Good morning. Thank you for coming. My name is Scarlett Aldebaugh-Green and I'm a policy analyst with the asset building program here at New America. The asset building program works on a range of policy proposals aimed at enabling low and moderate income people in America access tools for upward economic mobility and to build wealth. It's my pleasure to welcome you to Investing in the American Dream, Immigrants Financial Institutions and Financial Inclusion in America. This event will focus on the unique barriers that many low and moderate income immigrant consumers face when they seek mainstream financial services. Like all consumers, immigrants need access to high-quality financial services that facilitate day-to-day transactions and that build strong foundations for long-term economic well-being. Accessing these services and products, however, within mainstream financial institutions can be challenging for some immigrants. For example, low and moderate income consumers, some of whom are immigrants, often find that mainstream financial services and institutions are unwilling or lack the capacity to serve their needs. Undocumented immigrants in particular may have distinct challenges such as liking identification or lacking a credit history in the United States. Advocates of financial inclusion for low and moderate income immigrants in the United States argue that serving low and moderate income immigrants can benefit financial institutions and society at large. For low and moderate income immigrants, the cost of non-bank financial transactions can be quite detrimental. They reduce personal and family wealth. Financial exclusion can also make savings investing in credit building quite problematic for this group. Financial exclusion, therefore, is quite a problem, whereas financial inclusion can positively affect these consumers in society more broadly by increasing asset building for society as a whole in these families and also putting them on a path to upward economic mobility. On their part, advocates argue that financial institutions have a vested interest in establishing long-term relationships with immigrant consumers. This group can be profitable, especially if you take a long-term view of them as clients and especially if you consider the fact that immigration reform is inevitable in at least the near-to-middle-term future. However, there is an implicit source of tension when we discuss financial inclusion, and this must be acknowledged, particularly when we consider financial inclusion through profit-driven institutions. For individuals who may be particularly vulnerable to increased financial risk or who may be unable or unwilling to access legal protections or other recourses, we might, well, I mean, I might not resolve all of these tensions today. We sure hope that our panel will consider and will discuss some of the nuances of those tensions. So today we'll lead our presentation with Thea Guerin, whom I will shortly introduce and who will discuss a new publication by the Center for Financial Services Innovation. Investing in the American dream, how financial institutions can build long-term relationships with immigrants before and after immigration reform. After Thea's presentation, our full panel will be seated here and we'll hear from all of the panelists before concluding with a few questions from me at the podium and then with questions from the audience. We'll really encourage you to participate. Thea Guerin is a senior analyst at the Center for Financial Services and Innovation. Ms. Guerin conducts research to monitor and analyze emerging trends and innovations in the financial services industry and works with industry partners and other constituents to develop and share CFIS's expertise on underserved consumers and their use of financial services. So I'll welcome Thea now up to the podium. Great. Thank you, Scarlett. So Scarlett said my name is Thea Guerin and I'm a senior analyst at the Center for Financial Services Innovation. And for those of you who are unfamiliar with us, CFSI is one of the nation's leading authorities on consumer financial health. We lead a network of innovators committed to building high-quality financial services and products. And we believe that finance can be a force for good in individuals' lives and that designing products that respond to consumer need can be both good for consumers and for providers alike. So in our efforts to drive to drive innovation in the financial services sector, we recently released a report titled Investing in the American Dream. How financial institutions can build long-term relationships with immigrants before and after immigration reform? And the report was written in partnership with the National Council of La Raza, and it was made possible by the generous support of city community developments. And in the report, we highlight the growing opportunity for banks and credit unions to serve immigrants, the millions and millions of immigrants in the United States, many of whom lack access to high-quality financial services. In the report, we also highlight the opportunity that would be presented upon the event of comprehensive immigration reform, whether passed by Congress or enacted through executive action, that would likely provide a pathway to citizenship for the many millions of undocumented immigrants currently living in the country. And so we make the argument in this report that financial service providers who respond to the needs of immigrants, both undocumented and legal, will succeed in reaching these consumers at such a pivotal moment in their financial lives and will reap the benefit of long-term engaged and loyal consumers over the long term. So before I delve into the findings of this report, I'd like to say a quick note about terminology. This report and the remainder of my presentation will focus on the financial services needs of low and moderate income immigrants and the opportunities that exist for financial institutions to serve those immigrants. So for the remainder of my remarks, the term immigrants will refer to the entire population of low and moderate income foreign-born residents of the United States, including both legal immigrants and undocumented immigrants. The term legal immigrants will refer to individuals who have become citizens through naturalization, have been granted legal permanent residence or asylum, have been admitted as refugees, or have been admitted under other often temporary statuses for longer-term residence or work. The term undocumented immigrants will refer to individuals who have arrived in this country without legal documents, who have stayed beyond their visa expiration dates, or who are otherwise in violation of the terms of their admission. And so I'd like to note here that while I'll use these terms liberally throughout the remainder of my presentation, immigrants are not a monolithic group and should not be treated as such. So their needs vary considerably with regard to financial services, even within these designations that I just mentioned, and financial service providers who can recognize this and who can really try to understand the needs of immigrant consumers at a deep level will be the ones who will be most successful. So to set the stage for the second half of my presentation, I'd like to take a few minutes to provide you with a snapshot of immigrants in the United States today. So approximately 40 million immigrants live in the United States today, comprising approximately 13 percent of the total U.S. population. Of the foreign-born population in the United States, 29 percent come from Mexico, 5 percent come from India, and 5 percent come from China. And these three countries, together with the Philippines, El Salvador, Vietnam, Cuba, Korea, Guatemala, and the Dominican Republic, represent 60 percent of the total immigrant population in the United States. Immigrants live in all 50 states, but over half of them live in just four states, California, New York, Texas, and Florida, and one in four immigrants live in a single state in California. Immigrants have relatively high rates of home ownership, 52 percent of immigrants own a home, as compared to at 67 percent of U.S. born immigrants, so it's slightly less, but not that much less. Immigrants also have relatively high rates of participation in the workforce, 68 percent of immigrants participate in the workforce, as compared to 64 percent of U.S. born residents, and immigrants are more likely to own a business than U.S. born residents. So one in five small businesses in the United States is owned by somebody who was born abroad, and 10.5 percent of the immigrant workforce owned a business in 2007, compared to 9.3 percent of the U.S. born workforce. So now let's turn our attention to the undocumented population in the United States. 11.7 million undocumented immigrants are estimated to be living in the United States. The vast majority of these folks come from Mexico, and the next leading countries of origin are El Salvador, Guatemala, Honduras, China, the Philippines, India, Korea, Ecuador, and Vietnam. And again, over half of undocumented immigrants are located in just five states, California, Texas, Florida, New York, and Illinois. Undocumented immigrants tend to have lower incomes than other immigrants and the rest of the U.S. population, so I believe these numbers are from 2010. In 2010, the average annual income of an undocumented immigrant was $36,000. And undocumented immigrants tend to be young, so 59 percent of undocumented immigrants are between the ages of 25 and 44, and nearly half of undocumented adults are the parents of minors, compared to just 29 percent of U.S. adults overall. So with those statistics in mind, I'd like to take a few minutes to discuss the financial services needs of immigrants. And while we all know that immigrants have many unique financial needs, their fundamental needs with regard to finances are really the same as other consumers. They need access to financial service and products that will work well for them on a day-to-day basis, and we'll set them up for long-term financial health. So there are three components to this definition of financial health. The first is a well-functioning system of financial services that works well for consumers on a day-to-day basis and allows them to manage their day-to-day financial lives with ease. So for example, immigrants like all consumers need to be able to pay their bills, cash checks, send and receive money through affordable and accessible channels. The second component to financial health is the ability to weather the inevitable ups and downs of life. So for undocumented immigrants in particular, many of whom work in industries where pay is volatile and their wages are seasonal or sporadic, having a cushion to fall back on in case of an emergency is incredibly important. And such a cushion can take a variety of forms. It can be a reserve of savings, it can be access to credit, or it can be a strong network of friends and family. And the final and third component of financial health is the ability to access services that allow folks to build wealth and accumulate savings over the long term. So immigrants again like all consumers, but perhaps even more so, are interested in accumulating wealth and are interested in moving up the economic ladder and providing a better life for themselves and their children. After all, that's why so many of them came to the United States in the first place. So they therefore need access to products that will allow them to do just that. They need access to savings and investment vehicles for the long term, to mortgages, to small business loans, etc. That will allow them to build wealth, store wealth, and invest in opportunities over the long run. Now, of course, you know, immigrants, we know that immigrants do have unique financial services needs as well, especially undocumented immigrants. And I believe Charles Kamasky from NCLR will spend a few minutes talking about the potential for immigration reform this year or next year. So I won't go too much into detail about that here, but I will say that when immigration reform passes and we tend to think of this as a when not an if situation, when immigration reform passes, either this year, next year, five or ten years from now in its current form or in a revised form, it is likely to include a pathway to citizenship for many of the millions of undocumented immigrants currently living in the country. And when this happens, financial service providers will be presented with a once in a generation opportunity to develop high quality services that meet the needs of these individuals seeking legal status. So for example, these folks seeking legal status will need access to small dollar short term loans that will allow them to cover the costs of applying for legalization, the cost of the application fee itself, any associated legal costs, back taxes, the costs associated with English language classes, prep classes, etc. These folks will also need credit building tools, so probably credit building loans that allow them to borrow money while establishing a credit history and to build that credit history so they can access additional beneficial opportunities as their needs evolve. And so I can't stress this enough, providers should not wait for immigration reform to pass to start thinking about these products and services. They should really act now by starting to develop high quality financial services and products that respond to these needs, and if they're successful in doing this, they will be sending an incredibly powerful signal to immigrants, both legal and undocumented, that they are interested in their business and able to develop products that respond to their needs. So how can financial institutions responsibly and profitably serve this population? Well in our report we provide seven concrete strategies for banks and credit unions to adopt to develop products for this large and growing consumer segment. So I'm going to briefly touch upon the seven strategies here, but I encourage you to pick up a copy of the report on the table outside or to download the report from the link on our website to read more about these strategies. So first, in order to again profitably and responsibly serve immigrant consumers, financial institutions should strive to understand the needs of the immigrants within their footprint at a fundamental level. They should look past obvious demographic characteristics like country of origin and native language spoken to more sophisticated nuanced characteristics that will give them a better understanding of who exactly these consumers are and what they need. So they should look at things like average life stage, level of acculturation, comfort with English, etc. Secondly, financial institutions should ensure that they have inclusive customer identification policies. So currently under the USA Patriot Act of 2001, banks and credit unions are able to serve individuals without a social security number if they have comprehensive alternative ID policies in place. So financial institutions as a first step should ensure that their legal teams understand which types of identification are acceptable under current law. They should look into things like the matricula consular from Mexico. They should look into municipal IDs such as New York City's municipal ID as well as a variety of additional organizational forms of ID that they can use to verify the identity of consumers who might not have a social security number. Financial institutions should also develop products that meet immigrants immediate financial needs and that essentially meet these customers where they're at. So I already spoke about the need for the credit building tools that will help individuals build and establish credit. I also already spoke about the legalization and the citizenship loans that will allow these immigrants to get an economic foothold in their adopted country. Fourth, financial institutions should develop a comprehensive suite of products that allow consumers to manage their day-to-day financial needs with ease and also set them up for long-term financial success over the future. So they should look into developing and offering basic transactional services like checking accounts and remittance services as well as savings accounts and short-term loans that would provide these consumers with that cushion in case of a financial emergency. And they should also look into more sophisticated services like long-term savings and investment vehicles, mortgages, and small business loans that they can offer to these folks as their financial needs evolve. Financial institutions should also partner with trusted community organizations to market and deliver these services in places where immigrants are likely to live, work, shop, and worship. So they should explore mobile channels as well, since immigrants like all consumers, like many of us I'm sure, are starting to increasingly conduct their financial business on their smartphones. And they should also pursue high-quality customer service. Since so many immigrants learn of new financial service opportunities by word of mouth, through friends and family, offering a top-notch customer service experience is absolutely critical for these financial institutions. So banks and credit unions should employ bilingual staff as front-line tellers and customer service representatives, and they should ensure that all staff are trained to adequately respond to the diverse needs of the customers who walk in their door. And then finally, banks should pursue credit under the Community Reinvestment Act for offering lending services in low-income communities, low-income immigrant communities, making investments in local organizations not typically served by financial institutions and by maintaining bank branches in low- and moderate-income immigrant communities. So I think that my time is almost up, so I'm not going to go into too much detail about the providers listed on this slide, but I will say, again, I encourage you to pick up a copy of the report to read about what these organizations and many others like them are already doing to offer high-quality financial services to immigrants, both legal and undocumented. So in conclusion, I'd simply like to say that we are a nation of immigrants. We always have been, and we always will be. Over the next 20 years, 30 million new immigrants are projected to come to this country seeking better opportunities, better lives for themselves, for their children, for their children's children, for generations to come. And so when we at CFSI encourage financial institutions to develop products that respond to these consumers' needs, we are not making the argument that banks and credit unions should do this out of a purely altruistic motive. Instead, we are saying that this is a sound business decision and really an investment in the future. And so I know that there are many challenges, many, many challenges to delivering these services, to making them profitable, et cetera. I believe that my fellow panelists will speak to that more over the next hour. But we at CFSI truly believe that it's the financial service providers, the banks and the credit unions that can respond to America's changing consumer landscape. It's these guys who will be most likely to be profitable for generations to come. So that's all I have for you today. Thanks so much for your attention. And again, feel free to pick up a copy of the report outside or to download it on the link here. Thank you. Thank you very much, Thea. I would like now to welcome our full panel and ask that you all sit down as the screen goes up. And then while that goes on, I will let you know, introduce you to them, and also let you know we'll be in this section of the presentation for about 40 minutes. And then I'll have a couple of questions from the podium, and then I would like to open it up for you all. So our panel will be discussing the nuances related to market segmentation, which Thea touched upon a little bit. Address the way in which some indirect service providers and funders are liaising financial institutions with parts of this community and other low and moderate income customers. And then also provide some insight into how that's happening on the ground and into some policy that sort of intersects with this realm. So now that our panelists are seated, going from Thea in this direction, Charles Kamasaki has been for many years the executive vice president of the National Council of La Raza, the nation's largest Hispanic civil rights and advocacy organization. He is also a resident fellow at the Migration Policy Institute, where he is working on a book on the Immigration Reform and Control Act of 1986, widely known as Amnesty. And he is also just impartial sabbatical from NCLR. Jamie Alderslay is the director of communications, policy, and research for city community development. City community development leads cities' commitment to achieve economic empowerment and growth for underserved individuals, families, and communities by expanding access to financial products and services and building sustainable business solutions and innovative partnerships. Steve Zuckerman launched Self-Help Presence in California in 2006 and is president of Self-Help Federal Credit Union. Since its launch in 2008, Self-Help Federal has grown to more than 550 million in assets and 20 branches throughout California and Chicago. More than 50% of its members and customers are Latino and its products and services are specifically designed to meet the needs of immigrant and low-income communities. And then finally, David Neuvel. He is a senior policy advisor in the U.S. Department of Treasury's Office of Consumer Policy. His work focuses on emerging payments, innovation, consumer financial protection regulation, small-dollar credit products, and financial access issues. Sounds like you're busy over there. Prior to joining the U.S. Treasury Department, David worked on policy for the Center for Financial Services Innovation and here at the Asset-Building Program. So I will let you get started. Go ahead. Great. Good morning, everybody, or I guess good afternoon, everybody. First of all, thanks to the New America Foundation for the invitation to be here and the CFSI for the opportunity to work together with them on the report. Just one introductory note. It is true that I've spent most of my career on the consumer or the advocacy side, but I've also had some other experiences that I think might be useful. Through our community lending arm, the RASA Development Fund, which is the largest Latino CDFI in the country, we've had to face ourselves the questions of underwriting pricing and servicing a loan portfolio while also trying to be sustainable, if not exactly profitable. We've been engaged, deeply engaged in the mortgage market for some number of decades, and I think that has also shaped our views on this issue. And finally, I personally have seen both the rise and the demise of bank-sponsored remittance programs. I think I've been involved in every single one of the major banks' remittance programs, and I think there are some interesting lessons that can be drawn from that. So make no mistake, although my first priority and NCLR's first priority is to assure that there's an appropriately broad scope and availability of financial service products to Latinos. At the same time, I think we're keenly aware of the challenges involved in trying to actually design, implement, and sustain those kinds of products from the standpoint of a profit-making institution. So in that context, I'd like to make four quick points. The first, I think, is intuitively obvious, and I think you got that from Thia's presentation. And that is there's no such thing as a single immigrant market, just as there's no such thing as a single native-born market. So I'm going to give you two ways to think about this market. One is think about a matrix, and on one axis, put all the kinds of identifiers you would normally use to subsegment a market, age, gender, ethnicity, educational level, socioeconomic status, and so forth. And on the other axis, you can put those characteristics that are unique to immigrants, the tenure or date of arrival, other indices of acculturation, like language, but that's not the only one, intermarriage, and there are other factors that sociologists use to study the acculturation level of immigrants. And then finally is the question of immigration status. So one way to do this is to just do a matrix. Another way to do it, and at NCLR we do a fair amount of this, is grouping a number of these characteristics together. So for example, when we are working on a social marketing campaign, we often divide the Latino community into tiers. So one tier are those who've been in the country for three generations or more, and have incomes above the median, and have a high school degree or more. By and large, that population, tier one, is going to respond to products, services, and marketing efforts in a way that's quite similar to others in their demographic in the general population. Then at the other end, think of another tier, and that tier is in essence the opposite. Recent arrivals with less than a high school education and who make less than the median income. By and large, this population is going to be for Latinos, Spanish monolingual, and they are likely to be completely untouched by any mainstream level product or service launch or marketing effort. And then you've got a group that's somewhere in between that has a number of, a mixture of these various characteristics. But I think the point is regardless of how you decide to segment the market for your product or service, you've got to segment the market is the major point. Second way to look at this population is to identify specific events that might trigger the need for specialized financial services. And you have mentioned one of those, which is the possibility of what we thought was going to be imminent executive action on immigration. But even without that, you have in front of you an ongoing social experiment right now. And that is with the Deferred Action for Childhood Arrivals program, the so-called DACA program that President Obama announced two years ago. It provides two-year renewable work permits to certain unauthorized immigrant youth for a $465 fee, not including the cost of application assistance from a nonprofit or lawyer. So on many levels, DACA represents this enormous opportunity for these previously undocumented people. And in the last two years, we've seen a number of interesting findings. About 60% of those thought to be eligible for DACA have applied. Surveys suggest that the fee is the single major barrier that prevents otherwise eligible people from applying. And the vast majority of this population does not, in fact, have access to any small-dollar loan programs. But perhaps paradoxically, the take-up rates for the relatively small number of existing DACA loan programs that are out there and there are some couple dozen that we've counted, the take-up rates are abysmally low. So how does one reconcile this clearly demonstrated need for a significant benefit with these very low take-up rates? And I think the answer lies in part with my third point, which is that as conventional financial institutions think about these various sub-segments of the market, the one thing that's useful to do is to look at those who are successfully playing in the space already. So to over-generalize, if you take them together, payday lenders, check cashers, remittance providers, pawn brokers, all share three key characteristics. They are accessible. In fact, they are ubiquitous in the neighborhoods where immigrants live and work. They are culturally sensitive in everything they do, not just operating in language, but they conduct business in ways that follow the cultural norms of their target consumers. And finally, they specialize in rapid, often instant transactions. So if you are going for a small dollar loan in many of these places, you can get instant approval and your cash in a single transaction. By contrast, most mainstream financial service providers are relatively inaccessible, have few or no staff capable of providing services in a culturally appropriate manner, and their transactions are awfully very bureaucratic and cumbersome, right? So is there any wonder that there is a disconnect? And if I were to zero in on a single factor that explains the disconnect, it's not understanding the day-to-day reality that most of these people are facing, and I'm talking about low-income recent immigrants, particularly those who are undocumented. So you saw from the statistic that they have very high labor force participation rates. Many hold two jobs. They typically take public transportation to work, often taking two buses or more to get to work, and then back. They have no paid sick leave, no paid vacation days. Missing work often means you get fired. Those who have children then have another bus ride or two to deal with childcare and schooling. They don't have health insurance, and a sick child means a visit to an emergency room or waiting for hours on a Saturday at a community health clinic. And the really energetic and resourceful among them are taking English or GED or workforce development classes at night and or on weekends. That in and of itself, by the way, also means likely taking a day or two off just to enroll in school and or get textbooks and so forth. Many are unbanked, meaning that even the simplest transactions, like paying a bill outside of their neighborhood, requires yet another trip or two to pay those bills. So even the typical pilot program that's supposed to target this population presupposes, as most of us can do, taking a day or two off from work to fill out a form, collect documents, and so forth, or being able to do that online. I suspect, and by the way, for those who don't take buses, each additional trip risks a traffic stop that could lead to arrest, detention, or deportation. So I think the most important thing to understand about this population is time is more important to them than to us. We think of ourselves as extraordinarily busy and time-challenged. It is the rapidity of the transaction in a method that people can understand that's most important. So finally, what can we do about it? Look, I have no illusions about any big institutional systems capacity or willingness, frankly, to transform itself to effectively service this market or these market sub-segments. But even absent that, I would note three things to conclude. One is there are mainstream players that are successfully operating in the space, one of whom is right here, self-help credit union, and their cousin, the Latino Community Credit Union, North Carolina. So we know it can be done. Second, there are things mainstream institutions can do even without transforming themselves to help advance the state of the art. One of those is to build these successful partnerships that Thea alluded to between those institutions already embedded in and trusted in the community and their mainstream financial services and products, linking them mainly via technology. And there's a lot of work that's being done in that area. Second thing we need is long-term patient capital to help us test, refine, and eventually scale these models. And finally, we need the right kind of policy framework, the win-win policy frameworks that will work for both the immigrant population as well as financial institutions. So I'll stop there. Great. Thank you so much. Jamie. Hi. Good afternoon, everybody. Thank you to New America Foundation for the invitation. It's a real delight to be here. And thank you to my counterparts at NCLR and CFSI for writing this report. I think you can agree we have two great organizations taking the lead on this. I want to make several points, too, some of which is going to be repetitive and some of which I hope will be relatively new. So I'm going to start off by echoing some of the points that Thea made in her excellent presentation. I think the FDIC study on the unbanked said that one in five foreign-born non-citizen households is unbanked, and one in three is underbanked. It was a key driver. That number was a key driver in why we approached CFSI and NCLR to commission this report. 40% of the nation's immigrants live in the communities that Citi serves. And because of various regulatory and policy requirements, that's a sizable population that we really had to understand. Thea mentioned also that municipal governments around the country were taking the lead on ID programs on really thinking creatively about serving this population. And so all of these things came together. These issues were converging, and we as a bank, as an institution, as a division really needed to figure out a framework for looking at this. Maybe not with all the answers, but certainly providing the framework through which we could have discussions like this today. So it really is a delight to have this discussion today. I think Charles said, what an amazing description. I was trying to figure out where I personally fit on this matrix that you mentioned. I guess I can only look at this from a personal standpoint. As many of you have probably deduced, I don't come from the United States. I come from the UK. But if you wouldn't mind the dramatic gesture, here's my green card. I'm one of 40 million immigrants in this country. By having this, along with my vital organs, this is one of my most prized possessions. I'm one of 13 million immigrants in this country who are allowed to stay here, who are allowed to pay taxes, to work legally, to contribute to society, not to vote. And next year, I will become one of the 9 million immigrants in this country who are eligible for citizenship, which I will pursue. Citizenship has incredible value. It opens up all sorts of jobs, educational benefits, social benefits. We talk about income inequality in our major urban areas. And there are no easy, quick solutions. But by goodness me, if you can help the somewhat 5 million low-income legal permanent residents in this country secure citizenship, it's a big, quick, and relatively easy start. What I am not is a refugee. I'm not somebody who has an H-1B visa. And I'm not one of the 11.7 million undocumented immigrants in this country. In fact, I'm not one of the 11 categories of immigrant status that New York City recognizes when it decides to issue programs. So to echo a point that's been made, and you'll hear it over and over again, the immigrant segment is complex, it's dynamic, it's constantly evolving, and it's growing. So back to me again. My journey to citizenship. So I happened to come from a country where I could just about trust the financial system. English is just about my first language. And I've always been part of the financial mainstream. Ever since I was born, since day dot, my mom opened a savings bond with our local post office. And then on my 16th birthday, when I got my first job working in a theater, I got my first account so that my employer could direct deposit into my account and make sure that I got the patents that I was earning. But what if English wasn't my first language? What if I came from a country where I didn't trust? Financial institutions. What if I spent my entire life outside of the financial mainstream? Our friends at National Capacity often remind us that they represent over 30 countries in the AAPI community who collectively speak over 100 different languages and dialects. 100 different languages and dialects. An extraordinary range of experiences, backgrounds and journeys to whatever status you're happy with, whether it's citizenship, NH1B visa, or a green card. We also sponsored a report with the New York office for financial empowerment that looked at the integration rates of certain immigrant groups in New York City. How fast were they becoming financially included? And the results were kind of astonishing. They looked at Mexican, Ecuadorian and Chinese immigrants. After 10 years, 57% of Mexicans were still operating outside the mainstream. 35% of Ecuadorians were doing so. Much, much lower percentage for Chinese immigrants. Why? What was happening? What's the differences? Why were these different evolutions of somebody's financial identity? This speaks to what Charles said earlier. This is a highly segmented community and constituency, and there are multiple channels and journeys to understanding, not just citizenship and immigration, but those opportunities to include communities in the financial mainstream. What I would also say is that where there is clarity and certainty over the process, over somebody's journey towards citizenship or whatever status they're pursuing, we are beginning to see remarkable innovation and the flourishing of great ideas. And I want to spend the rest of my time just to talk about a couple of those. Just to give you a... Sorry to intro, and that's about one and a half minutes. Oh, wow, okay. Wow. Kazakhstan, Maryland, a fantastic nonprofit based in southern Maryland. This is how it works. If I'm one of the 4 million, 5 million low-income legal permanent residents in this country who desperately wants to become a citizen because of all of the benefits that it comes with it, I go into Kazakhstan, Maryland, and their citizenship, Maryland program. I walk in. They will give me all the advice, the support that I need. They will, through their CDFI, give me the $680 loan, the naturalization loan that it takes to become a citizen and they will report that loan repayments to the credit bureaus so that I get a credit score if I don't have one. What a stunning binary that is. If someone is who is about to embark on a new national identity, they're also about to build a new financial identity. This speaks to earlier points made about choosing the right chapters, the right moments, and the right opportunities to make the case for this. That program has gone gangbusters. Now cities around the country are doing it. New York City, Chicago, and Los Angeles are using some of these learnings to importantly take these programs to scale. I will just mention one other, our partners at Mission Asset Fund are thinking creatively about this too. In Northern California, they have lending circles using peer lending to do exactly the same thing. Again, reporting the loan repayments so that somebody is able to build their financial identity at the moment of a new national identity. That's a binary that makes sense. It's a wonderful narrative that if we can work with intermediaries, partners like MAF, Grameen America, Casa de Maryland and municipal governments, we can take some of these programs to scale, but it takes a constellation of actors and agencies to do so. Thank you so much. Thanks, and I'll echo the thanks to New America Foundation, CFSI, and NCLR for making this possible. And Charles, I'll thank you for counting us among the successful institutions serving this market. We feel like we are so barely scratching the surface that calling it a success is overreaching, but we're trying. Self-help is a large community development financial institution that has many parts, some of you may know, various parts. I'm most directly involved with the Self-Help Federal Credit Union, which is primarily operating in California and in Chicago. And I thought that given the role I was asked to play on the panel in terms of kind of what's it like in the trenches, I'm just going to tell a story of a member, a credit union member that I think really brings out many of the strategies articulated in the paper and some of the comments that others have said. And one of our efforts in California was developed something that we call a hybrid branch model at various times in its history. It was called the Micro Branch. It's now branded CT Prospera. The Federal Reserve actually wrote a nice article on it talking about the development. And the idea was to meet customers where they are, that a lot of people are more comfortable with check caching operations and transaction services. And so we would build a branch that looks like a check cacher but offers all the services of a credit union. I like to call this our sheep and wolves clothing strategy. And in one of those branches in San Jose, a gentleman named Jesus came into the branch one day and was asked by the teller or member service representative how he heard about us. And he said, well, I was at a community meeting and somebody was talking about the fact that there was this group down the street and I happened to be walking by and I saw it and I saw your, don't take this the wrong way, I saw your Western Union sign. So it was a comfortable place for him to go because it was like the places he was going to get his checks cashed. He came in, he cashed a check at what we think are fair prices and began the conversation that happened over several visits about other things he could do to strengthen his financial position. And on his second or third visit, he decided to participate in a program we had developed called Five for Me. It was kind of advertised not as be responsible and save for a rainy day, but savings can be fun. What could you do with your five? And it made it very easy to say, every time you come in and cash a check, $5 will automatically be put in a savings account just to begin that muscle memory of saving rather than taking everything and using it for their daily needs. After a couple more visits, he started putting more money into the Five for Me account, which you're allowed to do and started to see it build and then opened a traditional savings account and then opened a transaction account. In our case, we offer what we call a checklist checking account so that for people who have had trouble on check systems and for whom as a regulated institution, we don't feel we can take the risk of overdrafts through physical checks. It operates exactly like a checking account, only you have no physical checks, but you've got a debit card and you've got figures of a checking account. He used those products for a while and then he took out what we call a fresh start loan, which is the credit building loan that Thea talked about where basically he borrowed $500 immediately deposited in an account so regardless of having no credit history, we could take that risk because we really weren't taking a risk. The money was there supporting the loan, but over, I think it was nine months, he developed the habit of regular monthly payments and we report those payments to the credit bureau so he began the process of building a credit score. A little while after that, he had been driving just a complete clunker of a car, breaking down all the time, making it how Jesus worked two different jobs, making it hard to get to work and he got a $2,000 auto loan to be able to buy a more reliable used car and then later on got a $6,000 auto loan to be able to buy a much more economical car and he's now talking to us about the fact that someday he's going to come get a mortgage loan so he can buy a home, he's actually a single parent, two kids and he wants to put those roots down that are so important not only as asset building but as really arriving and setting down the roots as a family. That's obviously anecdotal and it's a data point of one although fortunately we have many elements of that story and a lot more people than that but I think I thought it might be a good way of highlighting so many of the things that people talked about from he probably wouldn't have walked in the door if we didn't have a partnership with a community group with whom he already had a trusted relationship. We could have served him a little bit of value by providing a better check caching service but it was the path to more products and services that really creates the value and so that's what we're trying to do. We are introducing and have introduced a lot of products including some in partnership with NCLR specifically around the Dreamer program we call it a Dreamer loan around the DACA program and citizenship lending to do again what CFSI is recommending trying to learn in advance of what we hope will be a much bigger wave but it's all in the experimental phase and we hope to be able to contribute along with many others to creating some solutions that can then scale far bigger than we could ever do it ourselves and I'll stop there. Fantastic, thank you so much Steve. Great and I will also thank New America and CFSI and NCLR and Citi and CELPELP for the report and for doing all this work. If we went into the trenches now I'm going to take us back out of the trenches and take us, we started a little higher and I'm going to take us back up higher and conclude briefly by just talking about three future directions slash potential policy options going forward on this and you'll see they'll hit on a lot of familiar notes that you've already heard here through all the other presenters and talking about different strategies for serving immigrants and the underserved in general in access to financial services. The first one I would touch on which is one that is very important to the institution that I work in and also very important on the financial institution side is the identification documentation process when you're getting people into accounts when you're signing them up for bringing them in for different products and services whether credit for payments and so forth. Documentation is difficult on both sides have we seen in the report and through some of these stories we know that for consumers there's concern about going into financial institutions because they'll be turned away or rejected because they have an alternative ID even though it is completely acceptable under federal law and there's concerns among financial institutions about accepting different types of alternative IDs just because there are so many from various countries and being able to ensure that they're valid and documenting that can be very difficult at times and having all your frontline staff being able to do that and verify various different types of ID can be difficult from a financial institution perspective. We've seen a lot of progress in this area because you've seen certain types of IDs that have already been mentioned like the Modricula Consular Cards some of these municipal IDs these great innovations in cities like Oakland and New Haven and others now that are coming forth which remedy this somewhat by creating an ID that has more scale that is more familiar to folks and to institutions and for the people going to present them when they're opening accounts and accessing financial services. One potential direction to take this even further in the topic that has been kind of looming over this entire discussion is about potential future immigration legislation is the idea that if there is a new type of identification created for undocumented citizens on a pathway to citizenship in this process that it be created in a way that would facilitate this easily as well that all the data points that are important to organizations when opening these types of accounts are included in that perhaps in consultation in the design of that ID if there is a new one as there have been in certain draft drafts of the legislation have circulated out there that it make sure that that also can build off these learnings and create something that would affect millions of folks nationwide making it easier on both sides to open accounts. The other theme that I'll touch on the second theme is around future directions on the technology side looking both the technology and also the richer sets of data that it creates. Obviously this is two sided because it creates opportunities that can also create problems as well but when looking at the opportunity side at least on the first on the first hand smartphones of course as already been mentioned as well is the first thing that comes up in the various features and functionalities that come with it whether it's something as simple as text messages or push notifications to now GPS, biometrics and various other things can facilitate and make it easier for people to access financial services and address as Charles mentioned time right for immigrants and for the underserved in general for everybody being able to open and access your accounts and different financial services quickly whether it's opening them or accessing you know just accessing information in your account and utilizing them quickly utilizing technology is important and figuring out ways to do that that has good security and has good design for consumers the more that we can do this the more we can facilitate access and bring people into it and lower the costs of using some of these other alternative financial instruments in addition to that the data side is also very important in particular with immigrants when you don't have a credit history you don't have a credit score new types of alternative data that can either confirm do things from as simple as confirming your residency to verifying older payment histories things that can help with underring process and lowering costs to make it easier to facilitate those things as are being facilitated by a variety of financial institutions right now and startups that are out there. These promising strategies can also make it easier for folks to access different types of financial services and it's important for financial institutions, startups everyone involved to be pursuing these different types of activities and new learnings and innovations and like I said at the same time disseminating best practices but at the same time also wanting to be sure that these things are structured in a way that consumers data is being used properly is being fully disclosed and all these things are done in a secure manner in respect to consumer protections. The last point I'll make is also around a topic that came up in the discussion which is around the Community Reinvestment Act. Stia brought up in her presentation as one of the strategies for serving these populations pursuing credit under the Community Reinvestment Act is a huge and important strategy and the Community Reinvestment Act has been a great resource for encouraging access mainly to lending but also bank branches under the services test bank branches and a variety of other features to ensuring access to low income underserved including immigrant populations to financial services. One thing to think of to build on top of the progress that's already been made as our financial services sector changes and as we see the underserved in particular leading this again coming back to this theme of mobile technology and digital technology and utilizing these things to access their financial services is to think of ways that institutions that are doing this in smart and safe ways to think about how they can also get credit for this under the CRA under the services test perhaps if you're providing the same services in a safe and sound manner for consumers and increasing access to financial services something to think about in the future is whether and potentially explore not only whether you should do this but how this could be structured how this could be measured increase access and get credit for this to encourage financial institutions to do more of this and the ones that are doing it to get more access to credit under the CRA and the incentive that it provides and that's something worth exploring in the future. Great, thank you all so much and I'd like to thank the organizations that have participated and all our speakers so I wanted to just address a couple of questions to you all before turning it over to the audience the first one deals with sort of this issue that has sort of implicitly been discussed the tension between the need to scale products and the tension and make them long-term sustainable which would definitely allow for more institutions to become interested in providing products for this somewhat segmentable group and the tension that comes with providing financial services to groups that are maybe not able to access legal recourse as easily as other groups or you mentioned data for example groups who may be quite reticent to be included in some sort of large data collection process because of their undocumented status so if you all whoever's interested in answering that could jump in. So essentially how do you resolve that tension can you resolve that tension do you have any ideas related to it? Tensions are funny words maybe it's a tension because it hasn't happened in a scalable way yet but you see the work that intermediaries fabulous intermediaries around the country are doing with great organizations like NCLR and CFSI and self-help the key is partnership the key is to partner with intermediaries and front-line organizations who have a different risk appetite to prove that the model works there is an ecosystem a giant ecosystem of financial service providers out there that provide a cocktail and a combination of different products and services that each of us use every single day what is true is that there is clarity and certainty over the process of securing whatever status you're looking for as I said earlier we're seeing innovation flourish we're seeing partnerships be forged and generated and outcomes delivered the loan products that self-help has developed are a clear example of that the partnerships that we as a financial institution have with intermediaries and now with municipal governments are a clear example of that so yes tension in so far as not overnight everybody is going to be served but those tensions necessity is the mother of invention those tensions are bearing fruit and the next challenge for us all is how do we take Steve's program to scale how do we leverage the scale and expertise of major financial institutions to play their role in what is an ecosystem of players there's a constellation of actors that needs to be involved here and also as David mentioned there's a regulatory component to this what does it mean for our community reinvestment act obligations so yes tension but good tension I would just say three things one if the desire is instant profitability up to the same ROI as proven products it's not going to happen we know that right so I think oftentimes the sort of more innovative products and services and pilot projects get held to the wrong standard second I do also think however that if people are if institutions are looking for growth strategies that means by definition getting outside of the boxes that they are already in so there is clearly R&D investment taking place in lots of other places and you know for those of us playing in this space we say well why not here along those lines not quite on point but you know in the late 90s and early 2000s there was quite a robust affordable mortgage industry that was developed in concert with a HUD housing counseling program and you know it was a profitable industry loans that were being made by and large were priced higher but had default in delinquency rates only slightly higher than conventional loans so to me it's pretty clear that it can be done but that many financial institutions chose to invest in other ways that ultimately got them in trouble was you know a good short term thing and a really bad long term thing not just for them but for the economy at large finally I think there are sometimes there are other parts of institutions that need to be aligned I made a brief reference to instances before when one very large financial institution was first rolling out its remittance products and I guess it had to have been the late 90s I sat watching almost like someone in a tennis match watching two people argue these two people from the same bank arguing about how that should be counted in the compensation systems that these executives were being judged by and one person who was in charge of the product had no distribution channel and the other person who headed the branch banks was saying his people should not be held responsible for marketing this product that he had no involvement in bringing to market and in those 15 or 20 minutes that I saw this argument going back and forth you know my thought was well this product is toast and to me it's sort of like it didn't really matter as long as somebody was incented to market the product I suspect it would have been brought to market in a more successful way but the fact that the two people who had the most gain or the most to lose actually were not in sync tells you a lot so a lot of times it had nothing to do with the product itself it had to do with these other barriers sort of outside the box I think that's great there's been a lot of recent publications on customer centricity for example and how you have to align various aspects of an institution to get products like this out there and part of it is exactly that sort of creating an incentive structure that aligns different parts to beyond board and I wondered sort of as part of that I wanted to push you all a little bit more and then I'll go to the audience the DICA loans for example have been introduced as a possibility for sort of targeting some aspect of this population and we're generally speaking to loans for very young people who don't have a great credit history or have no credit history at all who in the case of documented individuals may get into quite a bit of trouble financially and credit wise in taking this kind of loan so how would something like that work at scale that both prevents risk to the institution and that prevents risks to sort of the economic future of these youth Steve? Yeah I can speak to our experience and the most dramatic experience is exactly what Charles talked about which is despite trying to do partnerships with community groups the uptake has been so much slower than we thought it would be or would have liked but we have done close to 500 of these loans and so we've got some experience you know I think for us again as a regulated financial institution that is going to have our regulators breathing down our back if we're taking risk that we can't justify or document the philanthropic community played a really important part by creating loan loss reserves to let us plunge in and try to build as fast as we possibly could without taking the time to experience it track our losses experience a little more track our losses which is what we and other financial institutions would normally do you know I think the other thing is in communication and there are a lot of cultural issues we had some situations where we thought our communication had been really clear we thought a partnership with a community group was very well-defined and everybody understood the product and when we went back and did interviews with some people who had defaulted on our loans they said oh we didn't know we had to pay them back you know that there's a you know there is in some circles a culture of support that isn't around lending and repayment so we had to refine our educational tools to really talk about the importance of building credit and the cost of not paying back a loan and in fact we had some borrowers who had defaulted and then said oh now that I understand all that they found a way to kind of get back on track and actually pay the loan off so I don't know if that directly answers the question but those are some of our experiences with that specifically. And one thing to add to that I don't think that Steve just alluded to this but education has to be such an important component of any of these products and so to the extent that he himself helped you know can kind of convey that educational component can say that you know indeed these loans need to be paid back this is why it's worth taking it out that's just so key to any of to the success of any of these products. Great so I'd like to open it up if you have questions. Fantastic so my colleague Lea Sprague is circling around with the mic and she'll come to you maybe take two and there was one over there as well. I got the Willy Wonka a little reference I get to go first. I have a multiple question first first question being in terms of self-help Federal Credit Union also Laraza could you all briefly describe your counseling and education programs that go along with some of the actual products that you all offer. I know Laraza does some things on the counseling side I'm less familiar with self-help Federal Credit Union. Well that's really easy. Let's take one more. There was one over here as well. I wanted to ask since the school systems have social penetration that virtually no other institution has whether any of your efforts have basically worked systemically with school systems in terms of handling parents, grassroots advocacy and so forth because there is a community schools movement that's burgeoning in a number of urban communities around the country and it seems to me school systems can be very important vehicles for education not in the formal sense but working with parents. So I just wondered if anyone on the panel would comment on your experience in that area. Thank you very much Steve. Did you want to take the first? We partner with Laraza and its affiliates. We don't have as a financial institution our model doesn't have built into it the capacity to do the kind of in depth counseling. We have a few grant supported programs where we dive deep into the community and do that kind of counseling ourselves but for the most part we view our expertise as providing high quality financial services and we try to partner with people like a lot of Laraza's affiliates that whose core business is to be in there providing the deeper education. So let me try and answer both of those questions at the same time. So NCLR does a lot of our affiliates do a lot of financial counseling of various sorts. Most of it is built around or on top of a housing counseling platform which is the way delivered by NCLR one-on-one in language fair amount of screening at the front end. You know, we have tried and are trying because one-on-one counseling is really expensive and you cannot sustain that without very significant grant support which means to scale you need basically public support. We've tried various formulations of doing more online, doing more vehicle centers, doing more in schools and we are having trouble demonstrating the same kind of efficacy that we did with respect to both take up in terms of a mortgage produced or in terms of reduced delinquency and foreclosure. On the school side I think it's a great idea and there are actually real live social marketing examples of where messages delivered in the schools impacted parents' behavior. The environmental movement of not keeping the water running while you're brushing your teeth is one of them. Anti-smoking campaigns have been another one where there is really demonstrable evidence of behavior change coming from kids to parents. I think that has potentially a lot of potential in this context. You got two problems in schools. One is in the public schools by and large they are devoted to trying to hit their targets which and frankly aren't very good at delivering content that's outside of what's soon to be a common core curriculum. Second, the other problem we have NCLR has about 80 affiliates that run community-based alternative or charter schools. We have tried some financial literacy programs honestly as far as I can tell not a single one has been particularly effective and I think the problem is it's disconnected from the immediate life event or the immediate goal that I think most research in this area suggests that financial literacy needs to be tied to. Just to piggyback on what Charles said, yes there are certain efforts but let me clarify the New York citizenship in schools is a program focused on legal permanent residence so not undocumented no other status but this is specifically the million or so legal permanent residence living in New York of which potentially half are on low incomes. But really experimenting through the leadership of Nisha Agarwal, the commissioner of the mayor's office for immigrant affairs in New York, she is doing great work using the municipal school system to educate children to go on to do many of the behavioral changes that Charles so eloquently spoke about. Let's see if it works because if it does work municipal governments haven't, they're like Octopo Diana, they have all sorts of touch points to all sorts of individuals at various stages to look at this but again it's underpinned by clarity and certainty over the process municipal government a financial institution would use their time and resources once that clarity and certainty exists where there isn't any then you need to work with intermediaries that have the risk appetite to do something innovative and new. Thank you. We'll take two more questions. There's one in the back. Hi, Erwin De Leon from Urban Institute. Jamie, you mentioned the whole ecology of financial institutions and community-based organizations. Is there a map or is there some data on this ecology? Let me take one more. Is there anyone else? Sure. So you have a little bit of time. Any more? Yeah. I feel like I need to turn to Charles on this because he's the guy that knows all the matrices and can visually draw this. From our standpoint our limited purview maybe I don't think there is. I think that organizations like NCLR through their affiliates and others are probably ahead of the game on this but certainly organizations, intermediaries, municipal governments, regulators and policymakers are catching up. I wanted to say this in my remarks. I really do feel this is almost a different conversation. By 2050 no ethnic group will be in the majority in this country and we're told through research by CFSI that there will be 30 million new immigrants in this country. So if it wasn't an economic imperative to practice inclusive economics it's going to have to be pretty quickly otherwise this country is going to fail to compete internationally. So I think at the municipal level certainly with inspired leaders on this panel and in the audience there is beginning to be a movement especially around the legal permanent resident sector. So it's well for when immigration reform happens I think we can learn some useful lessons in dealing with those who are legal and low income and then try and apply them as soon as possible using those relationships and then hopefully building the kind of ecosystem of actors that constellation of agencies who can then take on any new immigration reform as it comes down the pipe. Thank you. We have time for one final question. Hi, thanks all for your contributions. Today I'm Reed Kramer, direct the asset building program here and I'll make a comment and ask for comment and one is to kind of connect this to I think an oncoming policy debate that hasn't been well actually David mentioned it which is kind of the accountability framework the Community Reinvestment Act is kind of a is a framework that really has aged and almost needs a new revisiting and a lot of the issues that we've identified affecting this population are ones that just affect low income populations in general. There's some issues on identity that we've kind of talked about can we solve that with some of the pending maybe immigration reform but really we're going to have to revisit this broader issue of an accountability framework and just if I can get some thoughts from a couple of you what might be some ways if we think about accountability in a new framework in a new time as we kind of update Community Reinvestment Act legislation. That wasn't planted at all. I mean we're a credit union so we're not subject to community reinvestment so we don't affect it we're not affected by it directly but in some of the work we've done with financial institutions talking to them about ways they could connect to the work we do there is no question that there are aspects of how CRA is measured that works against some very very good projects that I think we've had banks tell us we'd love to support that but the amount the amount of credit we get for the dollar we put in is so small compared to other things that it just doesn't make sense so I mean that's just a data point that says your question to me is a good one which is it should be looked at I don't know enough about CRA to know how politically feasible that is and who takes it on but it does seem like it's ready for reassessment. An accountability standpoint I mean we as a financial institution always try and fulfill and exceed our regulatory obligations but think back to Charles's eloquent and almost devastating insight into the lives of many of these people and it's just a different world the onset of my mobile technology the demographic makeup of our urban areas the size of our urban areas I think that there's there's we've been relatively successful in leveraging CRA to think innovatively about serving this constituency could it use a rethink maybe and I think we'd certainly be willing and active participants in looking at that not least because 40% of the nation's immigrants are in the handful or so markets where we have operations so you know it's in our interest to do so I guess I would say that having been around in the last big CRA fight I think it was 92 which was the save CRA campaign out of which the National Community Reinvestment Coalition was born it has been a while You were working on that when you were 7 I wish I think there might be a couple of useful things about the current environment from a just getting to yes standpoint there are fewer players so in those days I think there were many more quite large but not behemoth regional banks I think there is probably more alignment among the sort of big, medium and small banks than before and probably a better understanding of how mechanisms might work I think we have a little bit more humility at the Fed than we did back in the day when they were all knowing and had figured it all out and the rest of our opinions weren't weren't invited or appreciated so I'm not sure when this debate happens I'm not sure exactly what the conditions are under which it happens but I suspect we will maybe soon after mortgage reform there will be some realignment of the players and I'm actually pretty hopeful I think the major players are known I think the landscape is pretty known and I think there is a way to get to yes that makes sense David I don't know if you want to address I would say I'm by no means a CRA expert but the topic is there is a lot of interesting questions that have emerged given the changes in the financial services sector and I think particularly the services test is the area that I've looked at most closely which is a smaller part overall of the CRA but thinking about there's a lot of interesting questions I think that are right for research right now and eventually right for revisiting probably as Charles said probably after we settle some of these other issues in the mortgage market but I think once you figure out you're looking at these digital technologies like how do you measure quality in these new types of products these new types of access mechanisms could we revisit different ways of doing financial education how that's weighted and perhaps different types of partnerships that are involved as well there's really many different strategies and ways you could look at this if you're trying to rethink how you do credit among financial institutions that are involved in a lot of research but I think it's an area that certainly would like to see some more research and some more thought leadership around in the future and I'm glad that my fellow panelists spoke to CRA specifically because I too am not a CRA expert by any means but Reid I'm glad that you made the point that this issue is clearly larger than the 40 million or so immigrants in this country it's larger than the 11.7 million undocumented immigrants it's even larger than the 68 million folks in the country who are considered under banked by the FDIC it's really a huge issue that many consumers not just low income folks aren't being able to access high quality financial services in the best way so I'm glad that you made this point and I'm glad that we can hopefully continue to work together to come up with more of those accountability strategies and more continued high quality financial products together. Great thank you so much Thea, thanks to the panelists again and all of you for coming. Have a good afternoon.


I think we'll get started. The first one will be Dr. Deere-Cold. And he's going to share with us some of his research he's been doing in Dr. Umbody's lab. And his title is Identification of Brave or Two as a Novel Regulator of Escalation. Thanks, Leah. Thanks, everybody, for coming. I'm happy to have a chance to talk a little bit about some of the research I've been able to do with Dr. Umbody. I'm sure that everyone here will agree that my eye is the most amazing organ in the body. And part of the elegant structure of the eye involves proper vascular demarcation. And there are two important and striking examples illustrated here of that ocular vascular demarcation. The first is the boundary between the avascular cornea and the vascularized conjunctiva, which we call the corneal limbis. The second example is the avascular outer retina. So this is some immunofluorescence of the retina where this perlican stains blood vessels red and dappie stains nuclei blue. And you can see that the outer retina is avascular and that's separated, the avascular outer retina is separated from the highly vascularized coroid by the RPE Brooks membrane complex. So anytime, so the umbody lab is very interested in blood vessels, we're interested in blood vessels, we're interested in vasculature in the eye, things that make blood vessels grow in the eye and molecular factors that prevent blood vessels from growing places where they're not supposed to be. And when you're talking about regulation of blood vessel growth, one of the most important factors of course is VEGF. And this year marks 40 years since the original identification of a diffusable factor that regulates blood vessel growth. So in 1971, Judith Folkman identified through painstaking biochemistry work from actually multiple different tumor sources. The isolated biochemical fractions that had biological activity that in a rat assay of neovascularization led to blood vessel growth when you added some of these biochemical fractions. And so this is the model slide from Folkman's original paper where they postulated that this diffusable factor that they called tumor angiogenesis factor was secreted by tumors and led to growth of blood vessels into the tumor to enable the tumor to get larger. And 40 years later, we know that the situation is actually much more complex. We call this factor now VEGF, but in fact there are multiple different genes within the VEGF family. And many of those genes within the VEGF family actually exist in multiple different splicing isoforms. And in addition to that, different members of the VEGF family bind to multiple different VEGF receptors. And I have focused my research on VEGF receptor one. And scientists like physicians like to give multiple names the same thing. So we also call VEGF R1 flint one, and that's what I'll call it for the rest of the talk. Now the situation is even a little more complex than what is diagrammed here because these receptors actually exist in different isoforms as well. And those different isoforms of the flint one gene are generated by alternative RNA processing. So to give you just a context of what I mean by alternative RNA processing, first I'll briefly review some fundamental molecular biology about normal sort of canonical RNA processing. So the central dogma molecular biology is that DNA makes RNA and RNA makes protein. And the DNA to RNA step actually involves multiple different processing steps. That includes, so if we look at the genomic DNA that's transcribed into a pre-MRNA that undergoes a formation of a five-prime cap splicing out of introns and three-prime cleavage and polyadenylation. So in the case of the flint one gene, the pre-MRNA can undergo RNA processing along two different pathways. The first we can consider is kind of the more canonical situation where the flint one gene contains 30 exons. In this case, all the introns are spliced out and the 30 exons are spliced together and the cleavage and polyadenylation occur downstream of exon 30. And that results in formation of a full-length receptor that has a ligand binding domain, a transmembrane domain, and an intracellular signaling domain like the diagrams in the previous slide. However, if this pre-MRNA instead undergoes cleavage and polyadenylation within intron 13, that results in production of a truncated RNA that is stable and produces an isoform that contains the ligand binding domain only and not a transmembrane domain, so therefore it's soluble. This full-length protein binds to VEGF and elicits VEGF signaling within the cell, so it acts as a VEGF agonist. This soluble protein combined VEGF, but it doesn't elicit any signals and so it acts as a soluble decoy and actually is a VEGF antagonist. So we have been very interested in studying the biology of this soluble isoform S-flit and a lot of work, some of which I've reviewed in previous talks, but none of which I will review in detail today, has shown that S-flit is a key regulator of the vascular demarcations within the eye. So these are the two of the important examples of vascular demarcation that are both critical for vision that we discussed earlier and we now know that S-flit is critical for corneal avascularity. Loss of S-flit leads to growth of blood vessels into the cornea and it's also critical for the avascularity of the outer retina is loss of S-flit leads to coroidal neovascularization. So these are some FA and OCT images of mouse models where a flit one has been knocked out or versus control. So if we're going to understand the biology of S-flit better, the production of S-flit hinges on this critical RNA processing event. So what is known at this point about this RNA processing event? Well, it was known for some time that there were a few other genes that underwent the same sort of alternative processing. It wasn't just the soluble vagus receptor one, soluble vagus receptor two, the neuropilin receptor, or a couple of examples, but recently a group from New York actually found that this was a much more widespread mechanism of alternative processing than was previously appreciated. And in fact, it seems to be a property of receptor tyrosine kinases in general. So this is kind of a busy slide, but you can see that there are multiple receptor tyrosine kinase families here. And in fact, members of all these families were found to generate both soluble and full length isoforms. You can see some of those isoforms identified here. So it's kind of a general property of receptor tyrosine kinases. This group also went on to show that in fact the U1SN RNA, which is involved in splicing, is also involved in inhibiting intronic polydenylation. So in that way, the U1SN RNA promotes formation of the full length protein. And what they were able to show is that by blocking U1 function, they were able to induce production of the soluble isoform. So what we know now is that U1SN RNA through inhibition of intronic polydenylation leads to formation of the full length isoform. But we've been interested in some time in trying to identify factors that promote formation of S-flit. And when we were thinking about this project, we thought, well, how would we go about identifying these factors? And we came up with a strategy that involves several steps. So first we thought, well, if there's a gene that promotes production of S-flit, then tissues that express high levels of S-flit should probably express high levels of this protein, a vice versa. So can we identify a set of genes whose expression mirrors that of S-flit because we might be able to identify a candidate within that set? If we can identify a set of genes that has the correct expression pattern, then can we find within that set a gene that looks like it could be involved in RNA processing? So by inspecting the protein domain structure and known function of the gene, is there one that would make sense in terms of a possible role in RNA processing? If we could find that, then could we do some functional experiments and show that if we change the expression of gene X, we also change the expression of S-flit. If it is a regulator of S-flit, then that would be critical to be able to demonstrate that. We'd also like to be able to place that functional effect within a relevant biological context. So if we modify expression of gene X, do we get a phenotype that is relevant and that makes sense in terms of regulation of S-flit? If we can show both of these functional things to be true, then we would like to be able to localize this particular gene to the RNA of interest. If it's involved in alternative RNA processing, then we'd like to do some experiments that directly look at association of the factor in question with the F-flit1 RNA. And if we can demonstrate all of these, then we'd like to think about ways that we can get at the molecular mechanism of action. How could it actually be involved in RNA processing? So first let's look at our efforts to identify factors whose expression mirrored that of S-flit. This data has been presented before, so I'm going to go over it very quickly. What we did was identified a relevant model of corneal neovascularization. We identified two mouse strains, the MRL mice, also called the healer mice, that are resistant to corneal neovascularization. Paxix heterozygous gnome mice that undergo spontaneous corneal neovascularization. Both these mice are derived from the same wild type background, which has an intermediate susceptibility to corneal neovascularization. And as you would suspect, S-flit is the key regulator of corneal avascularity. It's expressed at high levels in the MRL corneas, at low levels in the S-flit corneas. And so what we did was, well, let's look at the genome-wide expression. The expression of all genes in the corneas of these mice. See, we can identify factors that have the same pattern of expression. So we did that, and this is the set of genes that we pulled out. This is the microarray data represented in heat map form. Each row here represents a probe on the array. Each column represents a different mouse. And it's color coded according to expression levels, so the bright colors means high level of expression, and dark color means a low level of expression. And you see that just for this whole table of about 80 genes or so, it's bright on the left and dark on the right. So they're expressed at high levels in MRL, lower levels in PAC-6. So we were able to do the first step, and find a set of genes whose expression mirrored that of S-flit. The next step was to be to look through this set and see if we can find a gene that looks interesting. And so we did that, and we found a gene, Raver-2. Obviously the title of the talk is the fact that this is the one that we've been studying. We're interested in. And the first thing we did was confirmed using a different method that, yes, Raver-2 is a real-time PCR of MRNA expression data in the cornea that shows like S-flit, which is expressed at high levels in MRL and lower levels in PAC-6. Raver-2 also is expressed at higher levels in MRL and lower levels in PAC-6. What is known about Raver-2? Well, it's part of this small Raver family of genes. There's a Raver-1 and a Raver-2. Each of them have three RRM domains. It stands for an RNA recognition motif. They have nuclear localization signals and loosing rich region. So just the domain structure, the fact that they have these RNA recognition motifs, suggests that they could be involved in RNA processing, potentially. What do we know about the biology of these two factors? Well, both co-localization and structural studies, this is some NMR spectroscopy data, show that Raver-1 can interact with PTB, the polyperimidine tract binding protein, which is a well-studied RNA processing factor. We'll talk more about PTB a little later. So Raver-1 is known to interact with a factor that regulates RNA processing and experiments in a splicing reporter system show that Raver-2 regulates splicing. Or Raver-1, I'm sorry. Raver-2, a little less is known about it, but co-localization and co-immunoprecipitation studies also show that Raver-2 can interact with PTB. So this looks like a factor that could be involved in regulation of RNA processing. So we found a candidate that makes some sense in terms of a possible regulator. Now we'd like to look if modifying expression of Raver-2 changes S-flit expression. So it's a simple idea. If Raver-2 promotes production of S-flit, if we decrease the levels of Raver-2, we should block this and decrease the levels of S-flit. So how will we go about doing this? Well, we'd like to use an S-I-R-N-A mediated system. S-I-R-N-As are small RNAs that are targeted to... can be targeted in a sequence-specific manner to a specific RNA that, through this risk complex, leads to some slicing and downregulation at the end of the target RNA. So we thought let's perform S-I-R-N-A mediated Raver-2 knockdown in both an in vivo system by injecting plasmids that bear Raver-2 S-I-R-N-As into mouse cornea and an in vitro system, one that's relevant to blood vessels, HUVAC, this is a human umbilical vein endothelial cells, endothelial cells, transfect these S-I-R-N-As into this cell culture. So when we did the injections into mouse cornea, we saw, first of all, that injection of control plasmid did not result in significant change in Raver-2 expression, but injection of two different S-I-R-N-As targeting Raver-2 resulted in about a 30% knockdown of Raver-2 expression that was reproducible and statistically significant. So that's great, we're able to knock it down in the cornea, so what happens to S-flit? Well, again, injection of the control S-I-R-N-A did not change S-flit levels significantly, but injection of either of the Raver-2 S-I-R-N-As resulted in decreased expression of S-flit that was both reproducible and statistically significant. The levels of the membrane-bound isoform did not change significantly, and the levels of the control gene, and the H, did not change significantly. We did a similar experiment in Hubek cell culture and saw similar results, that is, reproducible and significant knockdown of Raver-2 and decreased expression levels of S-flit without a change in the membrane-bound isoform. So this was great, we're able to show that if you decrease Raver-2 expression, you knock down the S-flit RNA. We also wanted to show that this resulted in changes in S-flit protein expression, because it's really the protein that is functional. So those mouse corneas are really, really small. It's kind of hard to harvest enough of those and be able to do protein expression assays. So we decided to do this in the Hubek cells. So this is a soluble protein, it's secreted into the culture media. We can look at expression levels of the protein in the culture media. So we did that by Western blotting. You can see that a mock transfection versus control transfection, we compare these two. There's no significant change by Western blotting. We can see decreased intensity of the band with treatment of either of the Raver-2 siRNAs. We can do this a little more quantitatively using ELISA. And again, we see reproducible and significant knockdown of S-flit protein levels within the culture media following treatment with Raver-2 siRNAs. Whereas the total level of protein in the culture media was unchanged. So that's great. We were able to show a functional effect in terms of S-flit expression that by knocking down Raver-2, we decreased the expression of S-flit. Next, can we put this in a biological context and show a phenotypic effect that makes sense in a relevant model? And so we chose to look in the cornea again and see if we could induce corneal neovascularization. So again, these are some representative photographs. So following injection of buffer alone, we see a cornea that is beautifully clear with no neovascularization. Injection of the control siRNA also results in nice clear cornea. There's no change there. But injection of the Raver-2 siRNA results in marked corneal neovascularization, which I wasn't sure how the picture would show up. We can highlight a little bit. You can see the blood vessels there, obviously. And the same effect was seen with injection of the other Raver-2 siRNA. All right, so this is great. So we see a phenotypic effect that makes sense in terms of regulation of S-flit. All right, so the next step would be is to show that Raver-2 acts at the level of the flit1 pre-mRNA. So can we localize it to the flit1 pre-mRNA? And how would we go about doing that? Well, we can use a technique called RNA immunoprecipitation or RIP. And in this technique, we harvest first a cell lysate that contains a mixture of RNA, some of which are bound by RNA-associated proteins. We can identify generically as an RNP here. So we harvest this cell lysate. We subject it to an immunoprecipitation with an antibody specific to our RNA-binding factor of interest or a control antibody. And that will enrich for RNAs that are bound by the protein of interest. Then we can isolate the RNA and analyze it any way we like. People do arrays, people do sequencing. If you know the gene you're interested in, the best way to look at it is just gene-specific PCR. So we did this experiment in Hubex cells that express a flag-tagged version of Raver-2. One reason for that is because the flag antibody is just a beautiful antibody. Immunoprecipitation is very well, it's very clean. So we went ahead and did this experiment, and this is an atherium-stained agrose gel showing the results from... This is the flag immunoprecipitation, a control immunoprecipitation, IP with a Raver-2 polyclonal antibody. So these two antibodies will both recognize Raver-2 in different ways. And then a control antibody for the polyclonal experiment. And then we did PCR for our gene of interest, and we saw a pull-down of the flip-1 RNA with both the flag monoclonal, and this is a weak band, but it's there and it's reproducible with the Raver-2 polyclonal. So this is great. We were able to localize Raver-2 to the flip-1 RNA. These other bands here just represent primer dimer from the PCR. So now we've been able to show that Raver-2 has the correct expression for an S-flit regulator. It is functionally important in terms of regulating S-flit expression levels, and that it localizes to the flip-1 RNA. Now let's try to think about what it might be doing there. And again, we know that, at least in the other studies we're done in HeLa cells, that Raver-2 and its homolog Raver-1 can associate with PTB. So the first thing was to show that this association between Raver-2 and PTB exists within our relevant system, like endothelial cells. So we did an immunoprecipitation experiment in Hubex, followed by immunoprecipitation of Raver-2, followed by Western blotting for PTB. So this is a co-immunoprecipitation experiment. And so we can see that this is our input lane, and then we pull down from the same input with a control antibody and with the Raver-2 polyclonal antibody and then do a Western blot for PTB. And we can see significant enrichment of PTB in the Raver-2 IP relative to control IP. So this indicates that Raver-2 associates with PTB in our endothelial cells. So what do we know about PTB? Well, it binds to this region called a polyprimiting tract, which is found in introns, and it is well-known, PTB is well-known to repress splicing. However, PTB has a lot of other functions, too. It is known in some cases to activate splicing. It can activate or repress cleavage and polydentalation. It can regulate mRNA stability, mRNA localization. It can even regulate translation by regulating internal ribosomal intracytes. In terms of these different functions, the two that would make the most sense for us in terms of regulating the alternative processing of S-flit would be either repression of splicing or activation of cleavage and polydentalation. Either one of those could lead to formation of the truncated isoform. So if PTB is associating with Raver-2 and playing a role in flit-1 processing, the next thing to be able to show is that PTB also localizes to the flit-1 RNA. So we can do the same experiment, a RIP experiment for PTB, and so that was done. We can see the PTB immunoprecipitation and the control immunoprecipitation, and again PCR for flit-1, and we can see that we're able to pull down the flit-1 RNA in the PTB, but not in the control. The PTB is better studied, so we know some genes that should be targeted by PTB and other genes that should not be targeted by PTB. It's actually been studied on the genome-wide scale. So this is a nice control for our RIP experiments to be able to show, pull down of a known PTB-regulated gene and to show that we don't pull down a gene that is known to not be bound by PTB. So the next step that we were interested in was seeing what happens, is there a relationship between binding a PTB to the flit-1 RNA and RAVR2? So we decided to do a sequential experiment where we knocked down RAVR2 first and then did RNAIP to see if that affected occupancy of PTB at the flit-1 RNA. And so this is the data for that experiment. We can see that the Hubex cells were treated with either RAVR2-SIRNAs or control treatments, either a control SIRNA or a mock SIRNA treatment. And then immunoprecipitation was performed either with a PTB monoclonal antibody or control antibody. And then PCR was performed for flit-1. And what we can see is that in the control situation, we pulled down PTB, as we saw before. But when we knocked down RAVR2, we pulled down significantly less PTB. So this suggests that PTB association with flit-1 is at least in part RAVR2 dependent. That if you decrease RAVR2 levels, you decrease occupancy of PTB on the flit-1 RNA. So we've been able to start to put together some of the other processing factors that might be involved in a molecular mechanism of action for RAVR2. So again, we return back to this critical processing event. And what we now know is that U1 through intronic polyane inhibition promotes formation of the full-length protein. The data I've showed you today supports a model wherein RAVR2, likely in association with PTB, promotes production of the soluble isoform. And given what we know about PTB, we're favoring a model in which it either does this by intronic poly-A activation or by splicing repression. So we've generated a lot of new questions now with this data and a lot of future directions. Some of the things that we're considering is I showed you that lots of receptor tyrosine kinases are regulated by this kind of alternative RNA processing. So does RAVR2 and PTB regulate the expression of other receptor tyrosine kinase genes? What other complexes are involved? Can we show that the cleavage-poly vanillation factors versus splicing factors are involved? We'd like to be able to localize regulatory sequence elements within intrum-13 that are important for this processing event. We have binding sites for RAVR2 and PTB within intrum-13. And of course, look at what happens when we knock down PTB. What happens to expression of S-flit and M-flit and what happens to RAVR2 occupancy. Then finally, of course, I'd like to acknowledge Dr. Ambadi for his wonderful mentorship and for allowing me to do this work in his lab. There are lots of people in the Ambadi lab who have been instrumental and helpful in this work. I'd like to thank Dr. Olson and Dr. Mifflin for giving me the opportunity. I have some time in the lab. And of course, I'd like to thank my wonderful family and thank all of you for listening. These are my big boys here. We went for a little hike up Little Cottonwood Canyon to Little Waterfall a few weeks ago, and then we went to the new Museum of Natural History, which was really fun for a while ago. I'd be happy to answer any questions that you might have. Well, I think we have a pretty good story right now, but the main thing that we'd like to figure out now is whether or not it's acting primarily through a cleavage implied inhalation pathway or splicing pathway. And those two are interrelated, of course, but there are some experiments that we're trying to set up now to try and address that. So I think that's the first thing. I think that what makes the most sense is that Raver 2's function actually is to target PTB there, and then PTB helps to either inhibit splicing and make the intron available or activate the intronic polydentalation through interaction with the cleavage and polydentalation machinery. So we're trying to figure out, first of all, which pathway in general is involved, and then we can try to figure out exactly which cleavage and polydentalation factor is being recruited by the complex or how it may be interrupting splicing. No, the crystal structure... I don't think the crystal structure of Raver 1 or Raver 2 is known, but it's certainly Raver 2 is not known. There's really only two papers that have ever been published on Raver 2. It would be useful to map the regions of Raver 2 that are important for interaction with PTB. And some of those experiments have been done, at least I know for sure in the setting of Raver 1, so we could get some idea from Somology to Raver 1 in terms of the domains that could be important. And those could be important mutants to use in the experiment. There's lots of ways that we could think of using those. Not that I know of, but I'd like to look at that. Thank you.