BILL ANALYSIS Ó
AB 385
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 385 (Dickinson) - As Amended: April 2, 2013
Policy Committee: Banking and
Finance Vote: 10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the Bank on California program in the
Department of Business Oversight (DBO), address the large number
of people without banking services. Specifically, this bill:
1)Provides that DBO, through the program, shall provide support
and coordination to regional programs throughout California
and specifies these regional programs shall be voluntary
public-private initiatives led by local government, in
partnership with financial institutions and community based
organizations.
2)Establishes requirements for financial institutions that
choose to participate in the Bank on California program.
3)Requires DBO to request and collect specified data from
participating financial institutions and report on the program
to the chairs of the Senate and Assembly banking committees.
FISCAL EFFECT
The estimated cost of this legislation will be approximately
$250,000 annually (special funds) for the ongoing administrative
costs of DBO, with an additional $65,000 in one-time costs.
COMMENTS
1)Purpose . The author contends AB 385 addresses a significant
issue in California, the large number of Californians who are
financially illiterate and are without banking services,
commonly referred to as the" unbanked" or "underbanked." The
AB 385
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unbanked constitute approximately 22 million Americans,
according to the author. The author states the goal of AB 385
is to encourage voluntary collaborative partnerships to lower
the number of unbanked and help more Californians enter the
financial mainstream. The author notes when unbanked
Californians gain access to a bank account they are better
able to save for the future and establish a credit history.
AB 385 codifies the program and provides it a permanent home
at the state level.
2)Supporters . Including the California Independent Bankers and
the California Credit Union League contend this bill promotes
financial literacy and supports efforts to introduce
Californians to mainstream financial institutions. The United
Way of California and selected local United Ways, support AB
385 as a means to ensure the continuation of Bank on
California, pointing out the original program's goal to open
100,000 starter accounts has been surpassed and that the total
now stands at over 214,000 starter accounts.
3)Background . The first Bank On program started in San Francisco
in 2006 with the launch of Bank on San Francisco. In 2008,
the state of California launched the statewide Bank On
California program. There are currently eleven regional Bank
On programs launched in California. Most Bank On programs in
California are led by the municipal government or the local
United Way.
4)The Unbanked . The impetus for the bank on programs is the
large number of unbanked. Data from a 2011 Federal Deposit
Insurance Corporation survey found an estimated 7.8% of
Californians are unbanked and an additional 18% are considered
underbanked. Ironically, the unbanked spend a
disproportionate share of their income on financial services.
A report from the Federal Reserve Bank of St. Louis found that
unbanked consumers spend approximately 2.5 to 3% of a
government benefits check and between 4% and 5% of payroll
checks just to convert these checks into cash. Additional
dollars are spent to purchase money orders to pay routine
monthly expenses. For a household with a net income of
$20,000, the costs of these services can be over $1,000
annually, substantially more than the expense of a monthly
checking account fee.
5)There is no registered opposition to this bill .
AB 385
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081