What the unbanked need from the 2020 election

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Over 6% of Americans—20.5 million people—are unbanked, according to the FDIC’s latest data, meaning they have no checking or savings account. Nearly 50 million more are underbanked: They have at least one bank account but still use alternative financial services like payday loans and check cashers outside the banking system.

Many go unbanked because they don’t have enough money to open a bank account or continue incurring overdraft fees. And going un- and underbanked isn’t cheap: Over the course of a lifetime, being unbanked can cost a person $ 40,000 just in fees, David Rothstein, a principal at the Cities for Financial Empowerment (CFE) Fund, says.

“Whether it’s cashing a check every time you get paid, whether it’s having to pay a bill, whether it’s overdraft fees, or insufficient fund charges that can occur monthly,” Rothstein says, “these are all things that take money away from the people who can generally least afford it for financial services.”

This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.

Lower-income customers pay higher interest rates and incur more fees, too, which subsidize the perks and rewards that “prime” customers—those banks deem the most creditworthy—get. Banks and their prime customers reap the rewards from the “subprime” customers, a system which often forces the latter out of the banking system in frustration.

When the Financial Health Network breaks down the data by demographic, it becomes clear how disproportionately this exclusion impacts certain groups. The study found that 15% of Black adults are unbanked, while 8% of Latino Americans and 4% of white Americans are. Similarly, only 11% of white people are underbanked, while 23% of Latino people and 32% of Black people are. This is one of the many ways redlining has continued to impact communities of color since it began in the 1930s. Since the nation’s inception, Black and brown Americans have experienced disproportionate suffering economically, which compounds as white, wealthy communities bounce back from recessions, and nonwhite, lower-income communities do not.

“Supposedly there’s been a major recovery since the Great Recession, but communities of color haven’t recovered,” Ashley Harrington, the federal advocacy director and senior counsel at the Center for Responsible Lending, says. “They lost over a trillion dollars in wealth that has yet to be regained. We have been most impacted by every single pandemic and recession that has hit this country; and this pandemic, this recession is no different.”

Financial institutions are chartered and regulated by the federal government, making financial inclusion a task for politicians. The Community Reinvestment Act (CRA) of 1977 obligates banks to meet the financial and credit needs of the communities they serve, including low- and middle-income neighborhoods. Bank regulators are then charged with examining the banks’ compliance with the CRA.

The next President will have the responsibility of setting economic policy priorities and appointing leaders for the federal banking regulators, both of which have implications that will trickle down to the lowest levels of government.

Democrats and Republicans agree that financial inclusion is an issue, but they often butt heads on how to address it. The politicians, nonprofit leaders, and financial services professionals Fortune spoke with make it clear that movement here is gravely needed.

What’s needed

“Change!” shouts Aaron Klein, a fellow in economic studies at the Brookings Institution who serves as policy director of its Center on Regulation and Markets.

“A banking system that works for [the un- and underbanked] and not banking that exploits them,” says Lauren Saunders, associate director of the National Consumer Law Center.

“A bold policy agenda that centers racial and economic justice,” says Harrington.

“Certainly not more of the same,” says Linda Jun, senior policy counsel at Americans for Financial Reform.

The suggested solutions range from targeting overdraft fee abuse to data use reform to public banking to improved education on the current financial system—and everything in between.

Experts say the most effective way a President could increase financial inclusion, though, is to simply make it a priority. Whether 2021 brings President Donald Trump’s second term or former Vice President Joe Biden’s first, the victor needs to acknowledge that there’s a problem and set policy goals to address it, says John Thompson, chief program officer at the Financial Health Network.

“The FDIC has done a terrific job measuring [unbanked and underbanked rates], and in the process of measuring it, we’ve seen improvement,” Thompson says. “But we really haven’t set at any policy level a goal that we’re going to eliminate it, or we’re going to try to make it equitable.”

In setting those goals, Thompson says, the data needs to be broken up by demographics to make sure the outcomes help the communities most affected.

Beyond measuring the problem and making financial health an issue of importance at the national level, Rothstein says that the President must ensure whomever he appoints to lead regulatory agencies like the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) values financial inclusion, too.

As American adults faced economic hardships brought on by the pandemic this year, a real-time payment system—which many countries around the world have already instituted—could have saved money and prevented suffering, Klein says. Anyone receiving their stimulus check by direct deposit, including those who are underbanked, had to wait several days before being able to actually use their money because of the way clearinghouse settlements work in America. This was not ideal for many who lost their income during the pandemic and were just scraping by, desperate for the stimulus funds to hit their accounts. Situations like this often result in crippling overdraft fees that turn swaths away from formal banking altogether. Many people choose to use check cashers instead of bank accounts to gain access to their money more quickly, but a chunk of the check’s value is taken as a service fee.

Real-time payments technology has existed for quite a while now, Klein says, but the federal government chose to build a new system, the FedNow Service, which will not roll out for at least a couple of years. When available, though, the Fed says it will “enable financial institutions in the U.S. to clear and settle transactions in virtually instantaneous fashion.”

Jodie Kelley, CEO of the Electronic Transactions Association, noted that many companies in the private sector like Square, Venmo, Zelle, and PayPal have real-time payment systems already, giving users access to their funds much faster than traditional paper checks.

Many Americans who opted to get their stimulus checks mailed—thus waiting even longer for access to their money than those who chose direct deposit—chose to do so because they did not have a bank account. To fold them into the formal banking world, Rothstein suggests that the federal government work on integrating banking programs into its systems. For instance, the IRS could provide an option to open a simple, no-fee bank account on the website used to choose how to receive stimulus checks. He says integration like this could be worked into many government-citizen interactions, such as unemployment compensation, taxes, and the Special Supplemental Nutrition Program for Women, Infants, and Children, also known as food stamps.

“Having the ability to open and facilitate that bank account opening during the enrollment process…would certainly help individuals come into the banking system and save them a lot of money,” Rothstein says.

While fintech often spurs important innovation like real-time payments, New Economy Project codirector Deyanira Del Río notes that some fintech companies are also known to develop “disruptive” alternative products that are high-cost, unregulated, and exploitative to the un- and underbanked.

“Some policymakers and regulators are so enamored with the rhetoric and promises of fintech that they don’t see the harms that they’re perpetuating against low-income people, immigrants, and others,” she says. Those harms are numerous and varied, Del Río says, and can include practices like issuing loans with triple-digit interest rates because fintech companies are often unregulated by the usury laws banks must follow.

On the flip side, congressman Patrick McHenry, ranking member of the U.S. House Committee on Financial Services, believes that technology is the best way to make banking and other financial services cheaper, thus lowering a common barrier to entry. He says he’s in favor of a “less onerous” regulatory environment to encourage that, pointing to the way Trump’s administration has loosened financial regulations over the past four years.

“It is generally a lessened weight of regulation versus a heavier weight of regulation on financial institutions. That’s the difference between these two candidates,” he says. “And one has shown in his first term a model at modifying regulation and lightening the burden of Dodd-Frank, and using more technology in the process of COVID and enhancing the technological shift.”

But Americans for Financial Reform’s Jun says that regulation is much needed after Trump’s first term, which has been chock-full of deregulation. According to Trump’s campaign website, “860 regulatory actions have been withdrawn or removed from active status,” in his first term. That includes the rollback of Dodd-Frank—enacted under President Obama after the market crash of 2008 to prevent any similar events—which eased rules on liability and data reporting on all but the largest banks. Americans are more vulnerable now than ever before, Jun says, and the CFPB seems to be focusing on giving companies flexibility rather than giving citizens relief.

This is generally the crux of the disagreement between Democrats and Republicans on how to approach financial inclusion. Democrats tend to believe that operating a bank comes with the responsibility to provide services to un- and underbanked people in the community that may not maximize profits, while Republicans believe the bank has no such obligation, or at least a looser one, experts say. Republicans also tend to think the market will correct itself, and regulation will fail, while Democrats are often in favor of more rules.

Deputy national press secretary for the Trump 2020 campaign Ken Farnaso wrote in an email that the President has spearheaded “pro-growth policies, deregulation, and tax cuts” in an effort to strengthen the American economy through his first term. The Trump campaign directed Fortune to the White House for more details, which did not respond to a request for comment.

The Trump administration has been busy in this arena for the past four years. Trump installed Kathy Kraninger as director of the CFPB, who is attempting to remove Obama-era protections for consumers against predatory lending. The OCC also proposed the True Lender Rule, which would effectively allow the circumvention of state usury laws by fintech companies, leading to loans issued with no interest rate caps, according to Raquel Villagra, staff attorney at the New Economy Project. Del Río says there’s been “a long, slow gutting” of the CRA under Trump and several of his predecessors. Harrington says the OCC’s recent changes to the CRA “will actually not help the communities that the Community Reinvestment Act was envisioned to help serve.”

Many of the regulations that have been rolled back under Trump were proposed under President Obama, for whom Biden served as Vice President. Biden has laid out economic policy plans that prioritize racial equity, strengthen and enforce regulations on banks and fintech companies, roll back Trump administration policies aimed at destroying fair lending, and provide student debt relief to increase financial inclusion.

“Even before Trump drove our economy into a recession, left frontline and essential workers to fend for themselves during a dangerous pandemic, and turned a blind eye to the disproportionate impacts of COVID in communities of color, he was already giving bad actor lenders a free pass to exclude neighborhoods and borrowers who have repeatedly been locked out of investment and economic opportunity,” Biden campaign spokesperson Rosemary Boeglin wrote in a statement. “Joe Biden has a real plan to build our economy back better, and that means bringing every community along. Biden will ensure that we all have a fair shot to pursue our own American dream by opening the doors to financial inclusion and closing gaps in access, for instance by setting aside future PPP [Paycheck Protection Program funds] for the smallest small businesses that often don’t have the necessary banking relationships.”

As evidenced in Tuesday night’s debate, policy specifics are rarely focused on when Trump and Biden meet, let alone the specific policy approaches each campaign has for financial inclusion. But as America weathers the historic crises of COVID-19, the worst economic downturn since the Great Depression, and a racial reckoning, economic justice concerns will continue to wrestle their way to the forefront in politics.

More from Fortune‘s special report on what business needs from the 2020 election:

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There was arguably no industry hit harder or faster by the coronavirus pandemic than restaurants. The urgent need for economic relief to keep small—and not-so-small—businesses afloat has turned restaurateurs, chefs, and servers into de facto activists for their own livelihoods.

So the upcoming November election is top of mind for owners and workers throughout the industry. While many are more concerned with staying afloat in the week ahead than with policy that won’t take shape until January, members of the field are certainly keeping an eye on which administration—and which local lawmakers—will be controlling their fates in four months’ time.

This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.

From takeout-only storefronts to fine-dining establishments, the single universal requirement of eating at a restaurant—that, to consume your food, you need to remove your face mask—has made the industry’s reopening during the coronavirus pandemic especially fraught. With restrictions on indoor dining capacity and colder weather in many parts of the country soon to make outdoor dining—thought to be a less likely setting for transmission of COVID-19—less appealing, getting these businesses through the upcoming months is more important to operators than ever.

These restaurant industry professionals—from Top Chef judge and restaurateur Tom Colicchio to the owner of a business shuttered by the coronavirus pandemic—told Fortune which issues are most important to them this election cycle.

Economic relief

The top priority for many throughout the restaurant industry is the urgent need for economic relief. One in four unemployed workers since the beginning of the coronavirus pandemic in the United States have been restaurant workers, according to the Independent Restaurant Coalition.

The group, formed to protect the interests of independent owners in the industry, is lobbying for the Restaurants Act, which would provide $ 120 billion in relief for the industry. Advocates are calling for that legislation in addition to the Paycheck Protection Program, which was available to all sorts of businesses.

The bill is endorsed by operators at all levels of the industry, from mom-and-pop shops up to representatives of national chain establishments. “We’re comfortable asking for special treatment,” says Sean Kennedy, executive vice president for public affairs for the National Restaurant Association, “because we are uniquely affected.”

President Trump has heard from restaurant operators over the past several months, including through a May roundtable. “The Trump Administration has undertaken unprecedented actions to alleviate the burden coronavirus has imposed on the restaurant and hospitality industry,” White House deputy press secretary Sarah Matthews said in a statement to Fortune. “From launching the Paycheck Protection Program to providing employers the option to defer their payroll taxes, President Trump has been on the front lines providing flexibility and relief for America’s restaurateurs throughout this pandemic.”

As a candidate, rather than an officeholder, Democratic nominee Joe Biden has not as directly addressed the restaurant industry, but the Biden campaign points out that his proposals to aid small businesses would apply to much of the sector.

“Small businesses, especially restaurants, are the beating heart of our communities, but across the country they are struggling to keep their doors open,” Biden campaign spokesperson Rosemary Boeglin said in a statement to Fortune. “The Trump Administration has left them out to dry, siding with big corporations and largely shutting minority-owned businesses out of COVID recovery funds. This translates to millions of jobs lost and far too many businesses permanently shuttered. Joe Biden has a restart plan for small businesses like restaurants to get back up and running and get workers back on payroll.”

Economic relief includes not just saving these establishments, but also supporting workers who remain laid off as restaurants downsize or who don’t feel safe enough to return to work as their employers reopen. People throughout the restaurant industry say they are eager to see more federal relief in the form of unemployment funding.

And in an open letter published September 24, 150 restaurant owners and chefs endorsed Biden in the 2020 presidential election, arguing that Trump’s COVID-19 response is what put the restaurant industry at risk.

“The perception of job security has been snatched from us,” says Christy Perera, a former maître d’ at a New York Michelin-starred restaurant who was laid off in March. Perera relied on the extra COVID-19 unemployment funding, which expired in July. Now she’s continuing to look for jobs outside of the restaurant industry, translating her customer service experience to remote customer service positions.

Trump signed off on enhanced $ 600 weekly unemployment benefits at the beginning of the pandemic and okayed a $ 300 weekly benefit following the lapse of the original agreement. Biden has a proposal to overhaul the unemployment system to create “employment insurance” that would place the cost of the program on the federal, not state, government.

Kennedy is eager to make clear that workers at some of the nation’s chain restaurants face these same concerns. “If you’re a franchise owner and you own just one restaurant, you face the same issues as any other independent,” he says. “If you’re an employee at a chain, it doesn’t matter what logo is on your vest—your job is not assured.”

Local legislation

The federal government, however, can’t solve every problem the restaurant industry faces. While government relief would overwhelmingly help restaurants make it through this year, many have been forced to close, in part because of factors that are controlled by state and local lawmakers.

Many restaurateurs have cited struggles with their landlords as one reason why they couldn’t remain open. Camilla Marcus, the owner of the restaurant west~bourne in New York’s SoHo neighborhood, closed her business in early September after failing to negotiate a percentage-of-sales rent agreement with her landlord. She was forced to make a decision this month because of a personal guarantee that would have kicked in, making her personally liable for any missed rent.

“Tenants are being leveraged as a backstop for a pandemic,” she says. “Most closures are because tenants and landlords don’t see the situation in the same way.”

Marcus says she believes that city and state lawmakers should intervene to reform tax structures that incentivize landlords to have a vacant storefront rather than a struggling tenant. These kinds of regulations vary widely by city and by state. In New York City, where Marcus was forced to close her business, Mayor Bill de Blasio has proposed a vacancy tax that would tax building owners who leave storefronts empty for longer than six months. The proposal would require the support of New York’s state government. New York’s City Council is considering recovery measures that include making sidewalk dining permanent in a bid to boost business.

Deepti Sharma, the founder of the food tech startups FoodtoEat and Bikky, has come to a similar conclusion after working with restaurant owners. Sharma is running for City Council in New York and hopes to address city issues from increasing the minimum wage for tipped workers to those landlord and tenant issues. “To me, what’s important is, What do these lawmakers believe in? Do they believe in fair wages?” Sharma asks.

Big-picture issues

But the restaurant industry had political concerns long before the coronavirus pandemic hit. Tom Colicchio, the Top Chef judge and restaurateur, has been a leading voice calling for economic relief for the industry, but also in food policy; he launched a podcast about the subject earlier this year.

The top political concerns on the minds of many in the industry? Health care and childcare, Colicchio says. Restaurant owners—like most small-business owners—say they don’t have good options for providing health care. Restaurant workers, in turn, often lack access to employer-sponsored plans. Trump has criticized the Affordable Care Act—and has said he has a replacement plan—but has not yet introduced any concrete proposals. Biden has pledged to protect the Affordable Care Act and supports creating a public health insurance option, the likes of which could be accessed by workers in the restaurant industry without employer-sponsored coverage.

When it comes to childcare, restaurant servers and cooks often work late at night, without reliable options for their children’s supervision, Colicchio says. Neither presidential candidate has put forward proposals that would close that gap in care, but both have addressed childcare as an issue. Trump, during his presidency, increased the size of the tax code’s childcare tax credit from $ 1,000 to $ 2,000. Biden supports an $ 8,000 tax credit and enhanced funding for after-school programs and community centers.

The other issues that most affect the industry? Immigration policy and climate policy. “It’s no secret that a lot of immigrants work in the restaurant industry—most of them on the books, paying taxes,” Colicchio says. “We need immigration policy to bring workers in where they have the same protections as anyone else in this country. We need a guest worker program that works.”

Biden generally agrees with Colicchio’s assessment of the shortcomings of these programs; his campaign’s immigration platform notes that the U.S.’s current temporary worker program is “cumbersome, bureaucratic, and inflexible.” He pledges to work with Congress to reform the temporary work visa system.

Trump’s immigration policy generally runs counter to the kind of protections for immigrant restaurant and food industry workers that Colicchio describes. The President supports a wall at the U.S.-Mexico border and other restrictions on both authorized and unauthorized immigration. At the onset of the coronavirus pandemic, the White House moved to suspend programs for temporary foreign workers, citing high unemployment within the U.S.

“And it goes without saying that climate affects everything” from food supply to national security, Colicchio says. “If we’re not going to have a planet, it doesn’t matter what happens to restaurants.” Trump’s climate policies prioritize “balanc[ing] environmental protection with economic growth,” and the administration has reversed or weakened several regulations intended to address climate change. Biden’s climate proposal aims for the United States to achieve a “100% clean energy economy” and reach net-zero emissions by 2050.

These big-picture issues are hard for restaurateurs to think about when their immediate crisis is so urgent. But policies on health care, climate, and immigration are all on the table in November alongside economic bailout proposals—and will be influencing the votes of the people in this industry.

Economic relief, still, remains an important first step. Says Perera: “Restaurants need an injection of capital so when you pull up Seamless in six months, you won’t have just McDonald’s and Burger King as your options.”

More from Fortune‘s special report on what business needs from the 2020 election:

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