Opening Remarks by Jo Ann Jenkins
President, AARP Foundation
AARP Foundation Conference on The Needs of Older Underbanked Consumers
Los Angeles, California
December 13, 2010
Good morning. Thanks you for coming—and welcome.
Let me welcome Los Angeles City Councilman Richard Alarcon.
I’d like to recognize our two AARP Foundation Board members who are here:
Fernando Torres-Gil, who is also a member of the AARP Board of Directors and is Associate Dean of Academic Affairs at UCLA’s School of Public Affairs; and Neal Cutler, the Executive Director of the Center on Aging at the Motion Picture and Television Fund.
I also want to acknowledge Leo Estrada, a member of the Board of Directors of AARP and] Bob Prath, who serves on AARP’s National Policy Council and AARP’s California State Executive Council.
And I want to thank the AARP staff here in California and in Washington, DC, who have done a wonderful job in putting this event together.
I’d like to thank the New America Foundation, and Olivia Calderon and Maria Sotero from that Foundation, who are here. We are presenting today’s conference in conjunction with the New America Foundation. They are taping today’s panels and will post them to the New America Web site.
I also want to thank the California Endowment for graciously hosting all of us.
The Center for Financial Services Innovation (CFSI) has made a critical contribution to this subject through its data and research, and we have the Director of CFSI, Jennifer Tescher, with us.
I’m delighted that we’ve all come together here in Los Angeles to address this topic. We’re here not only to generate greater awareness, but to apply our best thinking and take effective action that will build and sustain greater financial security for older adults who are underbanked.
This is a very fitting place for us to meet. Almost 450,000 households with people 45+, here in the Los Angeles area, are unbanked or underbanked.
Fortunately, there’s a growing energy and creativity and commitment on this subject across many different sectors in LA. You’re moving this issue from the shadows of neglect to the sunlight of solutions.
And I’m glad we’re in this city for a couple of other reasons as well. LA is a target community for AARP Foundation. It is also the place where AARP will hold our annual member event next September 22 to 24—and I hope to see many of you there.
Last but not least, it is the city where AARP’s remarkable founder, Ethel Percy Andrus, became the first woman ever to serve as principal of a California high school, a very diverse school in East LA that she renamed Lincoln High School. She also taught at Manual Arts High School in South LA.
This is the city where Dr. Andrus honed her skills and harnessed her sensitivity to the plight of older adults in profound ways that have made America a better, more caring, more inclusive country.
You might say that AARP—like many memorable American ideas—was made in California.
One day, more than 60 years ago, in a town just outside Los Angeles, Dr. Andrus was looking up a retired teacher. She was shocked to find that former teacher living in a chicken coop—living there because that was all the woman could afford.
Dr. Andrus didn’t just get mad—she took action—on behalf of retired educators who had no health insurance and terribly inadequate pensions. She founded the National Retired Teachers Association and then, AARP.
I mention this story not only because it took place near here, but because it goes to the heart of what we do, so many decades later, at AARP Foundation.
Dr. Andrus saw her role as not simply to spotlight problems, but to create and carry through new solutions that would lift people’s lives.
Today, AARP Foundation works to create solutions for vulnerable people 50+, solutions that help them secure the essentials—food, housing, income, and personal connection—and achieve their best life.
We focus on the needs of low-income vulnerable people—and we work with groups and individuals in LA and communities across the country to meet those needs.
Over 33 million low-income women and men age 50 and above lack adequate financial resources and are at risk of failing to meet one or more of their basic needs.
AARP Foundation is building relationships with banks and credit unions at the community level. We’re putting resources where our rhetoric is. The Foundation has a program-related investment at Broadway Federal Bank, a bank that serves customers in underserved LA communities. Kibi Anderson of Broadway Federal will be on the lunchtime panel.
We’re helping to bank the unbanked through our partnership with Bank on Los Angeles. We’re been particularly supportive of Bank on LA’s outreach through promotoras—the community-based leaders who provide financial education and guidance to help the unbanked open free or low-cost banking accounts, establish credit, and build their financial security.
There are neighborhoods in this city with a troubling ratio of alternative financial institutions—that’s a polite term—to banks. In Boyle Heights, for example, banks are outnumbered more than 4 to 1. In Southeast LA, the ratio is 5 to 1.
Low-income residents of LA pay a steep price for this imbalance.
We’re helping people move beyond payday lenders. We’re helping low-income older adults move beyond check cashing outfits and carrying around large amounts of cash. And we’re constantly looking for new ways to accomplish these goals.
Last week, AARP’s Board approved a Prepaid Debit Card program to increase financial security among low-income households.
We see such a card as meeting a vital need—and moving the marketplace. We see it as an important step away from predatory lenders and all the financial burdens they impose.
This would be a reloadable, prepaid debit card that functions like a debit card affiliated with a bank account. Cardholders would load funds on the card and only be able to spend the available balance. With this limitation, there is no risk of overdrafts—and no costly overdraft fees.
To get a good sense of the value of such a debit card, it’s important to keep in mind the estimate by CFSI that low income households pay about $700 per year for such basic banking services as check cashing and purchasing money orders.
That’s money these consumers could use to pay for food or transportation or health care or some other basic need.
This card would also include a savings feature enabling cardholders to save a portion of their funds automatically or through the transfer of funds between accounts.
This prepaid debit card will make it easier to manage their money well and protect their assets. And we’re going to make sure this prepaid debt card comes with strong consumer protections.
We think this kind of card will have an especially positive impact in diverse communities, since nonwhite families are four times more likely to be underbanked than white families—and 35 percent of all Hispanic households are underbanked.
We see this prepaid debit card as a natural progression from the report on the underbanked and unbanked that AARP Foundation and AARP’s Public Policy Institute issued earlier this year. And that report built upon data and research from the Center for Financial Services Innovation.
This prepaid debit card shows how we move from analysis to action.
That’s the approach we’ve taken to increase financial security. That’s the path we’re taking to combat hunger. Nearly six million older adults in our country face the threat of hunger.
AARP Foundation has joined with Hendrick Motorsports and NASCAR superstar driver Jeff Gordon on the Drive to End Hunger. We’ll be raising awareness, raising funds, and pursuing long-term solutions to the problem of hunger.
By bringing cause-related marketing to the NASCAR circuit, we’re taking an unconventional course. From NASCAR to neighborhoods, our role is not to duplicate, but to innovate—and to collaborate with others to make a lasting difference.
At AARP Foundation, we know that whatever road we take begins with careful listening.
We’re eager to get your insights, to share information with you, and to move forward together to help low income older Americans maintain or regain their financial footing.
On each table, you’ll find note cards that we encourage you to fill out. We’ll post these cards on the wall before the end of the event. Your answers will help make this conference as productive as possible. They will point us toward next steps for all of us and new solutions for low-income older adults.
One housekeeping detail: When you ask a question, please wait for a mic—that will make it much easier to fully capture the proceedings on tape.
Thank you for taking part in this conference—and taking a leadership role on this issue.
And now, Neal…