BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 385 (Dickinson) - Bank on California Program
Amended: May 24, 2013 Policy Vote: BFI 7-1
Urgency: No Mandate: No
Hearing Date: August 30, 2013
Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: AB 385 houses the Bank on California Program
within the Department of Business Oversight and establishes a
quarterly reporting system for participating banks.
Additionally, the bill requires participating financial
institutions to comply with specific administrative obligations.
Fiscal Impact:
The Department of Financial Institutions (DFI) indicates
the need for one PY (AGPA) at an annual cost of $144,000 and
one-time costs of $33,000 for equipment/furniture. (Special
Fund)
Background: The Bank on California Program is an outgrowth of
Bank on San Francisco, which, in turn, was created in response
to results of a survey performed by officials of the City and
County of San Francisco in 2005. At the time, that survey
identified approximately 50,000 unbanked households in the City
and County.
In December 2005, a committee comprising of the San Francisco
Treasurer's Office, the New America Foundation, the Federal
Reserve Bank of San Francisco, and the nonprofit organization
EARN worked with local community organizations, banks, and
credit unions to develop a new program to bank the unbanked.
This coalition eventually became Bank on San Francisco. It
began with four goals: 1) create more opportunities for
lower-income clients to enter the financial mainstream; 2)
create products without high fees or minimum balances; 3) help
unbanked individuals learn about the benefits of keeping their
money in checking and savings accounts; and 4) help San
Franciscans learn more about how to use, manage, and save money.
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Bank on San Francisco ultimately partnered with fourteen banks
and credit unions. The group set an initial goal of banking
10,000 unbanked San Franciscans in two years.
To date, within California, Bank on Programs have been
established in American Canyon, Fresno, Los Angeles, Oakland,
Napa Valley, Sacramento, Orange County, San Francisco, San Jose,
and Stanislaus. According to the Bank on California web site
( www.bankoncalifornia.ca.gov ), Bank on Programs in Monterey,
Salinas, Santa Cruz, and Watsonville are in the process of being
established.
Proposed Law:
1. AB 385 will statutorily house the Bank on California
Program within the Department of Business Oversight, and
would require the Commissioner of Business Oversight to do
all of the following, in coordination with regional Bank on
programs:
a. Request the following information from participating
financial institutions on a quarterly basis, and share
this information with regional Bank on programs, as
necessary: the total number of program accounts opened,
the total number of program accounts closed, the zip
codes of program accountholders, and the median and
average account balances of open program accounts.
b. Report annually to appropriate policy and fiscal
committees of the Legislature on all of the following
information, using information collected from
participating financial institutions and from regional
programs: data on program account opening, closing,
account balance, and customer zip codes by location and
quarter, and cumulatively; adherence by participating
financial institutions to negotiated account features;
and activities conducted by participating financial
institutions in support of regional programs.
c. Pursue voluntary agreements with financial
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institutions with a presence throughout California.
d. Identify geographic localities with a high density
of unbanked individuals and households and no existing
Bank On program, and work with local leaders in these
locations to support the establishment of new programs.
e. Provide support to regional programs in coordination
with regional program leadership, as specified.
2. Would provide that regional programs shall be voluntary,
public-private initiatives led by local government, in
partnership with financial institutions and community-based
organizations.
3. Would require regional programs to negotiate with financial
institutions to provide unbanked, low- to moderate-income
individuals with access to free or low-cost banked accounts
and promote financial education.
4. Would require participating financial institutions to do
all of the following:
a. Offer a low- or no-cost checking account with no
monthly minimum balance requirement.
b. Adapt internal systems to allow a customer with a
negative banking history or Chex Systems record to open
an account.
c. Accept consular identity cards and other alternative
forms of identification as primary identification.
d. Waive one set of nonsufficient funds or overdraft
fees per program participant per year.
e. Report data to the Commissioner of Business
oversight, as specified.
f. Train branch staff on program policies and
procedures.
g. Participate in outreach activities to promote the
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program to low-income communities.
Staff Comments: Effective July 1, 2013, the Department of
Financial Institutions and the Department of Corporations was
reorganized as divisions within a new Department of Business
Oversight (Government Reorganization Plan Number 2).