Assemblyman Miguel Santiago (D- Los Angeles) joined a coalition of lawmakers and financial services advocates on March 30 to announce landmark legislation that will offer a zero-fee, zero-penalty bank account to all Californians.
Assembly Bill 1177 – the California Public Banking Option Act, or BankCal – creates a financial services platform with existing financial institutions to close the widening racial wealth gap fueled by the exclusion of low-wage communities of color from basic banking services. According to the FDIC’s survey data, one in four California households, and nearly half of Black and Latino households in the state, lack a bank account or pay a high fee for basic financial transactions like cashing paychecks.
BankCal is a public financial services platform that will help level the playing field, particularly for low- and middle-income Californians, by offering universal access to standard tools of financial autonomy, the public officials said.
“California families are losing hundreds of millions of dollars in fees a year to payday lenders and check cashing stores that prey on the most vulnerable. With BankCal, more families will be able to keep the money they’ve earned, put food on the table and build their savings,” said Santiago, lead author of AB 1177. “We can’t create a stable economy when financially underserved households spend an average of 10% of their take-home pay in fees and interest just to access their own money and pay bills. Creating a public option for banking and closing the racial wealth gap isn’t only a moral imperative, but it also creates greater financial security for all of our communities.”
The central component of BankCal is a no-fee, no-penalty debit account requiring employers to facilitate direct deposit, when requested. Features include a debit card, automatic bill pay capacity and free ATM access at participating banks. Additionally, BankCal provides infrastructure that could be coordinated with local, state and federal agencies to streamline public benefit payments and other disbursements to account holders. BankCal would be available to all California residents and participation would be voluntary.
“Pawn shops, payday lenders and many check cashing businesses operate with profits as their priority, not the well-being of our communities,” said Trinity Tran, co-founder of the California Public Banking Alliance. “BankCal is the innovative solution we need to strike at the heart of extractive and predatory business practices.”
The California Public Banking Option Act will be heard before the Assembly Banking and Finance Committee on April 29. For information, visit bankcalnow.com/announcement.
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