Senators Kim and Warren Push for Banking Transparency in Letter to the Consumer Reporting Agency, ChexSystems
WASHINGTON, D.C. – Today, Senator Andy Kim (D-N.J.) and Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, sent a letter to President Ronald Whyte of ChexSystems, a consumer reporting agency, demanding increased transparency in their reporting process to break down barriers to financial mobility and help protect Americans from financial hardships like debanking.
“Every American who wants a checking account should be able to have one, and debanking represents a threat to millions of Americans’ financial well-being. It is critical that Congress determine the reasons for this debanking – including determining the role of middlemen like ChexSystems,” wrote the lawmakers.
Text of Full Letter (PDF)
ChexSystems is a consumer reporting agency governed by the Fair Credit Reporting Act that tracks people’s banking history. Banks and credit unions across the country rely on the company to screen customers, making it a powerful and secretive tool banks can use to exclude consumers from accessing basic financial services. Financial institutions report information about customers to ChexSystems and then the company compiles and reports information back to financial institutions for a fee. Banks use the information found in a consumer’s ChexSystems record to assess the riskiness of the consumer and determine whether to close an existing checking account or approve the applicants for a new account.
The Senators aim to shine a light on the company’s practices and the possibility for inaccuracies or errors in ChexSystems reports to cause consumers to become debanked or prevent them from being able to open accounts and create financial mobility. The letter follows a hearing held on February 5th by the Senate Banking, Housing, and Urban Affairs Committee on the impacts of debanking in America where the Committee learned that consumer reporting agencies like ChexSystems may be playing a role in debanking activities harming Americans.
“Reports indicate that nearly every big bank in the country uses ChexSystems to assess the riskiness of existing and perspective customers, giving banks a powerful – yet secretive – tool to exclude consumers from basic banking services,” wrote the lawmakers.
The lawmakers continued: “According to one report, ‘[m]any banks have construed an applicant’s mere presence in the ChexSystems database as the sole factor in assessing whether or not the applicant is an acceptable credit risk to open a checking account.’ And because ChexSystems retains its records for up to five years, consumers with a ChexSystems record may be affected for years.”
The senators are seeking answers from ChexSystems about whether the company’s information collection and reporting practices may be creating significant barriers to banking for millions of Americans that seek to access basic financial services. They provided ChexSystems’ leadership with a list of questions and asked for answers no later than March 20th, 2025.
Senator Kim serves as the Ranking Member of the Subcommittee on National Security and International Trade and Finance on the Senate Committee on Banking, Housing and Urban Affairs. He is a member of the Committee on Commerce, Science, and Transportation; the Committee on Health, Education, Labor, and Pensions (HELP); the Committee on Homeland Security and Governmental Affairs; and the Special Committee on Aging. Before being elected to the U.S. Senate, Kim represented New Jersey’s Third Congressional District in the U.S. House of Representatives and was a career public servant working in national security and diplomacy at the White House, State Department, and Pentagon.
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