Tim Scott: Bringing people into financial systems could help bridge racial wealth gaps

Bringing more people into financial systems like banks could be key to bridging racial wealth disparities, Sen. Tim Scott (R-S.C.) told Axios at an event Wednesday.

Why it matters: Scott said a number of people in his home state of South Carolina are "unbanked" — living without a relationship with, or access to, any financial institution.

• "That means that they're using cash to transact their business," Scott said, adding that such people are "not able to avail themselves to the entire portfolio that might be available at their financial institution."

The South Carolina lawmaker said he had "lived that reality of being outside of the financial systems for probably half of my life" until he first sought a loan to start a business.

• "For millions of Americans around our country who need more help and need more resources, need more access to loans and opportunities. It is imperative upon us in the positions that we hold to make it easier for those who are credit worthy to get the credit they need.

"You think about home ownership and the disparities between the races. One of the ways that we bridge that gap is not by extending loans to people who cannot afford it, but helping those who can be a part of the system and helping those who have been repaying their rent on time with their electric bill, on time, on their cell phone and time."

"That information should be scored by the credit agencies ... And when that happens, you have more people who have the beauty of experiencing the American dream. Building equity in their largest asset, their homes and closing the wealth gap. That raises a lot of the ills of society in and of itself."

What he's saying: "So we want to find ways to encourage that credit invisible or those who are unbanked to become a part of the system so that they and their kids get the benefit from the excellent opportunities that are afforded to people who have that relationship," Scott said.

• "And we saw that frankly might during the pandemic that having a relationship with their financial institution, especially in small businesses, was really important to getting your PPP loan approved and then forgiven and in record time."