[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTATION OF EFT REQUIREMENTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JUNE 20, 2001
__________
Printed for the use of the Committee on Financial Services
Serial No. 107-27
U.S. GOVERNMENT PRINTING OFFICE
73-596 WASHINGTON : 2001
_______________________________________________________________________
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice BARNEY FRANK, Massachusetts
Chair PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska MAXINE WATERS, California
RICHARD H. BAKER, Louisiana CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma KEN BENTSEN, Texas
ROBERT W. NEY, Texas JAMES H. MALONEY, Connecticut
BOB BARR, Georgia DARLENE HOOLEY, Oregon
SUE W. KELLY, New York JULIA CARSON, Indiana
RON PAUL, Texas BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio MAX SANDLIN, Texas
CHRISTOPHER COX, California GREGORY W. MEEKS, New York
DAVE WELDON, Florida BARBARA LEE, California
JIM RYUN, Kansas FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio JANICE D. SCHAKOWSKY, Illinois
DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina CHARLES A. GONZALEZ, Texas
DOUG OSE, California STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin HAROLD E. FORD Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York JOSEPH CROWLEY, New York
GARY G. MILLER, California WILLIAM LACY CLAY, Missouri
ERIC CANTOR, Virginia STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania
SHELLEY MOORE CAPITO, West Virginia BERNARD SANDERS, Vermont
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio
Terry Haines, Chief Counsel and Staff Director
Subcommittee on Oversight and Investigations
SUE W. KELLY, New York, Chair
RON PAUL, Ohio, Vice Chairman LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York JAY INSLEE, Washington
ROBERT W. NEY, Texas JANICE D. SCHAKOWSKY, Illinois
CHRISTOPHER COX, California DENNIS MOORE, Kansas
DAVE WELDON, Florida STEPHANIE TUBBS JONES, Ohio
WALTER B. JONES, North Carolina MICHAEL E. CAPUANO, Massachusetts
JOHN B. SHADEGG, Arizona RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York JOSEPH CROWLEY, New York
ERIC CANTOR, Virginia WILLIAM LACY CLAY, Missouri
PATRICK J. TIBERI, Ohio
C O N T E N T S
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Page
Hearing held on:
June 20, 2001................................................ 1
Appendix:
June 20, 2001................................................ 21
WITNESSES
Wednesday, June 20, 2001
Carrion, Richard L., Chairman of the Board, President and CEO,
Popular, Inc., and Banco Popular de Puerto Rico................ 13
Hammond, Donald V., Fiscal Assistant Secretary, U.S. Department
of the Treasury................................................ 4
Saunders, Margot, Managing Attorney, National Consumer Law Center 15
APPENDIX
Prepared statements:
Kelly, Hon. Sue W............................................ 22
Oxley, Hon. Michael G........................................ 29
Carrion, Richard L........................................... 47
Hammond, Donald V............................................ 31
Saunders, Margot............................................. 52
Additional Material Submitted for the Record
Kelly, Hon. Sue W.:
Letter to the General Accounting Office, June 20, 2001....... 23
Hammond, Donald V.:
Written responses to questions from the subcommittee......... 42
Saunders, Margot:
Comments to the Treasury on ANPRM, National Consumer Law
Center..................................................... 60
IMPLEMENTATION OF EFT REQUIREMENTS
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WEDNESDAY, JUNE 20, 2001
U.S. House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Financial Services,
Washington, DC.
The subcommittee met, pursuant to call, at 3:00 p.m., in
room 2220, Rayburn House Office Building, Hon. Sue W. Kelly,
[chairwoman of the subcommittee], presiding.
Present: Chairwoman Kelly; Representatives Tiberi,
Gutierrez, Inslee, Moore and Shows.
Chairwoman Kelly. The hearing of the House Financial
Services Subcommittee on Oversight and Investigations will come
to order. Without objection, all Members' opening statements
and answers to their questions then will be made part of the
record.
Good afternoon. We are here to examine the status of
electronic funds transfer requirements of the Debt Collection
Improvement Act of 1996, known as the EFT 99 program.
The purpose of this hearing is to examine how far we have
come in moving toward a checkless system for paying Federal
salaries, pensions, vendor payments, and Social Security
benefits, and whether or not the change has reduced costs as
was promised when the Act was passed.
We will also discuss the use of electronic transfer
accounts, (ETAs) that allow low- and middle-income Federal
payment recipients who do not have bank accounts to receive
their funds electronically.
The ETA can be the first step for the unbanked toward
participating in the financial system, and a lifetime of sound
money management and personal savings toward that first house,
a child's education, and a secure retirement.
Further utilization of ETA accounts should save the
Government money, ensure speed and efficiency of the
distribution of Government benefits, save a beneficiary's time,
increase the security of beneficiaries' benefits and provide a
sector of the population who have been without bank accounts
with this necessary service.
This program, should its full potential be realized, can be
a winner for all involved. We need to ensure that the program
is reaching the population it needs to reach. And in order to
do so, we should investigate who is not using this service and
why.
In addition, we need to ask what problems these accounts
pose to the beneficiaries, the banks, and the Government, so
that we may ensure adequate steps can be taken to correct any
problems that may be occurring.
Finally, we need to investigate what the fraud level is
with these accounts, and what steps might be taken to stop such
problems.
The Ranking Member of the Subcommittee, Mr. Gutierrez of
Illinois, and I, are committed to the long-term success of the
EFT and ETA programs.
To ensure that the greatest amount of Federal payments are
made electronically, and all eligible recipients who want to
open ETAs can do so, we are today asking the General Accounting
Office (GAO) to start a comprehensive review of the EFT program
and of the use of ETAs.
At this point, I would like to let Members of the
subcommittee and the subcommittee staff know that it is my
intention to enforce the 5-minute rule, and I would appreciate
their cooperation in this.
At this time, I would like to turn to the Ranking Member,
Mr. Gutierrez, my good friend who is also very interested in
the success of this program.
Mr. Gutierrez, your opening statement.
[The prepared statement of Hon. Sue W. Kelly can be found
on page 22 in the appendix.]
Mr. Gutierrez. Good afternoon, and thank you, Chairwoman
Kelly, for holding this important hearing. I was very proud
that you and I were able to send this letter out from the
Committee on Financial Services to get a GAO report so that we
can work in a bipartisan fashion. I think that's the first step
to get information from all the relevant sources. I look
forward to continuing working with you in this endeavor. I
think it's extremely important.
I would like to start by commending the Department of the
Treasury for its continued efforts in helping bring into the
mainstream of our financial system the millions of Federal
payment recipients who currently do not have bank accounts.
Today, we have a series of witnesses who are going to bring
us up to date with the progress of the EFT 99 Program and the
status of ETAs.
I would like to welcome Mr. Donald Hammond from the
Department of the Treasury and Ms. Margot Saunders from the
National Consumer Law Center.
I would also like to welcome my friend, Mr. Richard
Carrion, President and CEO of Banco Popular de Puerto Rico and
Banco Popular, whose vision and foresight has played an
instrumental role in the success of Banco Popular being the
number one ETA provider in the United States and in Puerto
Rico, a success story I think that this subcommittee has to
examine very, very carefully.
They've obviously shown how it can be done, and so I'm
excited to hear his testimony and his insight and his vision as
to how he's getting it done there.
ETAs offer a unique opportunity to fill consumer protection
voids, increase the attractiveness of the account for those
outside the banking mainstream, and build positive
relationships between banks and communities they serve, not
requiring a minimal monthly balance to maintain an ETA, except
as provided by State or Federal law, setting a maximum fee of
$3 per month, providing a monthly statement, and making ETAs
voluntary are important inclusions that demonstrate commendable
sensitivity to many low-income Federal payment recipients who
must live on what is essentially a fixed income.
However, I believe there are some flaws with current
requirements of the ETAs. One of the problems is that it sets a
minimum number of ATM and tele-transactions that consumers must
do in a month, and it also leads to the financial institution,
rather than the account holder, deciding whether to use a
teller, an ATM, or both.
Prospective ETA account holders average 61 years of age.
ATM usage decreases with age and only 33 percent of consumers
over 64 years of age use an ATM card. Therefore, teller access
is an important factor in encouraging the use of ETAs by these
prospective account holders.
It is also a crucial factor in assuring that the goal of
bringing those without bank accounts into the mainstream
financial system is realized.
ETA prospectives are not likely to enroll in a pure debit
card product. For this group, the branch is their primary
choice for any type of transaction. Therefore, it should be up
to the account holder, not the financial institution, to decide
whether to use an ATM or a teller.
Another concern is that the ETA does not provide means for
account holders to pay bills. Consequently, they must withdraw
cash and then purchase a money order.
These and other issues really do have a detrimental effect.
An important aspect of implementing the Act and establishing
ETAs is the confidence of recipients in the system. It is vital
that the unbanked receive effective, targeted education about
the availability of the account and how to use it.
Recipients should be given clear and understandable
information about the nature of the account, associate fees,
free items, additional fees, types of transactions that are
allowed. Any educational effort must consider potential
cultural and language barriers that could inhibit understanding
of the ETA in the unbanked population.
For this reason, it's important to ensure that
informational materials are provided and customer service lines
are available in a wide variety of languages.
I thank you again for coming here today, and I look forward
to hearing the testimony. And I thank you, Madam Chairwoman.
Chairwoman Kelly. Thank you very much, Mr. Gutierrez. With
unanimous consent, I would like to include a copy of the letter
to the GAO in the subcommittee record.
[The information referred to can be found on page 23 in the
appendix.]
Our first witness today is Mr. Donald V. Hammond, Fiscal
Assistant Secretary of the United States Treasury Department.
Mr. Hammond was named Fiscal Assistant Secretary on September
28th, 1998. As Fiscal Assistant Secretary, he provides policy
oversight for the Financial Management Service and the Bureau
of the Public Debt.
Assistant Secretary Hammond chairs the Treasury Working
Group on implementing the statutory mandate for the EFT
program.
Assistant Secretary Hammond also serves as the Treasury's
liaison with the Federal Reserve System in its capacity as the
Government's fiscal agent.
Mr. Hammond, we welcome you here today. We welcome your
testimony on the EFT and the ETA programs. Without objection,
your entire written testimony will be included in the record,
and we invite you to begin your 5-minute oral summary now, and
I will notify you when you have about a minute remaining by
just simply tapping a little bit with this handle.
[Laughter.]
Chairwoman Kelly. Please proceed, sir.
Mr. Hammond. OK. Thank you very much.
STATEMENT OF DONALD V. HAMMOND, FISCAL ASSISTANT SECRETARY,
U.S. DEPARTMENT OF THE TREASURY
Mr. Hammond. Good afternoon Chairwoman Kelly, Ranking
Member Gutierrez. Thank you for the opportunity to appear
before you today to discuss Treasury's efforts to implement the
electronic funds transfer, or EFT, requirement of the Debt
Collection Improvement Act of 1996, the DCIA.
The DCIA requires the Federal Government to issue most
payments via EFT and directs Treasury to ensure that any
recipients who are required to receive payment electronically
have access to an account at a financial institution at a
reasonable cost and with the same consumer protections as other
account holders at the same financial institution.
We believe the program thus far has been very successful,
resulting in approximately 80 percent of all Federal payments
currently being made electronically and generating considerable
efficiencies for the Federal Government, financial
institutions, and payment recipients.
In fact, the reduction in the number of check payments
alone, since the end of fiscal year 1995, has saved the Federal
Government almost $250 million and will generate recurring
savings each year.
We expect to expand on these accomplishments by increasing
our percentage of electronic payments in the future.
I commend the subcommittee for its continued interest in
and support of increasing the Government's usage of electronic
payments in a way that balances the interests of our payment
recipients and the cost to Government operations.
Treasury intends to continue with the implementation of
this important initiative in the same manner going forward.
In developing the EFT rule, Treasury followed four
principles. The interest of recipients should be of paramount
importance. Treasury's policies should maximize private sector
competition for the business of handling Federal payments in
order to promote the greatest possible convenience,
flexibility, efficiency and security.
Recipients, especially those having special needs, should
not be disadvantaged by the transition, and recipients without
accounts at financial institutions should be brought into the
mainstream of the financial system to the greatest extent
possible.
As a result, the EFT rule emphasizes recipient choice
through an accommodative waiver policy formulated for the
purpose of minimizing hardships to Federal recipients.
Treasury is confident that this balanced approach supports
the goals of the program, and the widespread use of EFT by
payment recipients indicates broad acceptance of EFT by the
public.
Through the DCIA and the Government's education and
outreach programs, we have made tremendous progress in the
conversion of check payments to EFT among Treasury and non-
Treasury disbursed agencies.
A couple of examples are noteworthy. Today, nearly 8 out of
every 10 Social Security and Veterans Administration benefit
payments, and 98 percent of all Federal salary payments, are
made electronically.
Half of all Supplemental Security Income (SSI) payments are
currently electronic, compared to just 24 percent for fiscal
year 1995.
We attribute our success to our public education effort,
our efforts to publicize and explain the requirements of the
DCIA and Treasury rules to key stakeholders and our efforts to
assist agencies operationally in converting more payments to
EFT.
The most complex and challenging task that has confronted
us in increasing the number of EFT payments, is how to meet the
needs of the millions of Federal payment recipients who do not
have an account at a financial institution.
Despite our waiver policy in keeping with the DCIA's intent
for access to a reasonable cost account, Treasury designed the
low-cost electronic transfer account, or ETA. The ETA is being
voluntarily offered by federally-insured financial institutions
that choose to offer the account, subject to the terms and
specifications prescribed by the Treasury.
We anticipate that we will have a national presence of over
600 ETA providers with more than 16,000 locations by the end of
this year.
As of April 2001, Federal payment recipients have opened
almost 11,000 ETAs. We project that the number of ETAs opened
will gradually increase over the next few months, and
substantially in the years to follow.
With regard to education, in fiscal 1997, Treasury began
developing a comprehensive public awareness and education
campaign to inform Federal payment recipients of their options
under the EFT legislation and to promote the safety and
reliability of EFT.
The components of the campaign included development and
distribution of printed materials, an educational video, public
service advertising for radio, television and print media,
public relations activities and a precedent-setting grassroots
community outreach initiative.
To expand EFT 99 public awareness to a grassroots level,
Treasury developed a regional network for its public education
efforts. Through that network, we reached over 1400 local
organizations and held more than 3500 consumer sessions through
the grassroots campaign.
With regard to ETA-specific activities, during the past 18
months, we have brought together providers and community groups
in order to expand our marketing opportunities and increase
awareness of the program.
Let me now turn to costs and savings. Costs to implement
EFT 99, including portions of the ETA program, from fiscal 1997
to 2001 are approximately $21 million. The public education
campaign that I just described has cost approximately $18
million over the same period, with most of the funds expended
in the first 3 years.
Specifically for the ETA, we have reimbursed financial
institutions approximately $100,000 and project an additional
$155,000 in the year to come.
Our costs for the Federal Reserve Bank of Dallas, who is
our fiscal agent in this endeavor, have been $2.7 million.
Therefore, total program costs have been $24 million.
In return, we have received----
In summation----
[Laughter.]
Mr. Hammond.----What we've received from these expenditures
is an annual savings of 140 million checks accumulating to $580
million, an annual recurring savings of at least $70 million a
year going forward.
In addition we've saved in excess of $41 million through a
decrease in fraudulent checks. We believe the program has been
a tremendous success. We look forward to its continuation. And
I look forward to the questions from the panel.
[The prepared statement of Donald V. Hammond can be found
on page 31 in the appendix.]
Chairwoman Kelly. We thank you very much, Mr. Hammond.
We have been joined by Mr. Shows. Mr. Shows, have you an
opening statement of any kind?
Mr. Shows. No. Thank you.
Chairwoman Kelly. Thank you very much.
Mr. Hammond, one of the reasons for converting paper checks
to electronic funds transfer is to reduce the costs associated
with fraud and paper checks.
What are the risks of fraud with the ETAs, and--well, let's
just stop right there. What are the risks of fraud with these
ETAs?
Mr. Hammond. We think that the risk of fraud with an ETA is
actually slightly less than the risk of fraud with a
conventional bank account. We designed the ETA to try to
minimize the risk of fraud, understanding that financial
institutions are very concerned about that important component
of their costs.
As a result, the ETA only offers additional deposits at the
discretion of the offering financial institution. We limit the
types of transactions. For example, there's no check writing
against the ETA permitted as check management was both an issue
that was a concern to the recipient population, but also a
concern to the financial institutions offering the accounts.
Obviously, you can't design any product in today's day and
age that totally eliminates the risk of fraud. And, in all
honesty, the ETA has some incidence. We think the account is
designed to minimize that incidence and to give the financial
institution offering it the opportunity to close the account if
it has been abused.
Chairwoman Kelly. Can an individual who is not eligible
open an ETA?
Mr. Hammond. An individual could open--if I understand the
question correctly--an individual who would not be a Federal
benefit recipient, they can attempt to open an ETA. In fact,
we've had cases, particularly on the West Coast, where accounts
have been opened by members of the public who do not receive a
recurring Federal payment.
What we quickly discover though, through the financial
institution, is that when no Federal payment is direct
deposited into the account, the institution then closes the
account based on non-eligibility.
So there have been cases where it's happened. It's been a
relatively small percentage of the accounts that have been
opened, and there is an easy way for the institution to verify
their eligibility and to close the account.
Chairwoman Kelly. And you find that's working?
Mr. Hammond. Yes.
Chairwoman Kelly. I'm wondering if you could submit to the
subcommittee any recommendations the Treasury might have for
amending the Act or regulations to further advance the EFT to
other Government programs.
For example, on the business side of Government, Treasury
has really made dramatic strides in converting Federal payments
to vendors from paper checks to the EFT.
I'm wondering if you've also made progress in converting to
electronic bill presentment? In other words, can the Federal
Government bill directly to the vendor and have the vendor pay
through the account?
Can all of that happen electronically? I'm interested
obviously in paper reduction and also in an anti-fraud
mechanism.
Mr. Hammond. We would be happy to get you some legislative
recommendations or proposals, specifically addressing the
business processes.
The aspects of Federal procurement and making that an all-
electronic process have been a very high priority of both the
Procurement Executives Council, as well as OMB, for some time.
It's a very difficult process, because it involves every
aspect of the organization's management as well as the vendor
community, but it is something that is very high on the
management initiatives of the Administration going forward, but
I can get you some more information on that.
[The information referred to can be found on page 42 in the
appendix.]
Chairwoman Kelly. And perhaps we can also ask the GAO to
take a look at it. Do you think it would offer any major
savings or efficiency in the Federal procurement programs if we
were able to get that put together?
Mr. Hammond. Absolutely. I think you can see an example of
the kind of efficiency that you can find in Federal procurement
from the adoption of the Government credit card program a
couple of years ago, and the number of steps it has reduced in
the procurement process for small purchases, the efficiency
that it has created on the bank end processing for paying those
bills, you can, through electronic processes for larger
procurements, where a credit card would not be an appropriate
payment mechanism, presumably extract similar, or maybe even
greater, savings.
Chairwoman Kelly. I'm a little concerned about the fact the
subcommittee has tried to get information from the Treasury on
how the ETA program is working. Although the Treasury can tell
us how many ETA accounts have been opened, they are not able to
tell us apparently who is opening them, or whether they are
Social Security retirees or VA beneficiaries. Treasury
apparently can't even tell us how many ETAs have been opened
for residents just in the City of New York, even though we know
that there are thirteen banks offering them there.
And you, at Treasury, have to pay each bank $12.60 for
every account. We haven't been able to find out from Treasury,
except anecdotally, why people refuse to open an ETA.
Apparently, Treasury also doesn't know how long an ETA may
be opened and whether or not some of these accounts, after
being opened with $12.60 paid by the Federal Government, are
quietly closed and converted to a regular account.
These are questions we can ask the GAO in its study, but I
really have to ask if you can also give us some answers to
questions like these. Without more detailed data on how the
program is working, I don't know how we can accurately assess
its effectiveness.
And also, any other issues that you think the GAO should
analyze during their review, and what data you would like to
see come out of it.
You don't have to answer that verbally right now. I just
want you to answer that in writing or in discussions with the
staff.
I think it's interesting the fact that only 11,000, less
than \1/10\ of 1 percent of the people eligible have opened an
account, even after we've mailed, done a lot of public
education. It tells me that something may not work, and doesn't
that tell you something may not be working with these accounts?
We'll hear testimony from someone who will testify later
who has done a great deal of outreach in making these accounts
work. It seems to me that maybe the outreach isn't working. And
I'd like to have some more explanation about that.
Also, I want to know what Treasury is able to do to beef up
its ability to monitor the programs.
So there are some questions, just a big block.
I've run out of time. I'm going to time limit myself also,
and we will move now to Mr. Gutierrez.
[The information referred to can be found on page 43 in the
appendix.]
Mr. Gutierrez. Thank you, Madam Chairman. I'm going to
follow up right where you ended.
Mr. Hammond, thank you for being here this afternoon.
There are approximately 10 million unbanked recipients in
the United States of America. Only 11,000 ETA accounts have
been established since ETA became available in 1999.
So we have a pool of 10 million people. I don't even want
to estimate what the percentage is. I didn't do the percentage,
but 11,000 out of 10 million people. That means there are 10
million people that are still getting their checks in the mail
after the program has been implemented.
To what do you attribute the numbers? I mean, I know that
the Chairperson has asked you, and I certainly look forward to
your comments in writing, but if you could just enlighten us
this afternoon, what's going on?
Mr. Hammond. Sure. There are a couple components to that
response. First, that the ETA is really a two-step program. The
first was to interest financial institutions in offering the
account, market it to the financial institutions such that
there would be an account structure available.
As a result, outreach to the ultimate recipient population
had to lag the enrollment of financial institutions who are not
only interested in offering the account, but also prepared to
offer it in their systems environment at that point in time.
It would make no sense for us to market the account before
the accounts were available in a particular county, only to
have consumers go ask questions and find out it wasn't
available.
Once we got a critical mass of recipients available in an
area, then we began to market the account to the ultimate
recipient population.
Now keep in mind, we're marketing two messages at the same
time. We're marketing the message EFT and electronic payment
and the availability of the option of the ETA account.
We do find that as our numbers continued to increase, we
suspect that a significant number of unbanked recipients of
that original 10 million person estimate have signed up for
some sort of account relationship.
I use, as an example, the Supplemental Security Income
(SSI) program. In composing that original estimate of 10
million unbanked recipients, we estimated that 50 percent of
SSI recipients were unbanked.
Today, 50 percent of SSI recipients receive electronic
payment.
Mr. Gutierrez. So what do we need to do to have that same
kind of success story with the 10 million population?
I understand what you're doing with the financial
institutions. Has there been a lag in the number of financial
institutions that wish to engage in the program?
Mr. Hammond. I think it's more a question of the timing,
and we were a little unfortunate in our timing of rolling out
the account in that, at the time of initiation, the
preparations for the Y2K systems conversions.
Mr. Gutierrez. How many financial institutions in the
United States of America, of the 10,000 banks, FDIC-insured,
offer this service?
Mr. Hammond. Right now approximately 600.
Mr. Gutierrez. Six hundred out of 10,000. You think maybe
that's a little bit of our problem?
Mr. Hammond. Well, except I think we have some encouraging
signs in that there are some very large financial institutions
who are committed to the program that give us great geographic
reach. Bank of America is now rolling it out in all their
branches. Wells Fargo is completing their roll-out of the
program. FirStar, which has just recently merged with U.S.
Bank, increases the penetration throughout the Midwest, and the
upper Midwest, and then Bank One.
So, I think you can't necessarily look to just the absolute
number. You want to look to the reach and where they hit the
geographic portions.
Mr. Gutierrez. But we're still at 600 of 10,000 financial
institutions?
Mr. Hammond. Yes, we are.
Mr. Gutierrez. Some have probably reached smaller
communities, larger communities. Geography must have something
to do with this. In terms of languages the people speak,
cultural.
I mean, where are the, especially all of the different
kinds of financial institutions that can out as long as they
are FDIC-insured?
Shouldn't we start maybe looking at some regulations, since
there are some that are obviously on the leading edge, and
we're going to hear from one soon, that other financial
institutions are bound to encourage, either through regulations
or through a change?
Because otherwise I have a funny feeling that they're just
not going to be involved in the program and we're going to stay
at that 600 level. Six hundred to 10,000, it's not a lot, it's
6 percent of all the financial institutions.
Mr. Hammond. Well, I think you make some very good points.
I think the question we've got in designing the product was,
one, to make it so that financial institutions truly had to be
interested in offering the account.
As you'll see later on, the success that Banco Popular has
enjoyed requires a real commitment by the offering financial
institution.
To simply require an institution to offer this account and
expose themselves to a new product offering, is something that
really should be voluntary.
Mr. Gutierrez. Let me, just so that I can continue, because
the sign says ``sum up'' and I have to. I have the luxury of
being here and watching the sign light up.
It says ``stop.''
Real quick, just in coordination with the Chairwoman's
request, please look at what steps can be taken to increase the
number of financial institutions from the 600 to the 10,000
eligible FDIC-insured institutions. What we can do to expand
that, and what measures have worked in the past specifically,
as you said with the Social Security checks, and what is the
plan to get the other 10 million; roadblocks, obstacles, and
how we're going to overcome that.
I know we're going to learn a little bit about that in a
minute, and as we're into the private sector, maybe you might
want to have a consulting contract with Banco Popular to
expedite your process.
Thank you, Madam Chair.
[The information referred to can be found on page 45 in the
appendix.]
Chairwoman Kelly. Thank you, Mr. Gutierrez.
I know that we can again ask the GAO to investigate the
issues that you've raised.
I'm just going to use the privilege of the Chair to do one
follow-up with my colleague's question.
And that is, I want to know if you're partnering to present
this to the public with any minority-owned radio, TV stations,
with any minority-owned print, any print mechanisms to
advertise ETAs?
Because as we were talking just before we began the
hearing, we both recognized that one of the problems that
people have is a fear of the mechanics themselves. Many people
fear a machine, the use of that kind of machine.
The second thing is that people cannot utilize the machines
because of language barriers.
What is your outreach?
Mr. Hammond. We've done a lot of outreach.
Chairwoman Kelly. With minority stations?
Mr. Hammond. Very definitely. In fact, our public service
announcement materials were prepared in both English and
Spanish and the print materials were, in fact, produced in a
number of other languages. I think I can get the answer for you
explicitly for the record, but I believe it was in 16 different
languages at one point in time.
Chairwoman Kelly. And you advertised in that, or you just
printed things?
Mr. Hammond. We've used no paid advertising as part of our
program. Quite honestly, that's a factor of cost.
Chairwoman Kelly. Have you used public service
announcements?
Mr. Hammond. Yes, we have. And we found that we had some
success with print, actually substantial success with print
advertising, limited success with radio, and from a personal
standpoint, somewhat disappointing success with television PSA
advertising. And I think that's consistent with Government
programs in general.
[The information referred to can be found on page 46 in the
appendix.]
Chairwoman Kelly. Well, we thank you very much, Mr.
Hammond. I know that both Mr. Gutierrez and I have further
questions. We will submit them to you in writing, because I
will hold the record open for 30 days. There are no more
questions, but I know there will be these additional questions
and we'll have 30 days for Members to submit those questions to
the witnesses and get those responses placed in the record.
Mr. Hammond, I'm going to excuse you with the
subcommittee's great appreciation for your time. We really
appreciate your being here.
Before I empanel the second group to speak, I want to say
to the people standing here at the door, there are seats so why
don't we just take a moment while Mr. Hammond leaves this
table, and feel free to walk through here and sit down. You
don't have to stand for the second half of this hearing.
Thank you very much, Mr. Hammond.
Mr. Hammond. My pleasure, and we'll have the responses to
you very timely.
Mr. Gutierrez. Thank you, Mr. Hammond.
Chairwoman Kelly. For the purposes of the introduction of
our first witness, I am going to turn that privilege over to my
Ranking Member, Mr. Gutierrez.
Mr. Gutierrez. Thank you very, very much. I really
appreciate the distinct privilege and honor of going out of the
regular order and allowing me to make these introductions.
Our second panel consists of Mr. Richard L. Carrion, the
President, Chairman of the Board, and CEO of Banco Popular of
Puerto Rico and Popular Incorporated, the holding company that
holds Banco Popular, and Ms. Margo Saunders, Managing Attorney
for the National Consumer Law Center.
First, Mr. Carrion. Banco Popular is the largest bank in
Puerto Rico and one of the largest in the United States and
throughout Latin America. Banco Popular North America, a
subsidiary of Banco Popular, Banco Popular Incorporated, is the
largest Hispanic bank in the United States.
It operates over 100 branches in the continental USA,
including over 30 in New York, and I might say gaining quickly
in Chicago.
Mr. Carrion is President of the Committee for the Economic
Development of Puerto Rico, a member of the Executive Committee
of the Puerto Rico Banking Association, President of Banco
Popular Foundation, and a member of the International Olympic
Committee.
He received a Bachelor's degree from Wharton School of
Finance and Commerce, and an MS in Management Information
Systems from the Massachusetts Institute of Technology.
During Mr. Carrion's tenure at Banco Popular, he was the
driving force to implement the ATM system throughout the branch
network in Puerto Rico and the United States, as well as
successful electronic services to facilitate banking
transactions.
In fact, Banco Popular Puerto Rico is ranked first in the
entire Nation as the bank with the largest number of electronic
transfer accounts. It is precisely this expertise in this field
that makes Mr. Carrion's testimony so relevant for today's
hearing.
Mr. Carrion, we are especially pleased that you are here to
discuss your outstanding performance in opening ATAs, and we
deeply appreciate your traveling from Puerto Rico to be with us
today.
Chairwoman Kelly. Thank you very much.
Before I introduce our next witness, I want to say that I
have given Anibal Acevedo-Vila, my colleague who is a Member of
Congress from the Commonwealth of Puerto Rico, the subcommittee
privilege of sitting with us today, and we welcome you.
Next we have, as a witness, Ms. Margot Saunders. Margo
Saunders is the Managing Attorney of the National Consumer Law
Center (NCLC).
Since 1969, the National Consumer Law Center has been
providing legal services, attorneys, and others representing
low-income clients, with technical and legal consulting,
training and publications that cover all major topics in
consumer law.
Since its' founding, the NCLC has established itself as the
Nation's consumer law specialist, making its' legal expertise
available to low-income clients, private and legal services
attorneys, and to State and Federal agencies.
Ms. Saunders has been the managing attorney there since
1991. She is a prolific writer and a witness on consumer
issues. She's also been a member of the Federal Reserve Board's
Advisory Council, and Chairperson of the North Carolina Bar
Committee's Consumer Credit Committee.
She received her law degree from the University of North
Carolina Law School.
We thank you both for joining us here today to share your
thoughts on this issue.
Without objection, your written statements will be made
part of the record. You will each be recognized for 5 minutes
in summary of your testimony. And once again, I remind you, if
you go over, I will remind you.
So we thank you very much, and we will begin with you, Mr.
Carrion.
STATEMENT OF RICHARD L. CARRION, CHAIRMAN OF THE BOARD;
PRESIDENT AND CEO, BANCO POPULAR DE PUERTO RICO
Mr. Carrion. Thank you, Madam Chairperson and thank you
Congressman Gutierrez and Congressman Acevedo-Vila for being
here and for your kind words.
My name is Richard Carrion. I am President and CEO of
Popular, Inc., and Banco Popular Puerto Rico. Banco Popular
Puerto Rico was founded on October 5th----
Chairwoman Kelly. Mr. Carrion, I'm sorry to interrupt, but
could you pull that microphone closer?
Mr. Carrion. I sure will.
Chairwoman Kelly. It's difficult for those in the back of
the room to hear you.
Mr. Carrion. It that better?
Chairwoman Kelly. Better.
Mr. Carrion. Banco Popular Puerto Rico was founded on
October 5th, 1893, when Puerto Rico was still under Spanish
domination. We have assets exceeding $28 billion and we are the
oldest and largest financial institution on the island.
We are also the 35th largest bank holding company in the
United States and 8th in Latin America.
The bank operates over 200 branches in Puerto Rico, 100 in
the continental United States, as well as the U.S. and British
Virgin Islands.
We also operate several subsidiaries including Popular
Mortgage, Popular Securities, Popular Leasing in Puerto Rico
and we also have a presence in over 30 U.S. States with our
Equity One Mortgage Subsidiary, Popular Cash Express, Banco
Popular National Association and Banco Popular North America,
the largest Hispanic bank in the mainland.
Throughout its history, Banco Popular has embraced several
institutional values upon which we have based our business
objectives generation after generation.
Two of those values are innovation and social
responsibility. We are particularly proud of our initiatives to
convert the so-called unbanked segment of the population in
Puerto Rico, as well as in the continental United States.
In the 1950s, Banco Popular put in place an outreach
program serving then-isolated communities with mobile units,
buses, a fleet of buses that then operated as bank branches
throughout the island.
We introduced Farmers Home Administration loans in Puerto
Rico and we are still one of the five Small Business
Administration lenders in the continental United States.
Two months ago, we launched a new product: ``Acceso
Popular'' and a new outreach program: ``El Banco en al
Comunidad'' or ``The Bank in the Community,'' also directed to
converting the unbanked segment.
Moreover, since its inception, Banco Popular de Puerto Rico
has ranked first in the entire Nation as the bank with the
largest number of electronic transfer accounts, or ETAs--4,349
as of May.
Likewise Banco Popular North America ranks fourth after
Banco Popular de Puerto Rico, Firstar Bank-Milwaukee and Wells
Fargo & Co., San Francisco.
Another Popular, Inc. subsidiary, GM Group, is in charge of
processing electronic payments of the U.S. Department of
Agriculture Nutrition Assistance Program to over 450,000
beneficiaries in Puerto Rico.
Individual benefits are electronically accessed through our
network of 624 ATMs on the island, a network we have owned and
operated since 1983.
Several years later, we also introduced the point-of-sale
technology and we currently own and operate over 40,000
terminals. Both initiatives have been responsible for a
dramatic transformation of consumer behavior in Puerto Rico.
In the year 2000, our ATMs and point-of-sale terminals
processed 184.9 million electronic transactions. Our clients
averaged 11 transactions a month at our point-of-sale
terminals, and 9.6 at our ATM network, a user pattern that
doubles the U.S. average.
In total, our clients conduct 76 percent of all their
transactions electronically, which represents the highest usage
of electronic banking in the entire United States.
In Puerto Rico, Banco Popular owns and operates the local
ATM and POS switching networks. This allows us to provide free
and unlimited access to the ATM and POS networks since the
marginal cost of processing these additional transactions is
extremely low.
I believe this has been one of the principal reasons for
the success we've had with the ETA and other similar products
in Puerto Rico.
If the U.S. Federal Government and the U.S. Congress are
committed to the expansion of ETAs and EFTs in general, there
are two areas on which it should focus.
One, access to the national ATM networks. Some mechanism
must be found to enable a lower cost of access to the ATM
network for these account holders. While I instinctively recoil
from mandated subsidies or additional regulations, I think that
a voluntary agreement can be reached with the major ATM
networks.
Again, the marginal cost of processing these additional
transactions is small and it is in the long-term interest of
these networks to promote a shift toward electronic
transactions.
Second, a check-cashing or money exchange industry. There
are currently over 10,000 check-cashing locations in the United
States. They are the primary providers of basic financial
services to the unbanked, mostly check-cashing, money
transmission and bill payment.
I would urge this subcommittee to include them in your
discussions.
And for the record, I will mention that our subsidiary,
Popular Cash Express, currently operates 87 check-cashing
locations in the U.S.
It is imperative that we recruit the support of these
institutions in promoting electronic transactions among their
clients and reevaluate both the Bank Secrecy Act and anti-money
laundering regulations that currently curtail this industry's
possibilities of growth and of servicing the unbanked
population.
Madam Chairperson, as telecommunications redefine the
banking industry, we need to move forward in providing equal
access to this technology.
Thank you, Madam Chairperson.
[The prepared statement of Richard L. Carrion can be found
on page 47 in the appendix.]
Chairwoman Kelly. And I thank you, and I thank you for
observing the 5-minute rule.
Ms. Saunders.
STATEMENT OF MARGOT SAUNDERS, MANAGING ATTORNEY, NATIONAL
CONSUMER LAW CENTER, WASHINGTON, DC.
Ms. Saunders. Madam Chairwoman and Mr. Gutierrez, thank you
for inviting us here today to testify.
I offer my testimony today on behalf of our low-income
clients as well as the Consumer Federation of America and
Consumers Union.
Treasury has accomplished a great deal of good things in
the past few years regarding implementation of EFT 99. We
especially applaud them for the excellent waiver system that
they adopted.
They have aggressively ensured that no recipient is led to
believe that a bank account is necessary to receive Federal
benefits, which was a tremendous concern originally. There was
a lot of misinformation out there.
The Treasury has adopted an excellent education program. We
are hearing from all around the country from our local
communities and our partners, that the education effort
Treasury has engaged in is really a leader in the Government
efforts.
The design of the ETA account is excellent in many ways. We
especially like that it's open to all Federal recipients
regardless of credit status, that it appropriately limits fees
for basic services--and this is very important--that it
prohibits attachment by judgment creditors for all exempt
proceeds in the account. And we believe that is of significant
importance to many of our clients.
However, we do think there is a problem with the ETA in
that it does not provide any payment mechanisms for recipients,
and it does not limit charges for additional services.
As you have already noted, the ETA account has currently
only opened 11,000 new accounts. Whether this is \1/10\ of 1
percent, which is my math on that, or some higher number, it's
clear that the ETA account has not begun to reach its full
potential.
We in the consumer community feel strongly that a number of
things have to be done differently. One big problem the
Treasury has already acknowledged is the lack of regulation of
the method of receiving all Federal payments.
Treasury has said in its regulations that all Federal
payments must be deposited in an insured financial institution,
in an account established in the name of the recipient.
However, Treasury has not required that the recipient
actually have access to that account directly. As a result,
many check-cashers and other fringe bankers, unregulated
financial service providers, have established accounts through
their own storefronts. While we don't have any idea of the
actual number of these relationships, we believe that it is a
substantial number of low-income recipients of Social Security
and SSI benefits who receive their Federal benefits through the
check casher.
I indicated in my written testimony just a few examples of
how much this can cost a low-income recipient. For example, in
Philadelphia, in one of several programs offered, recurring
monthly recipient fees are typically charged to access $500 of
monthly benefits that total approximately $234 a year. On a
yearly basis, half-a-month's benefits is being spent on
accessing the benefits through the check-cashers.
Why is this a problem? We think it's not only a problem
because of the fees necessary to access the Federal payments,
but it is also a problem because it feeds these recipients into
the other onerous services that these financial services
alternative fringe bankers are providing, such as payday loans,
and other sources of high cost credit.
We think the law is absolutely clear. The Treasury has the
mandate to provide access to an account at a financial
institution at reasonable cost to all recipients. That's what
the law says, that's what Congress said when it adopted the
DCIA.
But I'm afraid that the establishment of the ETA, as good
as it is, does not fulfill Treasury's obligations under the
law.
I've run out of time. I don't want to see that stick, so I
will stop there.
Chairwoman Kelly. You still have a little time if you want
to take it.
Ms. Saunders. I've supplied you with lots of paper, and if
you have any questions, I'd be glad to answer them.
[The prepared statement of Margot Saunders can be found on
page 52 in the appendix.]
Chairwoman Kelly. Thank you very much. We appreciate your
testimony.
I'd like to begin the questioning actually by utilizing
your testimony and addressing Mr. Carrion.
Ms. Saunders raised the issue of banks partnering in with
check-cashers in which a Federal benefit is electronically
transmitted to a bank, and then the beneficiary withdraws the
benefit at a check-casher.
Does Banco Popular have a product like this?
Mr. Carrion. No, we don't. We're aware that is done, but we
don't have that product.
Chairwoman Kelly. Would that be a helpful thing?
Mr. Carrion. What I think would be helpful is to take
advantage of the fact that there are 10,000 locations where
these accounts could be opened--ETA or similar type of
account--could be opened.
And I would use that infrastructure and I would bring them
into the discussion rather than leave them out.
Chairwoman Kelly. You'd like to see us bring the check-
cashing industry into the ETA account system?
Mr. Carrion. Yes, I would.
Chairwoman Kelly. If I understand you correctly.
Ms. Saunders suggests that we should then, if we were to do
that, subject the check cashing industry to Federal regulation
in order to increase that usage and also to make sure that
everything works properly. Do you agree with that?
Mr. Carrion. Far be it from me to request Federal
regulation of anything, but I would say that insofar as the
specifications for the product that is to be offered should be
mandated by the Treasury in the same way that the
specifications for the ETA product through banks was mandated
by Treasury, and that means inevitably regulating the costs and
the revenues that are associated with that product.
Chairwoman Kelly. Well, as you probably know in New York,
the check-cashers are pretty heavily regulated.
Mr. Carrion. Yes, they are.
Chairwoman Kelly. It's one of the States where we do have
regulation on the check cashing industry, and it does work.
I'm wondering, though, with regard to that, what
improvements you would like to suggest to the ETA program
itself?
Mr. Carrion. Well, as I mention in my testimony, I think
the main factor of our success in Puerto Rico, and we've also
had success in the United States, but our main factor in Puerto
Rico has been the fact that we own and operate the ATM network,
and that we have really not charged for access to that network.
I think that is a big part.
Obviously, the outreach programs and the communications and
education associated with those programs have been a part of
our history and it's something that we continue to do, and that
it has been a large part of our success here in the States
where we are actually in those communities and we do spend a
lot of time and resources on the outreach.
Chairwoman Kelly. You mentioned that you thought a
voluntary agreement could be reached with the networks?
Do you think it could work?
What kind of a process or structure do you think you would
envision there?
Mr. Carrion. There are two major and several regional ATM
networks, and they're all owned by banks. I think the fact is
that we are moving away from the paper-based system which
imposes higher costs on the banking system and moving toward an
electronic system which essentially has a very low marginal
cost associated with it.
I think this would be very positive and convince the
networks to do it.
There is also using the Community Reinvestment Act (CRA),
these kinds of things, to stimulate this kind of activity. I
think it would be helpful, as well.
Chairwoman Kelly. I'd like both of you, just quickly, to
answer what issues you think you would like to see the GAO
review and what data you think that it would be helpful to have
them determine so that we can get a better handle on this
situation.
Let me just ask both of you that question.
Ms. Saunders. I think there is still some controversy over
how many unbanked Federal recipients there are. And I think
actually clarifying that question would be helpful.
But you've already asked that and I think that's the most
important question.
I would like to find out how many check-cashers and
alternative service providers actually have established these
relationships. And if we're talking about a few thousand, then
I don't need to spend all my time worring about it.
But if we're talking about tens of thousands, as we
believe, then it becomes an altogether different matter, so I
think that's the primary other question.
We have an alternative way that we have long proposed to
Treasury to address this problem, and I don't know if the
efficacy of that proposal is something that might be within
GAO's purview.
But if I could explain it, you might be interested.
Chairwoman Kelly. Well, I think that's something that the
subcommittee and I would be very interested in talking with you
about it later, and we could perhaps develop something for GAO.
I have run out of time, but I think, Mr. Carrion, perhaps
with the indulgence of my colleague, perhaps he would be
willing to allow you to answer that question also.
Mr. Carrion. Well, I think you've all proposed the right
questions. I would look at the difference in the profile in
terms of socioeconomic profile, ethnic profile of recipients
that are currently signed up for the ETA and those that are not
signed up, and look at the difference amongst them.
And of course, our database is open for whatever help we
can provide in this matter.
Chairwoman Kelly. Thank you very much.
Mr. Gutierrez.
Mr. Gutierrez. Thank you. Well, I just want to go over some
things because, as I understand it, Banco Popular of Puerto
Rico currently has more than 4,000 ETAs. The approximate number
of ETAs opened in my home State of Illinois is 500, and that
includes 40 banks in Illinois that currently provide these
accounts to consumers.
Now this is only 500 accounts opened and there are 12.3
million people in Illinois, compared to 3.8 million in Puerto
Rico. Of those 12.3 million, almost 2 million are Social
Security recipients and nearly 1 million are recipients of
Veterans Administration benefits.
I guess we have a lot. I simply raise the issue just to
compare a State to financial institutions to a population which
is \1/3\ the population with many more people participating and
yet such a higher rate. So I think Mr. Carrion, if you would
open up your books to us in terms of showing us who it is
that's getting engaged and maybe, you know, the education.
Sometimes I can get a little sensitive.
I know that technology and fear of technology, and
something that has nothing to do particularly with education is
that I have a Bachelor's degree, but my daughter who is in
seventh grade uses the computer. I always think it's going to
break down on me.
Chairwoman Kelly. My husband can't turn one on.
Mr. Gutierrez. You know, so I mean just technology,
education, understanding and anything that you have insight.
I think also it's important to understand, given my own
personal experience, because I think Mr. Carrion has explained
why his program works, it's because they go out into the
community and they actually do the outreach.
You know, we don't have a CRA problem with Banco Popular,
because Banco Popular is opening and expanding branches
throughout Chicago, Houston, in Florida, in New Jersey, in
areas where, quite honestly, before were under-served
communities.
I think part of the solution here is to get the 600
financial institutions that are already in the program,
congratulate them, give them incentives and then figure out how
we get the other 9400 FDIC-insured institutions to do what
Banco Popular has already done in terms of doing that.
And I would just like to say that part of, I think, making
this work--and I may be wrong, and once we get the information
about just who it is who is signing up and who isn't signing
up, Madam Chairman, and you and I will talk about that in terms
of their education level, in terms of their social standing--is
trust that people have.
I have a feeling that a lot of people are staying away
because they would rather still have that piece of paper in
their hand at the end of the month, because they don't trust
the financial institution to take that piece of paper away from
them.
And so we may have to gear ourselves especially to--you
know, we're talking about Veterans, we're talking about Social
Security recipients. They tend to be older. They come from a
different time. And maybe we should examine how it is, trust.
Because I know one of the things that, if you were in
Puerto Rico, when you think about Puerto Rico and you think of
the different icons of the Puerto Rican society and culture,
and I'm sure the resident commissioner will share on this, is
that when my mom and dad went from Puerto Rico to Chicago, and
they saw Banco Popular, they went there.
They went there because they saw it as an institution that
they knew and had learned about and trusted. And so I think
that's part of the success that I think Mr. Carrion has been
very good about not telling us, because I'm sure he's very
proud of it.
But I'll tell you that's why I think part of the reason
Banco Popular is part of the society and if it's part of the
society and the makeup of the society in terms of financial, in
terms of philanthropic and other kinds of endeavors and it's
part of the fabric of a society, then people tend to sign up.
That's why I think people sign up.
Thank you.
Chairwoman Kelly. Thank you very much.
I would like to go now to Mr. Moore.
Mr. Moore, thank you for joining us. Have you any
questions?
Mr. Moore. I have no questions. I hate to come into a
hearing late. Not hear what's gone before. Madam Chairman,
thank you for the invitation for questions. I apologize for
coming in late. I had another hearing earlier and I don't like
to come into hearings in the middle of a hearing and then ask
questions that may have been asked, so thank you very much.
Chairwoman Kelly. I'm holding the record open for 30 days,
should you have some.
Mr. Tiberi.
Mr. Tiberi. Ditto.
Chairwoman Kelly. Thank you both.
Mr. Acevedo-Vila do you have anything you would like to
say?
Mr. Acevedo-Vila. I just have one question and one comment.
Welcome Mr. Carrion and Ms. Saunders.
As Louis just said, Banco Popular is part of the Puerto
Rican society. It's my bank. I've been using this for the last
50 years. I have never seen a paycheck for the last 10 years,
and now I don't even issue checks anymore, because I pay almost
everything through the internet. So it's really a success
story.
But I have a question. You point out the fact that you
don't charge customers when they use ATMs because you own them.
But, other banks have ATMs in Puerto Rico, don't they?
Mr. Carrion. Yes.
Mr. Acevedo-Vila. And they don't charge either, because
they are following you?
Mr. Carrion. Yes.
Mr. Acevedo-Vila. So that's also very important.
I live half of the time here, half of the time in Puerto
Rico, and I'm shocked whenever I go here and have to use any
card, and they charge me $1 or $1.50.
In Puerto Rico, even if you go using this one, to another
one that is not owned by Banco Popular, they don't charge you.
Why? Because they have basically established the lead, and
everybody's following.
Chairwoman Kelly. Thank you very much.
I must say that I am very impressed with what Banco Popular
has been able to do in this regard, and we do thank you for
taking your valuable time, Mr. Carrion.
And Ms. Saunders, also, I know you are a busy woman.
We thank both of you.
If there are no more questions then, the Chair notes that
some Members may have additional questions, and as I stated
before, they may wish to submit them in writing, so without
objection, the hearing record is going to remain open for 30
days.
The second panel is now excused with the subcommittee's
great appreciation for your time.
And this hearing is adjourned.
Mr. Carrion. Thank you, Madam Chair.
[Whereupon, the hearing was adjourned.]
A P P E N D I X
June 20, 2001
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