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AB-385 Bank on California Program.(2013-2014)

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Amended  IN  Assembly  May 24, 2013
Amended  IN  Assembly  April 02, 2013


Assembly Bill
No. 385

Introduced by Assembly Member Dickinson

February 14, 2013

An act to add Division 23 (commencing with Section 80000) to the Financial Code, relating to financial institutions.


AB 385, as amended, Dickinson. Bank on California Program.
Existing law provides for the formation and regulation of state-organized banks and state-certified credit unions by the Department of Financial Institutions. The Governor’s Reorganization Plan No. 2 of 2012 provides that, on and after July 1, 2013, the responsibilities of the Department of Financial Institutions and the Commissioner of Financial Institutions shall be transferred to the Department of Business Oversight and the Commissioner of Business Oversight.
This bill would establish the Bank on California Program in the Department of Business Oversight. The bill would require the Bank on California Program to provide support and coordination to regional programs in California that are voluntary, public-private initiatives led by specified entities in partnership with participating financial institutions. The bill would require participating financial institutions to, among other things, provide low- or no-cost checking accounts and report specified data to the commissioner. The bill would also require the commissioner to report annually to specified committees of the Legislature on the activities of the program, including the data provided by participating financial institutions, regional programs, and to undertake specified activities to promote the Bank on California Program.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


 Division 23 (commencing with Section 80000) is added to the Financial Code, to read:


 The Legislature finds and declares all of the following:
(a) “Bank on California” is a voluntary collaborative initiative among local governments, state officials, the department, financial institutions, and community-based organizations that assists Californians in opening a bank or credit union account and helps Californians enter the financial mainstream.
(b) The goal of the Bank on California Program is to financially empower lower income consumers by making it easier and more affordable for them to deposit their paychecks, pay their bills, and start saving.
(c) The Bank on California Program increases the supply of starter account products that work for the low-income, unbanked Californians by developing baseline product criteria that must be offered by all participating financial institutions.
(d) The Bank on California Program raises awareness amongst unbanked consumers about the benefits of account ownership and spurs Californians to open accounts.
(e) The Bank on California Program makes quality money management education more easily available to low-income Californians and raises statewide awareness of the unbanked problem and potential solutions.
(f) An estimated 7.8 percent of Californians are unbanked and an additional 18 percent are considered underbanked.
(g) The average unbanked Californian pays one thousand dollars ($1,000) to cash a year’s worth of paychecks.
(h) Californians with bank accounts are more likely to save, have higher credit scores, and get better priced car and home loans.
(i) Bank on California programs are located in Fresno, Los Angeles, Oakland, Sacramento, San Francisco, Napa Valley, Orange County, Stanislaus, American Canyon, Central Coast, and San Jose.

 There is hereby established in the department the Bank on California Program.

 For purposes of this division, the following terms have the following meanings:
(a) “Commissioner” means the Commissioner of Business Oversight.
(b) “Department” means the Department of Business Oversight.
(c) “Program” means the Bank on California Program.
(d) “Unbanked” means any individual or household that lacks any kind of deposit account at an insured depository institution.

 (a) The program shall provide support and coordination to regional programs located in communities throughout California. Regional programs shall be voluntary, public-private initiatives led by local government, in partnership with financial institutions and community-based organizations. Regional programs shall negotiate with financial institutions to provide unbanked, low- to moderate-income individuals with access to free or low-cost banked accounts and shall promote financial education.
(b) Participating financial institutions shall agree to do all of the following:
(1) Offer a low- or no-cost checking account with no monthly minimum balance requirement.
(2) Adapt internal systems to allow a customer with a negative banking history or Chex Systems record to open an account.
(3) Accept Consular identity cards and other alternative forms of identification as primary identification.
(4) Waive one set of nonsufficient funds or overdraft fees per program participant per year.
(5) Report data to the commissioner on a quarterly basis on key metrics metrics, including, but not limited to, the number of program accounts opened and closed, the ZIP Codes of program accountholders, and the average and median monthly balances of program accounts.
(6) Train branch staff on program policies and procedures.
(7) Participate in outreach activities to promote the program to low-income communities.

 Commencing in 2014, the commissioner shall, in coordination with local regional programs, conduct the following activities:
(a) Request and collect the following data from participating financial institutions on a quarterly basis, sharing this data with local regional programs as necessary. necessary:
(1) The total number of program accounts opened.
(2) The total number of previously opened program accounts closed.
(3) The ZIP Codes of program accountholders.
(4) The median and average account balances of all open program accounts.
(b) Provide the respective chairpersons of the Senate Committee on Banking and Financial Institutions and the Assembly Committee on Banking and Finance appropriate Senate and Assembly policy and fiscal committees with a brief annual summary on the activities of the program. The commissioner shall request information from local regional programs in order to complete this report, which shall include, but is not limited to, the following:
(1) Data on program account opening, closing, account balance, and customer ZIP Codes presented by location and quarter, as well as cumulatively.
(2) Adherence by participating financial institutions to negotiated account features.
(3) Financial institution activities in support of local regional programs, including branch trainings, data reporting, participation in meetings and activities, and other program outcomes reported by local regional programs.
(c) Pursue voluntary agreements with financial institutions with a presence throughout California to offer program-style products throughout their California footprint, not only in localities with programs.
(d) Identify geographic localities with a high density of unbanked individuals and households and no existing program and work with local leaders in these locations to support the establishment of new programs.
(e) In coordination with local regional program leadership, provide support to local regional programs throughout California by:
(1) Establishing guidelines and best practices for programs.
(2) Providing information and guidance on regulatory and other banking issues.
(3) Intervening on behalf of local regional programs if a participating financial institution is not adhering to program commitments.
(4) Providing assistance, as needed, to disseminate program materials and other information.
(5) Hosting one convening per year for all programs, including local leadership and participating financial institutions.