ABOUT BANK ON LOS ANGELES
Bank on Los Angeles is a collaborative initiative focused on connecting Los Angeles’ unbanked and under-banked population to low-cost financial products and services and expands opportunities and access to financial education. This effort helps individuals and families enter the financial mainstream by opening starter bank accounts, where they can begin saving, build a credit history, gain access to lower-cost sources of credit, and invest for their future.
One of seven cities selected for former Governor Schwarzenegger’s Bank on California Initiative, a non-traditional approach to ensure every resident has access to mainstream financial institutions, Bank on Los Angeles is a joint effort of the Office of the Governor, the Office of the Mayor, the California Department of Consumer Affairs, the Federal Deposit Insurance Corporation, local Financial Institutions and Community Based Organizations and groups. United Way of Greater Los Angeles serves as the fiscal sponsor.
The convenience and safety of having a bank or credit union account is often taken for granted by a large majority of Los Angeles residents. Imagine if you didn’t have a bank or credit union account: How much would it cost to cash your checks? How would you pay your bills? Would you be prepared to carry cash at all times? These questions raise issues of personal safety, economic mobility as well as simple convenience.
Bank on Los Angeles is intended to address the barriers to economic opportunity that can be overcome through saving and better access to safe, affordable mainstream financial services. The program is therefore strategically designed to target just under a half a million residents of Los Angeles who are “unbanked.”
Studies show that most un-banked households have adults with steady jobs and moderate incomes.
In similar initiatives targeting the un-banked, banks have started to see these individuals as valuable customers.
Research shows that in cities where a greater share of residents have a bank account, homeownership rates are higher, while crime rates are lower, an important indicator of the overall economic and social well-being of a community. (Source: Federal Reserve Bank of Chicago and Brookings Institution)
Asset building strategies that focus on increasing income, building savings and gaining and sustaining assets are successful strategies to fight poverty and create financial stability in a community. Such strategies include a wide range of components from claiming Earned Income Tax Credits and Workforce Development to Individual Development Accounts (accounts for low-income individuals that are “matched” 1:2 for each deposit from the account holder). In all of these cases the on-ramp in the process is to build a relationship with a mainstream financial institution and learn how to utilize its services. Without an account at a bank or credit union the asset building strategies for low-income working families are limited at best.
A true collaborative effort:
In the initial roll-out of Bank on California, financial institutions met with a diverse coalition of partners to develop policies and product features that will facilitate banking for unbanked residents. These accounts focus on starter accounts for first time banking clients and second chance accounts for previously banked individuals with ChexSystems histories.
Starter Bank Accounts
Financial institutions working with partners have designed special starter bank accounts which will provide un-banked clients immediate access to a new account with any one of the participating banks, as well as, access to free financial education. Some of the account features are:
• Low-cost accounts
• No monthly minimum balance requirements
• Waiver/Refund one set of NSF/overdraft fees per year
• Allow acceptable forms of ID, including the Matricula Consular Card and individual
• Taxpayer Identification numbers (ITIN)
Second Chance Accounts
For persons placed on ChexSystems for reasons other than fraud, Bank on Los Angeles will provide an opportunity to gain immediate access to a new account with any one of our participating banks according to the financial institutions policy:
Community-Based Organizations (CBO) and Groups have also invested countless hours designing ways to act as trusted liaisons to neighbors and clients in order to educate on the benefits of using mainstream financial institutions. The coalition consists of CBOs who provide a variety of health and human services, working to offer financial education, free tax preparation, and other asset building opportunities.
For more information contact
Patricia (Pat) A. Clary
Bank on Los Angeles
WHY BANK ON LA?
Greater Los Angeles? is the third least banked market in America (percentage-wise) and first in absolute numbers. In fact, approximately 20% of all households in the City of Los Angeles (a city of an estimated 3.8 million residents) do not have any bank accounts. Significantly, a closer look at the data shows that these unbanked are highly concentrated in low-moderate income (LMI) communities: that approximately 30% of those living in LMI communities are unbanked and that 75% of Los Angeles check cashing operations - used as alternatives to mainstream financial institutions - are located in LMI census tracts.
The consequences of being unbanked or underbanked in today's economy are significant: it blocks pathways to savings and greater assets (education, auto, home, business), and it drains wealth from L.A.'s most vulnerable residents and communities. Using alternative financial services can cost families up to $1,000 a year, which means that over $54 million in check cashing fees and $88 million payday loans fees are leaving Los Angeles communities - for the most part, these dollars are leaving the communities that need it most.
REACHING OUT TO UNBANKED ANGELINOS
Unbanked Angelinos are concerned about the cost of having a bank account and are worried they may be denied an account because they have made financial mistakes in the past. Others believe that without a Social Security card they are not eligible for an account. Some think they do not make enough money to have a bank account, or are intimidated by a traditional banking environment.
To directly address these concerns, participating banks and credit unions agreed to the following baseline criteria:
" Offer a low-or no-cost product. The high minimum balances and fees of many accounts is a key factor keeping people out of the financial mainstream.
" Adapt internal systems to allow customers with a poor banking history to open "second chance" checking accounts.
" Accept the Mexican Matricula and Consular identification cards as primary ID. For many immigrants, the barrier to opening an account is having the proper documentation.
" Expand marketing and outreach strategies in targeted, low-income neighborhoods, and increase the visibility of appropriate products in Los Angeles.
" Provide financial management training (financial education) in the community and partner with local community-based organizations to transition customers ready to enter the financial mainstream.
Thanks to the hard work of our Financial Partners and our Community Partners, and the overwhelming response of our clients, Bank on Los Angeles has helped open over 56,500 accounts since the program launched in 2008. Together, we continue to prove that with the right products and support, thousands of families can get on the road to financial security.
On January 24, 2008, Governor Arnold Schwarzenegger announced the creation of a "Bank on California" campaign, serving unbanked Californians in cities across the state. Click here for more information. In partnership with New York City, San Francisco is co-chairing a coalition called Cities for Financial Empowerment (CFE), which seeks to expand the vision of what municipal government can and should do on behalf of its residents with low and moderate incomes. CFE member cities (Los Angeles, Miami, New York, San Antonio, San Francisco, Savannah, and Seattle) are committed to leveraging local opportunities, resources and powers to improve the financial health of their citizens. Click here for more information.
Read about some of our strategic partners, and review a case study, articles, and press releases about Bank on Los Angeles. Click here for more information. Members of the media, please contact Patricia (Pat) A. Clary, Managing Director, Bank on Los Angeles 213.744.9350
"Reaching L.A.'s 'unbanked'
Bank on Los Angeles is ultimately a network of strong partners across the city and the nation, working together to ensure that families throughout the City have access to qualify and affordable financial services to build assets and invest in their future. To this end, the following partners make this possible:
o Wells Fargo (link to www.wellsfargo.com )