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Imagine having served honorably in the military, winning medals and the nation’s gratitude but having no bank account. Yet that’s the case for an estimated quarter million veterans. Now the Veterans Benefits Administration has partnered with several external groups to improve the banking services available to veterans. With more, the VBA’s senior advisor for fiscal stewardship, Joseph Gurney, joined the Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: Mr. Gurney, good to have you on.

Joseph Gurney: Thanks for having me, Tom. I appreciate it, and I’m happy to share my thoughts on this today.

Tom Temin: Tell us about the program. Who are you partnering with? And what are the goals here?

Joseph Gurney: The Veterans Benefits Banking Program or for short, the VBBP, is a partnership between VA and the Association of Military Banks of America. And the partnership was designed to promote access for unbanked veterans and also the unbanked–in this case, people who use prepaid cards or checks and their beneficiaries–to provide them with access to banks and credit unions. And right now we have about 34 financial institutions, which includes 11 banks and 23 credit units. The Credit Union Council also has been a supporter of our program as well. So considering one year ago, we started with four, we’ve come a long way.

Tom Temin: And I mentioned a quarter of a million veterans. Is the best count that we have right now of those that are unbanked?

Joseph Gurney: So right now, we actually, in the last six months have converted over 30,000 veterans and beneficiaries to bank accounts. So the number’s continually going down. And it’s due to, honestly, things like this: talking on the radio, getting the word out. The more that we can share with veterans that they can get a bank account with this, called one-stop shop, the better. And it’s been really easy for veterans to access.

Tom Temin: And the ones that do not have bank accounts, do they tend to be poor, to begin with?

Joseph Gurney: It’s a mix of poor, there’s homeless. There are people who just are unaware that they were receiving a check, and they can have bank accounts. So it kind of runs the gamut. The issue is, some of them use prepaid cards. When they use a prepaid card, they’re subject to fraud, theft. There’s poor customer service, and there’s such high fees over the course of a year. I was telling someone the other day, someone who use a prepaid card, say for their benefits, and they are poor. For example, they’re basically giving away almost $500 a year in fees when they use a prepaid card versus just having a traditional checking account. And with the VBBP, the one thing I like about it is all the banks and the credit unions that are in the program, have offered our veterans a low to no-cost checking for as long as they got their benefits received through them. So it offers them a way to, one, get a credit history, two, set up a checking account very easily, and three, not to deal with agonizing costs month after month, when they don’t even have the money for those costs. To me, it’s a real benefit from that perspective.

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Tom Temin: And there must be more security with VBA able to deposit their benefits directly to that account, correct?

Joseph Gurney: There are. The other piece is the banks and credit unions and these programs offer a two-factor authentication security with their cards and accounts. If you do face fraud, they put the money back within 24 hours. It is just an easier way. I’ll also say when we started the program, part of it was people wanted to do in-person banking, and a prepaid card or check made that very difficult. However, with the pandemic, it’s actually turned out to be timely, is the ability for a veteran to not leave their home and just do electronic banking right from their home. It just makes it safer and securer, both physically and from a financial standpoint, which I think is really timely during this time of the year.

Tom Temin: We’re speaking with Joseph Gurney, senior adviser for fiscal stewardship at the Veterans Benefits Administration. And some of the institution’s the federal credit unions, I guess, are among those, and some banks, often they have minimums required for how much you need to have an assets, or there are fees and so forth. So how does that all work? How do you convince them to offer these services to people that aren’t going to have million-dollar accounts?

Joseph Gurney: So the one thing I’ll say about the banks and credit unions in this program is they’re familiar with veterans as they’ve been supporting veterans or inactive military with programs for many, many years. The one nice thing about the banks and credit unions in this program is they stepped up right away to say, “What is it that you’re looking for to help veterans?” And cost was a big deal. So, most of the banks–and they’re all different, well, they all have different requirements–as long as you’re getting a benefit check from, say, VBA, or even Social Security, they’ll provide zero-cost checking in most cases or low-cost checking with, again, not the traditional fees that you would have for a debit card, etc.

Tom Temin: Yeah, you raise another question. The same veterans that might be getting VBA benefits, could also be getting Social Security. They could be getting SNAP or food stamp benefits. So this kind of has a cross-governmental application in some cases.

Joseph Gurney: I think it does. And that’s why we’ve been trying to make veterans aware that even if you are receiving benefits through the VBA, you may be receiving a benefit from Social Security, as you said, and to have it all go into one account, again, provides a more safer avenue for accounts. The other thing I’ll mention, too, just with having a bank account, is prepaid cards and checks don’t allow any individual to save money, or to add money on a card. So the example I’ll give you is, let’s just say I have to pay my rent this month and on my prepaid card, I have $X, I can’t add money to it. So what I’d have to do is go to Western Union, get an additional, basically Western Union check or find another means to pay the remainder, and then have to basically combine the two. With a checking account, you just don’t have to do that. And then the other piece is, think of the $500 I mentioned annually that someone puts with a prepaid card. In this case, you could’ve put that all towards a savings. And honestly, that is a good thing, just in that alone. And you wouldn’t even have noticed it because you’re paying the fees already. So for me, like I look at it as the ability to help veterans have options and save money will also be a bigger part of this program, not just “Hey, we’ll put your benefits on, say, a bank account.”

Tom Temin: And for those veterans that might be homeless or are struggling in some other way, I guess this is a difficult question. But do they have the mental and other wherewithal to maintain a bank account and go where they need to go and have the access they need to manage it in a way that’s going to be beneficial in the long run for them?

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Joseph Gurney: You know, it is difficult, and especially the homeless, it is a difficult situation, but even in those situations, are receiving some payment, whether it’s a check or a prepaid card. So with the banks in our program, whether you have poor credit history, legal history, etc., they’re willing to work with each veteran to get them, I’ll call it, on a financial path of freedom and independence. And they’re willing to do that. So even in the cases, let’s say, where a veteran says, I’ve been turned away by this bank, this bank and this bank, they’re willing to work with that veteran to help them along the path so they can have some independence. And the other piece of this is all of these banks and credit unions that are in this program–we have regional ones, we have national ones, we have local ones. So in the case of even, I’ll look at a homeless or someone with maybe some mental issues, they have the opportunity after the pandemic, to go into a local branch and just talk to somebody. And I think in some cases that would help a veteran feel much more secure, and much more comfortable with a bank or credit union. And some may be scared off by it alone. I mean, it’s possible.

Tom Temin: Sure. And you said you’ve given about 30,000 accounts, are established. How many do you have to go?

Joseph Gurney: We have a lot to go. So if we have 250, we’ll have 220 or so to go. This past four months, we’ve been converting anywhere from, I’ll say 6,000 to 10,000 a month. So, the last four months have been really an uptick in the change. And I think it’s good. We’ve been doing a lot of, I’ll say, direct marketing, advertising to the veterans to say, “Hey, get a bank account,” for those that need it. And that’s helped tremendously. So we’ve mailed veterans, “Hey, are you aware of this program? Please sign up.” The other piece is, for someone getting benefits for the first time, on the forms, now, they have access to a link for the Veterans Benefits Banking Program.

Tom Temin: All right. Joseph Gurney is senior adviser for fiscal stewardship at the Veterans Benefits Administration. Thanks so much.

Joseph Gurney: Thank you for having me, and I appreciate it. Stay safe.

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