AB 385, as amended, Dickinson. Bank on California Program.
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 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 the commissioner to report annually to specified committees of the Legislature on the activities of the program, including the data provided by participatingbegin delete financial institutions,end deletebegin insert regional programs,end insert and to undertake specified activities to promote the Bank on California Program.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Division 23 (commencing with Section 80000)
2is added to the Financial Code, to read:
3
The Legislature finds and declares all of the following:
7(a) “Bank on California” is a voluntary collaborative initiative
8among local governments, state officials, the department, financial
9institutions, and community-based organizations that assists
10Californians in opening a bank or credit union account and helps
11Californians enter the financial mainstream.
12(b) The goal of the Bank on California Program is to financially
13empower lower income consumers by making it easier and more
14affordable for them to deposit their paychecks, pay their bills, and
15start saving.
16(c) The Bank on California Program increases the supply of
17starter account products that work forbegin delete theend delete low-income, unbanked
18Californians by developing baseline product criteria that must be
19offered by all participating financial institutions.
20(d) The Bank on California Program raises awareness amongst
21unbanked consumers about the benefits of account ownership and
22spurs Californians to open accounts.
23(e) The Bank on California Program makes quality money
24management education more easily available to low-income
25Californians and raises statewide awareness of the unbanked
26problem and potential solutions.
27(f) An estimated 7.8 percent of
Californians are unbanked and
28an additional 18 percent are considered underbanked.
29(g) The average unbanked Californian pays one thousand dollars
30($1,000) to cash a year’s worth of paychecks.
31(h) Californians with bank accounts are more likely to save,
32have higher credit scores, and get better priced car and home loans.
P3 1(i) Bank on California programs are located in Fresno, Los
2Angeles, Oakland, Sacramento, San Francisco, Napa Valley,
3Orange County, Stanislaus, American Canyon, Central Coast, and
4San Jose.
There is hereby established in the department the
6Bank on California Program.
For purposes of this division, the following terms have
8the following meanings:
9(a) “Commissioner” means the Commissioner of Business
10Oversight.
11(b) “Department” means the Department of Business Oversight.
12(c) “Program” means the Bank on California Program.
13(d) “Unbanked” means any individual or household that lacks
14any kind of deposit account at an insured depository institution.
(a) The program shall provide support and coordination
16to regional programs located in communities throughout California.
17Regional programs shall be voluntary, public-private initiatives
18led by local government, in partnership with financial institutions
19and community-based organizations. Regional programs shall
20negotiate with financial institutions to provide unbanked, low- to
21moderate-income individuals with access to free or low-cost banked
22accounts and shall promote financial education.
23(b) Participating financial institutions shall agree to do all of
24the following:
25(1) Offer a low- or no-cost
checking account with no monthly
26minimum balance requirement.
27(2) Adapt internal systems to allow a customer with a negative
28banking history or Chex Systems record to open an account.
29(3) Accept Consular identity cards and other alternative forms
30of identification as primary identification.
31(4) Waive one set of nonsufficient funds or overdraft fees per
32program participant per year.
33(5) Report data to the commissioner on a quarterly basis on key
34begin delete metricsend deletebegin insert metrics,end insert including, but not
limited to, the number of
35program accounts opened and closed, the ZIP Codes of program
36accountholders, and the average and median monthly balances of
37program accounts.
38(6) Train branch staff on program policies and procedures.
39(7) Participate in outreach activities to promote the program to
40low-income communities.
Commencing in 2014, the commissioner shall, in
2coordination withbegin delete localend deletebegin insert regional end insert programs, conduct the following
3activities:
4(a) Request and collect the following data from participating
5financial institutions on a quarterly basis, sharing this data with
6begin delete localend deletebegin insert regionalend insert programs asbegin delete necessary.end deletebegin insert
necessary:end insert
7(1) The total number of program accounts opened.
8(2) The total number of previously opened program accounts
9closed.
10(3) The ZIP Codes of program accountholders.
11(4) The median and average account balances of all open
12program accounts.
13(b) Provide thebegin delete respective chairpersons of the Senate Committee begin insert
appropriate Senate and Assembly policy
14on Banking and Financial Institutions and the Assembly Committee
15on Banking and Financeend delete
16and fiscal committeesend insert with a brief annual summary on the activities
17of the program. The commissioner shall request information from
18begin delete localend deletebegin insert regionalend insert programs in order to complete this report, which
19shall include, but is not limited to, the following:
20(1) Data on program account opening, closing, account balance,
21and customer ZIP Codes presented by location and quarter, as well
22as cumulatively.
23(2) Adherence by participating financial institutions to
24negotiated account features.
25(3) Financial
institution activities in support ofbegin delete localend deletebegin insert regionalend insert
26 programs, including branch trainings, data reporting, participation
27in meetings and activities, and other program outcomes reported
28bybegin delete localend deletebegin insert regionalend insert programs.
29(c) Pursue voluntary agreements with financial institutions with
30a presence throughout California to offer program-style products
31throughout their California footprint, not only in localities with
32programs.
33(d) Identify
geographic localities with a high density of
34unbanked individuals and households and no existing program and
35work with local leaders in these locations to support the
36establishment of new programs.
37(e) In coordination withbegin delete localend deletebegin insert regionalend insert program leadership,
38provide support tobegin delete localend deletebegin insert regionalend insert programs throughout California
39by:
40(1) Establishing guidelines and best practices for programs.
P5 1(2) Providing information and guidance on regulatory and other
2banking issues.
3(3) Intervening on behalf ofbegin delete localend deletebegin insert regionalend insert programs if a
4participating financial institution is not adhering to program
5commitments.
6(4) Providing assistance, as needed, to disseminate program
7materials and other information.
8(5) Hosting one convening per year for all programs, including
9local leadership and participating financial institutions.
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