Written Testimony of Melissa Koide, Vice President of Policy, Center for Financial Services
House Subcommittee on Financial Institutions and Consumer Credit

An Examination of the Availability of Credit for Consumers

September 22, 2011 Thank you, Chairman Capito, Vice Chair Renacci, and Ranking Member Maloney. On behalf of the Center for Financial Services Innovation, I appreciate the opportunity to participate as a witness before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit on the matter of underbanked consumers’ access to credit. We appreciate the Subcommittee’s attention to the state of consumers’ access to credit, particularly in this economic environment.

I am the vice president of policy for the Center for Financial Services Innovation. CFSI is a national
nonprofit organization, in its eighth year of providing national leadership, research, and insights on
the non-mortgage, retail financial services needs of underbanked consumers. We conduct consumer
and industry research to develop a broad understanding of consumers in this segment and the
products offered to them. We hold twice-yearly roundtables with large and small financial services
providers and nonprofits to develop and advance products and strategies for serving underbanked
consumers. Each year we bring together over 500 representatives from the financial services sector,
including innovators, nonprofits, and policymakers, to spotlight how innovation, partnerships, and
public policy can improve financial services for underbanked families. We provide grants to
nonprofits that are building underbanked consumers’ financial capability through the marriage of
financial education and products and technology.

Finally, we develop and champion federal policy to spur financial product innovation and market
competition and address impediments to access to high-quality financial services. We believe that
effective public policy must protect consumers from harmful products and practices; ensure that
consumers have access to safe and affordable products and services; and ensure that providers
operate safely and soundly. Our vision is to see a strong, robust, and competitive financial services
marketplace, where the diversity of consumer transaction, savings, and credit needs are met by a
range of providers offering clear and transparent products and services at reasonable prices.

My testimony will provide insights on the small-dollar credit marketplace and recommendations for
public policy. These comments are based on our consumer research and our observations of market
practices. We pay particular attention to consumers’ need for small-dollar credit and emerging
product innovations with the potential to extend wide-scale credit access to underbanked consumers,
responsibly and affordably. We believe that well-structured credit products can help consumers
address short-term credit needs and build positive credit histories, critical for employment, insurance,
and housing, as well as for longer-term asset building. We believe quality credit is marketed
transparently and priced fairly, and that it is affordable and structured to support repayment without
creating a cycle of repeat borrowing.

Download the full testimony below.