KANSAS CITY, Mo. (By Garance Burke, Associated Press) December 15, 2005 — Hispanics may be the largest minority in the United States, but almost half that population - almost 20 million people - haven't opened a basic bank account, according to the Federal Deposit Insurance Corp.

New financial education efforts targeting Hispanics have created mounds of brochures but have not explained to families why they should establish a credit history or how to avoid predatory lenders, according to a report released Thursday by the National Council of La Raza, a nonprofit civil rights and advocacy organization in Washington, D.C.

"How can we bring Latinos into the middle class?" said Beatriz Ibarra, the report's author. "The lynchpin of the strategy should be investing in counseling programs on the ground."

In May, President Bush introduced an initiative that called on government agencies and selected Hispanic organizations to promote financial literacy among Latinos. Two years ago, the U.S. Treasury launched a similar effort to step up financial planning and education for all Americans. The FDIC now offers free financial education programs in Spanish in 14 regions across the country.

Elizabeth Kelderhouse, a community affairs officer for the FDIC in Kansas City, said an internal survey shows over half a million people have attended the MoneySmart courses and have gone on to open 100,000 bank accounts.

"You can offer people five different kinds of checking accounts, but it's not going to matter if you don't tell them why they would want one in the first place," said Kelderhouse.

The report released by La Raza points to structural barriers in financial institutions, noting that lenders have little incentive to sign on low-income clients. Financial counselors usually work for a commission and would prefer customers with large asset portfolios, it said.

The report calls on Congress to pass several pending bills that would direct money to a community-based network of financial planning advisers. It also recommends creating an income-tax credit that would cover the cost of one-on-one financial counseling services.

One-time banking fairs won't do much to create a new class of mortgage-ready home buyers, either, said Ian Bautista, president and chief executive officer of El Centro Inc., a Kansas City nonprofit that partners with the FDIC to offer Spanish-language courses on everything from opening a savings account to buying a home.

Bautista said many undocumented Latino immigrants shy away from banks and mainstream lenders for fear that giving over personal identification could result in deportation. He said the median income of El Centro's Kansas City-area clients was approximately $18,000 per year.

A report last year by the Pew Hispanic Center, a Washington-based think tank, found the average net worth of Hispanic households nationwide was about $8,000, while for Anglo households it was almost $89,000.

"When customers want to buy a house, banks require a credit-card history, or a history of bank or car loans," said Shane Cuevas, a loan officer at the National Bank of Kansas City. "So people who don't have that are going to end up getting loans from someone on the corner. They'll believe the guy who's going to come to the door and say, `I speak Spanish and I can close today.'"

Other financial programs targeted at new Latino immigrants are leveraging banks outside the U.S. to offer low-cost car and home loans. And Venice, Calif.-based No Borders Inc. competes with money-wiring outlets such as Western Union, selling debit-like cards on which immigrants can store cash and send money home through a network of Mexican credit unions.

"When you talk about saving more for the future and putting money toward a 401K plan it's a point that's moot to a lot of people," said Louis Barajas, president of Wealth & Business Planning in Los Angeles. "They're just barely surviving."