California Tackles Banking Accessibility With New Bill
(TNS) – Increase in overdraft fees. Minimum balances. High ATM, check cashing and debit card fees.
Banking can be expensive, especially for low-wage workers.
Lawmakers signed a new bill designed to provide Golden State households with free financial services, attacking the state’s powerful banks at a time when easier access to banking services could help families cope the economic fallout from the COVID-19 pandemic.
If it passes, the California Public Banking Option Act would create BankCal, the country’s first government program to offer universal banking services to consumers, according to financial policy experts. The program would provide free debit cards, direct deposits from employers and government agencies, electronic bill payment and access to ATMs, in direct competition with private banks.
“The bill creates a way for Californians to do banking transactions without paying outrageous fees – money that could be used for food and rent or to rebuild themselves after the economic devastation caused by the pandemic,” said a deputy.
“If a rich person earns money, that money makes money. When a poor person earns money, that money is ripped off from all corners. Financial institutions make huge profits on the backs of those who… they say they are helping. “
Support for government banking initiatives, supported by groups such as
Like federal legislation, BankCal would “break the mold of private bankers’ control over access to financial services for people who have been left behind,” said
AB 1177 must be heard before
Calling attention to this year’s revelations estimated at $ 30 billion pandemic unemployment fraud and “obsolete technology” at
Individual institutions – including
Although BankCal is available for everything
A 2019 survey of the
Race is also a factor for the underbanked: households that have bank accounts but often rely on money orders, check funds and high interest payday loans due to a lack of affordable banking services and money. convenient branches, or because of language and cultural barriers.
Federal officials found that in addition to those without a bank account, about a quarter of Latino and black households
While BankCal is targeting basic consumer services, progressive activists are also pushing cities to create state-owned banks that would lend money at lower commercial interest rates to businesses, infrastructure, affordable housing, and money. other municipal projects. One state –
BankCal is not creating a public bank, but it is part of the same “ecosystem … democratizing finance,” she said. “BankCal provides a passport for black, brown, immigrant and low-income workers who have been excluded from the financial system.”
A nine-member public council, made up of the state treasurer’s office, would oversee the program and contract with financial institutions such as credit unions. The platform would not offer loans, but could connect users to lenders it certifies as offering low-cost terms.
The authors of the bill estimate that the program would cost the state up to $ 5 million per year for six years or until 100,000 Californians have signed up. At this point, they say, it would be self-sufficient thanks to merchant swipe fees on debit card purchases.
One of the goals would be to remove traditional barriers. In the
A 2018 study by academics from
AB 1177 would require
Public benefits could be deposited electronically in BankCal accounts. “During the pandemic, we have witnessed the need to quickly distribute stimulus and unemployment payments and broken systems unable to provide timely relief, said
By offering electronic bill payment, BankCal would relieve low-wage workers of the need to travel, often by public transport, to pay their bills in person.
“I cash my paychecks in a store half an hour from my house, where I have to take a bus to get to me, with my 2 and 7 year old children,” said
She pays $ 12 to cash each paycheck and takes hour-long bus trips to pay rent and half-hour trips to pay her phone bill using money orders. she declared. “Paying bills without a bank account is difficult. But banks don’t make it easy to set up an account or keep an account.”
Using such alternatives consumes up to 10% of the average income of underbanked households, or more than $ 2,400 per year, according to one. federal study.
BankCal backers say the measure could also help undocumented immigrants who have encountered citizenship issues when trying to set up accounts. About 1.7 million
They also highlight the success of another state initiative aimed at strengthening the finances of low-wage workers, CalSavers. The program, which went into effect last year, requires companies without a retirement program to allow payroll deductions for employees to enroll in a state-sponsored IRA. So far, workers have saved $ 55 million.
“BankCal will change the lives of families who live between paycheck and paycheck,” said
“People turn to prepaid debit cards and pay monthly fees whether they use it or not, and transaction fees for every time they use it to pay basic bills, and sometimes they are charged only to check their balance, ”he said. .
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