Lawmakers announce plan to offer zero-cost, zero-penalty bank account to all Californians

FILE PHOTO - A banking customer withdraws money from an ATM machine. (Photo by Robert Alexander/Getty Images)

A coalition of lawmakers and financial services advocates joined together to announce landmark legislation that would offer zero-cost, zero-penalty bank accounts to all Californians, it was announced in a statement Tuesday.

The California Public Banking Option Act (AB 1177), also known as BankCal, creates public banking legislation with existing financial institutions to close the widening racial wealth gap fueled by the exclusion of low-wage communities of color from basic banking services.

BankCal would be the first statewide program in the nation that offers residents access to a no-fee, no-penalty bank account that includes debit cards, automatic bill pay, direct deposit capacity and a platform for account holders to build credit.

"California families are losing hundreds of millions of dollars in fees a year to payday lenders and check-cashing stores that prey on the most vulnerable. With BankCal, more families will be able to keep the money they’ve earned, put food on the table, and build their savings," said Assemblymember Miguel Santiago, lead author of AB 1177.

"According to the FDIC’s survey data, one in four California households and nearly half of Black and Latino California households, are either unbanked or underbanked. That means they lack a bank account or pay a high price for basic financial transactions like cashing their paycheck," the statement read.

RELATEDStay up to date on all coronavirus-related information

"We can’t create a stable economy when financially underserved households spend an average of 10% of their take-home pay in fees and interest just to access their own money and pay bills. Creating a public option for banking and closing the racial wealth gap isn’t only a moral imperative, but it also creates greater financial security for all of our communities," Santiago said.

According to officials, BankCal would be available to all California residents and participation is voluntary.

"Unequal access to basic services—including financial services—have devastated low-income communities and communities of color during this pandemic," said Jyotswaroop Bawa, Organizing and Campaigns Director for the California Reinvestment Coalition.

"Part of ensuring that everyone can bounce back stronger from the pandemic is addressing the systemic exclusion of low-wage, Black, Brown, and immigrant working people from full participation in our economy," said Joseph Bryant, President of SEIU 1021 and Executive Board Member of SEIU California.

"Pawn shops, payday lenders, and many check cashing businesses operate with profits as their priority, not the well-being of our communities," said Trinity Tran, co-founder of the California Public Banking Alliance.

The California Public Banking Option Act will be heard before the Assembly Banking and Finance Committee on April 29, 2021.

Get your top stories delivered daily! Sign up for FOX 11’s Fast 5 newsletter. And, get breaking news alerts in the FOX 11 News app. Download for iOS or Android.