BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1292|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1292
Author: Dababneh (D)
Introduced:2/27/15
Vote: 21
SENATE BANKING & F.I. COMMITTEE: 7-0, 6/17/15
AYES: Block, Vidak, Galgiani, Hall, Hueso, Lara, Morrell
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 77-0, 4/30/15 (Consent) - See last page for
vote
SUBJECT: Bank on California program
SOURCE: Author
DIGEST: This bill establishes the Bank on California Program
within the Department of Business Oversight (DBO) and requires
DBO to report annually to the chairpersons of the Senate
Committee on Banking and Financial Institutions and Assembly
Committee on Banking and Finance regarding the activities of the
Bank On California Program.
ANALYSIS:
Existing law:
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1)Authorizes DBO to administer provisions of the Financial Code
regulating the activities of state-chartered banks and
state-chartered credit unions (Divisions 1 and 5 of the
Financial Code).
2)Provides for the California Financial Literacy Fund,
administered by the State Controller, to enable partnerships
with the financial services community and governmental and
nongovernmental stakeholders to improve Californians'
financial literacy (Financial Code Section 70000 et seq.).
This bill:
1)Contains findings and declarations stating that "Bank On
California" is a voluntary collaborative initiative that
assists Californians in opening a bank or credit union account
and saving for the future.
2)Establishes the Bank on California Program within DBO.
3)Requires, beginning in 2016, DBO to provide the respective
chairpersons of the Senate Committee on Banking and Financial
Institutions and the Assembly Committee on Banking and Finance
with a brief annual summary on the activities of the program
no later than August 30th of each year.
Background
"Bank On" programs are voluntary programs in which local
agencies, typically municipalities and community partners, form
coalitions with banks and credit unions to reduce barriers to
banking among unbanked and underbanked individuals.
The first Bank On program was created in San Francisco in 2005,
in response to a survey that identified approximately 50,000
unbanked households in that jurisdiction, many of which housed
people of color. When San Francisco officials reviewed the
data, they determined that San Francisco had a compelling
interest in helping the unbanked open accounts, as a first step
toward financial empowerment and a stronger community.
In December 2005, a committee including the San Francisco
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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 people
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. Bank on San Francisco
ultimately partnered with 14 banks and credit unions. The group
set an initial goal of banking 10,000 unbanked San Franciscans
in two years.
Results to date have been strong. Bank On San Francisco has
helped bank an average of 10,000 people per year since launch
(http://sfofe.org/programs/bank-on). According to the San
Francisco Office of Financial Empowerment (OFE), Bank on San
Francisco is the first comprehensive program in the United
States dedicated to helping people without access to mainstream
financial institutions. It has become a model for similar
programs across the nation.
In 2008, the Schwarzenegger Administration launched Bank On
California, to build on Bank On San Francisco, and encourage
other local governments to launch and maintain regional "Bank
On" programs of their own. Initially, Bank On California was
housed within the Governor's Office of Planning and Research. A
few years later, Bank On California was shifted to the State and
Consumer Services Agency. In 2012, the program was moved to the
Department of Financial Institutions (DFI), then moved to DBO in
2013, when DBO was formed through the merger of DFI and the
Department of Corporations.
To date, within California, Bank On Programs have been
established in American Canyon, the Central Coast (including
Monterey, Santa Cruz, Salinas, and San Benito Counties), Fresno,
Los Angeles, Oakland, Orange County, Napa Valley, Sacramento
(including Sacramento, Amador, El Dorado, Placer, and Yolo
Counties), San Francisco, San Jose, and Stanislaus
(www.bankoncalifornia.ca.gov).
Comments
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If this bill is enacted, DBO would join the U.S. Department of
the Treasury and the National League of Cities as a repository
of information about state and regional Bank On programs.
According to the San Francisco OFE, "Bank On San Francisco's
success attracted national attention. To help other cities start
their own programs, the National League of Cities created "Bank
on Cities" and the U.S. Department of the Treasury has begun
work on a national "Bank on USA" program.
More than 100 cities have launched, or started planning, a Bank
On program. To provide technical assistance to support these
efforts, the San Francisco OFE partnered with the National
League of Cities and the James Irvine Foundation to create
joinbankon.org, a web portal offering tools and resources for
other cities planning Bank On programs." A significant amount
of information about the philosophy behind Bank On, how to find
an existing Bank On program, and how to start a new Bank On
program is available at www.joinbankon.org.
Prior Legislation
AB 385 (Dickinson, 2013) would have housed the Bank On
California Program within DBO, required DBO to coordinate with
regional Bank On programs, and required financial institutions
that chose to participate in Bank On California to adhere to
several rules. AB 385 was held on the Senate Appropriations
Committee Suspense File.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, this bill will
impose minor to potentially significant cost pressure on the
Financial Institutions Fund, potentially in excess of $150,000
annually for DBO to provide general oversight and support of the
Bank on California Program and prepare the report required by
the bill.
SUPPORT: (Verified8/27/15)
California Credit Union League
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California Independent Bankers
San Francisco Office of Financial Empowerment
United Ways of California
OPPOSITION: (Verified8/27/15)
None received
ARGUMENTS IN SUPPORT: The California Independent Bankers (CIB),
California Credit Union League (CCUL), and the San Francisco OFE
support the bill. CCUL believes that too many Californians are
disconnected from the financial mainstream. Federal Deposit
Insurance Corporation survey data indicates that 3.1 million
adults are unbanked, and 6.6 million are unbanked in California.
Recent market research indicates that Fresno and Los Angeles,
respectively, have the highest and third highest percentages of
unbanked residents in the country. CCUL supports AB 1292,
because it "intends to increase and enhance banking services in
underserved communities and stimulate greater financial
inclusion by identifying areas that need expanded service."
CIB writes, "With millions of Americans unbanked and underbanked
(1 in 13 households in 2013), it is critical to take steps to
help these individuals gain access to financial services,
including checking and savings accounts."
The San Francisco OFE believes that the most successful model
for Bank On is one in which regional coalitions lead and state
agencies provide needed support and coordination.
ASSEMBLY FLOOR: 77-0, 4/30/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gonzalez, Gordon, Gray, Grove,
Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
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Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Campos, Chávez, Gomez
Prepared by:Eileen Newhall / B. & F.I. / (916) 651-4102
8/31/15 9:05:54
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