California Helping Poor and Immigrants Open and Maintain Bank Accounts

California wants to get 100,000 poor and immigrant residents to open bank account. Many of these people don't trust banks and because they don't have bank accounts, can't qualify to get many other financial services. DP

By JENNIFER STEINHAUER

LOS ANGELES — California is starting what banking experts call the nation’s largest, most ambitious effort by a state government to enable people, especially immigrants and the poor, to open and maintain bank accounts.

The program, Bank on California, which is to be announced Friday in Sacramento, will seek to create 100,000 accounts over two years among residents here and in San Francisco, Oakland, San Jose and Fresno. It is based on a two-year trial in San Francisco, where 31,000 accounts were opened by first-time users.

“For a governor of a state the size of California to stand up and say access to financial services for everyone is a critical issue is very significant,” said Jennifer Tescher, director of the Center for Financial Services Innovation, a nonprofit research group affiliated with the Shore Bank in Chicago.

Under the program, more than 30 banks and credit unions will receive grants from the William J. Clinton Foundation to enable them to offer residents low- or no-fee accounts, to train them how to use banks and in many cases to waive overdraft fees the first few times.

“When there are such a staggering amount of people that are not having a checking account or a savings account and getting their paychecks cashed in some other place where they have to pay dearly for that,” Gov. Arnold Schwarzenegger said in a telephone interview, “you say to yourself, ‘I think we have to do a better job.’ ”

Roughly 11 percent of California’s 25 million residents — most of them poor — do not have checking or savings accounts. They cash paychecks at privately owned check-cashing businesses and store their money under proverbial mattresses and in other places that earn them no interest.

Many of the “unbanked,” as those in the finance world refer to people lacking accounts, are immigrants who fear doing business with commercial banks, or people who have a history of accumulating so many overdraft, below-minimum-balance and other fees that they end up forfeiting their accounts.
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