April 19, 2022

CFPB: New Report Released on Financial Challenges Facing Rural Communities

Many rural communities are “banking deserts”

Today the Consumer Financial Protection Bureau (CFPB) issued a report on the challenges faced by Americans in rural communities. The report highlights that many of these communities lack access to physical bank branches, are more likely to seek credit from nonbanks, and are heavily affected by medical bills. The CFPB will be expanding its efforts to address these and other challenges facing the people and families of rural America.

“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.”

There are multiple ways to define rural communities. According to the definition of the U.S. Department of Agriculture’s (USDA) Economic Research Service , rural, or “non-metro,” counties are home to 46 million people, which is 14 percent of the U.S. population. People living in rural counties tend to have lower income and higher rates of poverty. The overwhelming majority of persistent poverty counties across the U.S. are located in rural areas.

While agriculture has historically been a pillar of rural economies, the number of farms has decreased over several decades. Today, less than 10 percent  of people in completely rural counties work in agriculture, and the farmers who remain earned only 16 cents for every dollar spent by consumers on agricultural products, according to a USDA analysis . Another pillar of rural economies is small businesses, with people living in rural communities more likely to be employed by small businesses than people living in other parts of the country.

Local financial institutions, such as community banks and credit unions, often offer products and services that fit the local economic terrain. However, rural communities are experiencing a fast-paced exodus of in-person banking services, with rural communities 10 times more likely than urban communities to be located in banking deserts. In fact, the Federal Reserve  has identified more than 2,100 existing and potential banking deserts across the country with more than 1,500 located in rural areas.

Today’s data snapshot provides a summary of economic challenges facing rural people and communities. Among its key findings:

The CFPB has launched a new Rural Initiative to focus its authorities and resources to address the particular needs of rural communities. The CFPB has begun making a concerted effort to work with government and civil society stakeholders to establish lines of communication and gain more visibility into the most pressing consumer finance issues in rural areas. Specifically, the CFPB will:

Read today’s Data Spotlight: Challenges in Rural Banking Access

This post was originally published here.