The Consumer Financial Protection Bureau wants to focus on banking issues facing rural Americans, it said after releasing a report on the topic.
People who live in rural areas frequently lack access to physical bank branches, are more likely to seek credit from nonbanks, and are heavily affected by medical bills, the agency said in the report.
About 46 million people — 14 percent of the U.S. population — live in rural areas, according to a definition used by the Department of Agriculture’s Economic Research Service. They tend to have lower incomes and higher rates of poverty, with a historical reliance on agriculture and small businesses.
Rural communities are 10 times more likely than urban communities to be located in banking deserts, the CFPB said. Out of 2,187 current or potential banking deserts identified by the Federal Reserve Bank of St. Louis in 2014, almost 1,600 are in rural areas.
They also depend more heavily on in-person banking and smaller, community banks, with nearly 90 percent of rural residents visiting a branch in 2019. They rely on local decision-makers for tailored credit decisions, according to CFPB research, and larger national banks don’t always meet their credit needs.
Nationwide, the number of net branches declined by 3,164 in 2021, the highest reduction since at least 1987, according to the FDIC. In rural areas, there has been a 6.7 percent decrease in the number of bank branches over the five-year period from 2016-2021.
Compared to the rest of the country, rural areas have the highest rates of people without a usable credit history, the bureau said. This makes them more likely to turn to nontraditional credit sources such as payday lenders. The bureau also expressed concern about the effects of medical debt on rural communities: Unpaid medical bills are more common in the Southeastern and Southwestern U.S., which also have significant rural populations.
“For decades, many government agencies have turned a blind eye to pressing problems facing families, farmers, and businesses in rural communities,” said CFPB Director Rohit Chopra. “The CFPB will be focusing on ways to ensure that rural communities can better access relationship banking services and achieve their economic potential.”
The CFPB launched an initiative to focus on rural dwellers, vowing to collect and analyze data, hold roundtables with rural stakeholders and work with federal partners to meet the needs of rural communities.