Remittances have become a major source of capital for Latin America and the Caribbean, which last year received more than $38 billion from its expatriates around the world. According to the Inter-American Development Bank (IDB), Latin American migrants living in the U.S. will send some $30 billion back to their countries of origin in 2004. These projections are based on the assumption that of the estimated 16.7 million Latin America-born adults residing in the U.S., approximately 10 million will send money to families abroad. While Latin American immigrants will send billions of dollars south of the border, these remittances are but a small fraction of their greater contribution to the U.S economy - estimated at $450 billion.
Although states with large Hispanic populations comprise the largest source of remittances, significant amounts are also flowing from states not generally associated with Latin American migration. While states such as California, New York, and Florida rank securely in the top three positions, Georgia, North Carolina, and Virginia all rank well within the top 10. Remittances are no longer a localized phenomenon.
According to statistics from the IDB, nearly eight in 10 remittances senders use money transfer companies; others use informal couriers (viajeros), banks and credit unions, or mail. Only half of Latin American immigrants have bank accounts. In addition to concerns about the quality and cost of remittances provided by money transfer companies, other ramifications must also be considered. According to the Federal Reserve, by using money transfer companies for making remittances, many immigrants forgo the opportunity to enjoy the wider benefits that arise from an established relationship with a bank, such as established savings accounts.
Given the growing salience of remittances in the U.S. and Latin American economies, Representatives Barney Frank, Luis Gutierrez, Ruben Hinojosa, and Joe Baca, members of the House Financial Services Committee, recently approached banking regulators about the feasibility of allowing regulated financial institutions to claim Community Reinvestment Act (CRA) credit for offering international remittances services to low- and moderate-income individuals. The Federal Deposit Insurance Corporation, the Federal Reserve, the Comptroller of the Currency, and the Office of Thrift Supervision have all agreed that remittances services can receive consideration in a CRA evaluation as both a retail service, and as a community development service if remittances serve to increase access to financial services by low- and moderate-income individuals. Not only will this ensure that remitters can send funds to home countries safely and at a reasonable cost, but also, it will provide remitters and their families greater financial access.
This move by Representatives Frank, Gutierrez, Hinojosa and Baca is a step in the right direction.
This information is provided by the Latino Leadership Link (LLL).