LITTLE ROCK – The Federal Deposit Insurance Corporation and Southern Good Faith Fund announced today a partnership to expand access to Individual Development Accounts (IDAs) and other banking products and services that target underserved populations.
The partnership, through the FDIC’s Alliance for Economic Inclusion initiative, will increase the number of persons throughout the state who can access IDAs and other financial services, such as free tax filing and alternative loan products. The FDIC’s Alliance for Economic Inclusion is a broad-based local coalition of banks and thrifts, community leaders, public officials and other seeking to improve access to banking products and services for underserved populations.
IDAs are matched savings accounts that enable low-income families to save money for a particular financial goal, such as buying a home, paying for postsecondary education, or starting or expanding a small business. Savings are matched through the use of state allocations of federal Temporary Assistance for Needy Families (TANF) funds or federal Assets for Independence (AFI) funds, along with other sources of funds, including financial institutions. Typically, participants are required to save money on a regular basis, and their funds are matched 2-to-1 or 3-to-1. A ceiling of dollars and time frames is established for the match amount.
“This is very exciting partnership and a real opportunity to stimulate innovation in access to financial services for all Arkansans,” said Angela Duran, President of Southern Good Faith Fund.
As part of its Alliance for Economic Inclusion initiative, the FDIC has held two informational sessions on IDAs in Arkansas, inviting financial institutions and IDA providers together to discuss IDAs and how banks can get involved in the various programs offered in their areas. Financial institution involvement may include contributions, establishing and servicing the IDA accounts of participants, providing periodic account statements, and helping to provide financial education to enrollees.
The FDIC Quarterly, First Quarter 2007, featured the report “IDAs and Banks: A Solid Match.” This report showcases the business case for banks being involved in IDAs, including the potential for long-term profitability, positive consideration during Community Reinvestment Act examinations, and goodwill in the community.
“IDAs are a relatively low-risk way for banks to introduce underbanked individuals to the financial mainstream,” said FDIC Chairman Sheila C. Bair. “IDAs can help people of modest means build assets and can help banks tap into new markets.”
In the future, the FDCI and Southern Good Faith Fund intend to conduct similar information sessions highlighting other innovative financial services and products targeting underserved populations. Such sessions likely will cover short-term loan products like alternatives to payday loans and free tax filing services, among other topics.
About the FDIC
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,650 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars-insured financial institutions fund its operations. FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200).
About Southern Good Faith Fund
Southern Good Faith Fund, a 501(c)(3) non-profit organization, is an affiliate of Southern Bancorp, Inc. and is committed to increasing incomes and assets of low-income and low-skilled residents in rural communities. Southern Bancorp’s non-profit family also includes Southern Community Development Corporation, Southern Property Corporation, and Southern Financial Partners.