BILL ANALYSIS Ó
AB 1292
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1292 (Dababneh) - As Introduced February 27, 2015
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|Policy |Banking and Finance |Vote:|11 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes the Bank On California Program in statute
and places the program within the Department of Business
Oversight (DBO). The bill requires DBO, beginning in 2016 and
no later than August 30 of each year, to provide the
chairpersons of the Senate Committee on Banking and Financial
Institutions and the Assembly Committee on Banking and Finance
with a brief annual summary of activities of the program.
FISCAL EFFECT:
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As the state currently provides no funding for activities, minor
and absorbable costs to DBO for codification of the program and
producing the summary report.
COMMENTS:
1)Purpose. According to the author, Bank On California is
needed to make it easier for lower income consumers to
establish affordable bank accounts, raise awareness among
"unbanked" consumers, meaning those without bank accounts,
about the benefits of account ownership, and make money
management education more accessible.
According to data from a 2013 survey by the Federal Deposit
Insurance Corporation, 7.7% of households in the United States
were unbanked in 2013, and 20.0% were "underbanked," meaning
those households had a bank account but used alternative
financial services outside the banking system. Assuming
California's banking participation rates mirror the national
rates, approximately 1.0 million California households are
unbanked and 2.8 million are underbanked.
2)Bank On Future Funding? This bill does not provide any
funding for the Bank On California program, and previous
funding has been completely exhausted. Establishing the
program in statute may result in future budget pressure to
fund activities. DBO estimates that it will need at least
$175,000 a year to conduct meaningful activities. Without
funding, the report required by this bill may simply indicate
DBO has not undertaken any activity.
3)The Bank On Movement. The "Bank On" movement began in San
Francisco in 2006, and Governor Schwarzenegger launched Bank
On California, the first state-wide program of its type, from
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his office in 2008. Currently, there are four active local
Bank On programs in the state: San Francisco, Los Angeles,
Oakland, and Sacramento. To date, the Bank On California
program has lacked statutory oversight and moved among several
different state departments before settling within DBO in
2012. As a result, the state program has struggled with
inconsistent leadership and resources.
Patterned off the success of Bank On San Francisco, Bank On
California is intended to increase the supply of starter
account products through voluntary partnerships with financial
institutions and raise awareness of the benefits of account
ownership and sound money management. Bank On California
provides technical assistance to local programs, leveraging
connections with statewide partners, assisting local programs
in understanding financial regulations, and sharing best
practices. The state currently provides no funding for the
Bank On California program, and most activities are operated
with local government and private funding.
In September, 2013, the Cities for Financial Empowerment Fund
announced the creation of "Bank On 2.0," a new effort to
create a unified, national approach to delivering affordable
banking products and services to low-income and underbanked
people through local programs. Bank On 2.0 is intended to
build on the grassroots successes of current Bank On and
related banking access programs, developing a comprehensive,
national model for Bank On movements in communities across the
country.
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Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081