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