high-fee money orders, check-cashing services, international remittances, payday loans, refund-anticipation loans, rent-to-own services, pawn-shop loans or auto-title loans instead of formal banking services.

Moreover, the most recent survey confirms that, as in the past, access to formal financial services is skewed toward whites and the well-educated, while the use of informal financial services is skewed toward minorities and the less-educated. Clearly, achieving financial inclusion in this country requires more aggressive oversight and new approaches.

But there's something that all Americans need to understand about financial inclusion: It is intertwined with monetary policy. Fringe banking's negative micro- and macroeconomic repercussions affect economic growth and stability for everyone. An inclusive economy creates equal economic opportunity and, subsequently, economic growth.

The economy surges when consumers have access to jobs and steady income, as well as access to the financial products and services they need. Participating in the economy has a positive impact on the economic lives of those with lower incomes because it allows them, over time, to improve their economic capability.

But economic stability also means consumers are able to withstand financial uncertainty. Consumers must have sufficient liquid assets, savings or borrowing ability to sustain them during the all-but-certain financial emergencies that every household will inevitably experience. Both saving and borrowing require access to the financial system. Without that access, people are dependent on family and friends or, worse, on fringe banks and their predatory products.

In 2013, the World Bank began measuring financial inclusion. The United States lags significantly behind other developed countries in providing access to basic banking services. In Britain, France, Germany and South Africa, every citizen has access to a basic bank account — a key financial product that offers a range of services including access to cash, bill payment and money transmission. A basic bank account is also the gateway to a range of other financial products, such as affordable credit, savings and insurance. Remaining in the fringe banking economy creates a never-ending cycle of financial vulnerability; households are financially unstable, illiquid and unable to save for emergencies.

Participation in the formal banking economy remains the primary way for people to enter the financial mainstream, by building wealth, acquiring assets and establishing credit. In the United States, underserved customers are excluded for a myriad of reasons ranging from poor credit to the place where they live.

While banks assume some risk in ensuring access to basic accounts for all, appropriate supervision can address the safety and soundness of financial institutions.

Financial inclusion must become a national priority. The Wall Street bailout reminded Americans that insured banks serve a critical economic function. What remains undefined is how those institutions should serve the citizenry that shored them up when they were in trouble. A requirement that insured banks set specific goals to bring the financially excluded into the banking mainstream — along with an annual progress evaluation — is one way to increase access.

If America is to remain competitive in the global economic marketplace, a financial-inclusion policy is a must. Every American needs to understand the importance of this year's "sleeper" issue.

Cassandra Jones Havard is a professor at the University of Baltimore School of Law; her email is chavard@ubalt.edu.