Amended in Assembly April 2, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 385

Introduced by Assembly Member Dickinson

February 14, 2013

An act to add Division 23 (commencing with Section 80000) to the Financial Code, relating to financial institutions.

LEGISLATIVE COUNSEL’S DIGEST

AB 385, as amended, Dickinson. Bank on California begin delete program. end delete begin insert Program. end insert

Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Institutions. The Governor’s Reorganization Plan No. 2 of 2012 provides that, on and after July 1, 2013, the responsibilities of the Department of Financial Institutions and the Commissioner of Financial Institutions shall be transferred to the Department of Business Oversight and the Commissioner of Business Oversight.

This bill would establish the Bank on California Program in the Department of Business Oversight. The bill would require begin insert the Bank on California Program to provide support and coordination to regional programs in California that are voluntary, public-private initiatives led by specified entities in partnership with participating financial institutions. The bill would require participating financial institutions to, among other things, provide low- or no-cost checking accounts and report specified data to the commissioner. The bill would also require end insert the commissioner to report annually to specified committees of the Legislature on the activities of the program begin insert , including the data provided by participating financial institutions, and to undertake specified activities to promote the Bank on California Program end insert .

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Division 23 (commencing with Section 80000)
is added to the Financial Code, to read:

 

Division 23.  BANK ON CALIFORNIA PROGRAM

 

80000.  

begin delete (a) end delete begin delete   end delete The Legislature finds and declares begin delete that “Bank on
California” is a voluntary collaborative initiative that assists
Californians in opening a bank or credit union account and saving
for the future. end delete begin insert all of the following: end insert

begin delete

(b) There is hereby established in the department the Bank on
California Program.

end delete begin insert

(a) “Bank on California” is a voluntary collaborative initiative
among local governments, state officials, the department, financial
institutions, and community-based organizations that assists
Californians in opening a bank or credit union account and helps
Californians enter the financial mainstream.

end insert begin insert

(b) The goal of the Bank on California Program is to financially
empower lower income consumers by making it easier and more
affordable for them to deposit their paychecks, pay their bills, and
start saving.

end insert begin insert

(c) The Bank on California Program increases the supply of
starter account products that work for the low-income, unbanked
Californians by developing baseline product criteria that must be
offered by all participating financial institutions.

end insert begin insert

(d) The Bank on California Program raises awareness amongst
unbanked consumers about the benefits of account ownership and
spurs Californians to open accounts.

end insert begin insert

(e) The Bank on California Program makes quality money
management education more easily available to low-income
Californians and raises statewide awareness of the unbanked
problem and potential solutions.

end insert begin insert

(f) An estimated 7.8 percent of Californians are unbanked and
an additional 18 percent are considered underbanked.

end insert begin insert

(g) The average unbanked Californian pays one thousand
dollars ($1,000) to cash a year’s worth of paychecks.

end insert begin insert

(h) Californians with bank accounts are more likely to save,
have higher credit scores, and get better priced car and home
loans.

end insert begin insert

(i) Bank on California programs are located in Fresno, Los
Angeles, Oakland, Sacramento, San Francisco, Napa Valley,
Orange County, Stanislaus, American Canyon, Central Coast, and
San Jose.

end insert

begin insert

begin insert 80000.5. end insert   

There is hereby established in the department the
Bank on California Program.

end insert

80001.  

For purposes of this division, the following terms have
the following meanings:

begin insert

(a) “Commissioner” means the Commissioner of Business
Oversight.

end insert begin delete

(a)

end delete

begin insert (b) end insert  “Department” means the Department of Business Oversight.

begin delete

(b)

end delete

begin insert (c) end insert  “Program” means the Bank on California Program.

begin insert

(d) “Unbanked” means any individual or household that lacks
any kind of deposit account at an insured depository institution.

end insert

begin insert

begin insert 80002. end insert   

(a) The program shall provide support and
coordination to regional programs located in communities
throughout California. Regional programs shall be voluntary,
public-private initiatives led by local government, in partnership
with financial institutions and community-based organizations.
Regional programs shall negotiate with financial institutions to
provide unbanked, low- to moderate-income individuals with access
to free or low-cost banked accounts and shall promote financial
education.

(b) Participating financial institutions shall agree to do all of
the following:

(1) Offer a low- or no-cost checking account with no monthly
minimum balance requirement.

(2) Adapt internal systems to allow a customer with a negative
banking history or Chex Systems record to open an account.

(3) Accept Consular identity cards and other alternative forms
of identification as primary identification.

(4) Waive one set of nonsufficient funds or overdraft fees per
program participant per year.

(5) Report data to the commissioner on a quarterly basis on key
metrics including, but not limited to, the number of program
accounts opened and closed, the ZIP Codes of program
accountholders, and the average and median monthly balances of
program accounts.

(6) Train branch staff on program policies and procedures.

(7) Participate in outreach activities to promote the program
to low-income communities.

end insert

begin delete 80002. end delete
begin insert 80003. end insert   

Commencing in 2014, the begin delete department shall provide the
respective chairpersons of the Senate Committee on Banking and
Financial Institutions and the Assembly Committee on Banking
and Finance with a brief annual summary on the activities of the
program. The summary shall be submitted no later than August
30 of each year. end delete begin insert commissioner shall, in coordination with local
programs, conduct the following activities: end insert

begin insert

(a) Request and collect the following data from participating
financial institutions on a quarterly basis, sharing this data with
local programs as necessary.

end insert begin insert

(1) The total number of program accounts opened.

end insert begin insert

(2) The total number of previously opened program accounts
closed.

end insert begin insert

(3) The ZIP Codes of program accountholders.

end insert begin insert

(4) The median and average account balances of all open
program accounts.

end insert begin insert

(b) Provide the respective chairpersons of the Senate Committee
on Banking and Financial Institutions and the Assembly Committee
on Banking and Finance with a brief annual summary on the
activities of the program. The commissioner shall request
information from local programs in order to complete this report,
which shall include, but is not limited to, the following:

end insert begin insert

(1) Data on program account opening, closing, account balance,
and customer ZIP Codes presented by location and quarter, as
well as cumulatively.

end insert begin insert

(2) Adherence by participating financial institutions to
negotiated account features.

end insert begin insert

(3) Financial institution activities in support of local programs,
including branch trainings, data reporting, participation in
meetings and activities, and other program outcomes reported by
local programs.

end insert begin insert

(c) Pursue voluntary agreements with financial institutions with
a presence throughout California to offer program-style products
throughout their California footprint, not only in localities with
programs.

end insert begin insert

(d) Identify geographic localities with a high density of
unbanked individuals and households and no existing program
and work with local leaders in these locations to support the
establishment of new programs.

end insert begin insert

(e) In coordination with local program leadership, provide
support to local programs throughout California by:

end insert begin insert

(1) Establishing guidelines and best practices for programs.

end insert begin insert

(2) Providing information and guidance on regulatory and other
banking issues.

end insert begin insert

(3) Intervening on behalf of local programs if a participating
financial institution is not adhering to program commitments.

end insert begin insert

(4) Providing assistance, as needed, to disseminate program
materials and other information.

end insert begin insert

(5) Hosting one convening per year for all programs, including
local leadership and participating financial institutions.

end insert