Published: December 12, 2008
Gov.Schwarzenegger Launches "Bank on California" to Help Californians
California First State in Nation to Open Door to Money-Saving Benefits, Help California's Unbanked Achieve Financial Mobility
With the support of former President Bill Clinton and joined by elected officials from across California, Governor Arnold Schwarzenegger today launched Bank on California, making California the first state in the nation to launch a program designed to help Californians without checking or savings accounts open starter accounts. With the goal of opening 100,000 bank accounts over the next two years, the Governor has partnered with city mayors, community groups, Bank of America and other financial institutions, the FDIC, and federal and state regulatory agencies to put this innovative plan into action - bringing California's unbanked the opportunity to gain access to lower-cost sources of credit and financial services, establish savings, build credit history and invest for the future.
"During these difficult economic times we must do everything in our power to help ensure the financial future of each and every Californian. For the countless families that lack basic financial services, Bank on California is the on-ramp to financial mobility, establishing savings, building credit history, and investing for the future," said Governor Schwarzenegger. "The average worker without a bank account spends an approximately $40,000 in a lifetime on financial services like check cashing that are available at banks for free - money Bank on California will keep in their pockets and keep in their futures."
Spearheaded by Governor Schwarzenegger and funded by non-profits and coalition organizations, Bank on California is a collaborative voluntary program based on the partnership of city mayors, community groups, financial institutions and state and federal bank regulatory agencies. The cities of San Francisco, Los Angeles, San Jose, Fresno and Oakland are the first wave of California cities joining Bank on California today - with other cities to follow. At the press conference, Sacramento Mayor Kevin Johnson announced Sacramento will be the next city to begin structuring the program. The Governor also announced that more than 32 financial institutions, 75 community organizations and 450 coalition members have joined Bank on California - and that Bank of America will offer the starter accounts in all of its California branches.
Millions of families lack basic financial services like a checking account - and nearly half of California households do not have a savings account. According to Scarborough Research (2006), California is home to two of the top three areas with the nation's highest percentage of residents without bank accounts - Fresno and Los Angeles. The Brookings Institution reports that each year Americans spend $8 billion for basic financial services through alternative financial institutions such as check cashing outlets. This translates into $40,000 over the course of a career for the average full-time worker. Additionally, families without bank accounts may not have a safe place to keep their money and can become a magnet for crime.
As partners in Bank on California, financial institutions will increase the supply of starter accounts defined under a baseline product criteria. Mayors and community groups will inform their constituencies of the benefits of opening starter accounts through Bank on California and serve as a bridge to overcome distrust between their communities and financial institutions. Additionally, state and federal bank regulatory agencies will assure financial institutions are in compliance with banking laws, encourage institutions to meet their obligations under the Community Reinvestment Act (CRA) and highlight the fact that institutions will receive positive consideration under CRA for offering low-cost bank products and services.
Originally discussed in an opinion piece co-authored by Governor Schwarzenegger and President Clinton in the Wall Street Journal, Bank on California will help more low-and-middle-income Californians establish savings, build credit history, gain access to lower-cost sources of credit and invest for the future.
"During these tough economic times, our nation must do everything it can to restore the fundamental principle of the American dream that if you work hard and play by the rules, you can make ends meet and get ahead financially over time," said President Clinton, who delivered a video message at the Bank on California launch in Sacramento. "A bank account is an essential tool of good money management and being part of America's financial mainstream. That is why Bank on California is so important. California is to be commended for taking this important step forward."
For more information please visit: www.bankoncalifornia.ca.gov
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