- Jaspreet Johl
- (916) 335-8871
- Jaspreet.Johl@asm.ca.gov
(Sacramento, CA) – Today the California Senate Banking and Financial Institutions Committee approved AB 1177, the California Public Banking Option Act (Santiago), which would guarantee all Californians access to basic banking services without fees or penalties. AB 1177, also known as BankCal, would partner with existing banks and credit unions to help close the financial access gap that leaves 1 in 4 Californians unbanked or underbanked and nearly half of Black and Latino California households.
“BankCal takes us one step closer to helping the millions of Californians excluded or exploited by big banks,” said Assembly Member Miguel Santiago (D-Los Angeles), author of AB 1177. “Overdraft fees, payday lenders, and check cashers gouge our communities from every corner. With BankCal, we can help our communities save money and build wealth by giving them a no-fee, no-penalty banking option.”
“There has long been a gap in banking services in low-income communities. To fill that gap, we passed AB 857 in 2019 to allow local governments to create their own public banks and reinvest in our local communities,” said Assemblymember David Chiu (D-San Francisco), joint-author of BankCal. “AB 1177 is the next step forward in our people-centered public banking movement, and I am delighted the bill is moving forward in the Senate. By creating the BankCal Program, we can provide basic banking services for all Californians.”
“I am glad that California is taking the next step towards ensuring that every Californian has access to basic financial services,” said Sen. María Elena Durazo (D-Los Angeles), co-author of AB 1177 and Senate Banking and Financial Institutions Committee member. “We have an obligation to find a solution to close the banking gap in California within our low-income and minority communities. The deck is already stacked against low-income communities; nobody should have to struggle to get access to money that is already theirs.
“The issues associated with large numbers of unbanked and underbanked Californians have been further exacerbated by the pandemic – from missed paychecks to medical expenses to cashless businesses,” said Sen. Hueso (D-San Diego), co-author of AB 1177 and Senate Banking and Financial Institutions Committee member. “By helping those who are already struggling to avoid penalties and fees, we can stimulate our economy and give our residents more financial security. It’s a win-win for California.”
The Senate committee heard testimony from Anneisha Williams, a care provider and fast-food worker from Los Angeles, on the extortionate fees facing working families who are underbanked, “Living paycheck to paycheck isn’t easy, and last month I had to take out a loan to help me make it to my next paycheck. I ended up having to take out a loan for $255 at a local check-cashing place. I paid it within two weeks but ended up paying $300 in total – that’s 17.7% in interest. The money I’m paying in fees and interest could be going toward the basics, like gas or groceries. That money could go toward preparing for emergencies.”
According to a study issued by HR&A Advisors last month, unbanked and underbanked Californians could potentially save more than $3 billion a year if they had access to basic banking services. Expanded banking services access to unbanked and underbanked Californians would redirect billions from fees and interest to local spending, resulting in a $4.2 billion boost to the California economy and support the creation of up to 22,000 jobs.
“With California’s economy booming, we have an opportunity to ensure a more equitable future for all working families. California can lead the way by providing a public option for banking services and expanding opportunities for Black, Latino, and immigrant families who are drowning in fees and penalties simply to cash their paychecks and pay their bills,” said Bob Schoonover, President of SEIU California and Executive Director of SEIU 721.
“Today, the Senate Banking Committee voted in favor of moving California closer to a universal public option for banking that would allow all Californians the opportunity to open a free bank account,” said Paulina Gonzalez-Brito, Executive Director of the California Reinvestment Coalition. “This vote reaffirms the importance of closing the state's racial wealth gaps and moves us closer to a banking system that centers people instead of profits.”
“Today’s vote shows the growing momentum and support for public banking—a public option to the predatory and extractive financial services draining our communities," said Trinity Tran, Lead Organizer of the California Public Banking Alliance. “Universal banking access would be life-changing for the millions of Californians who face barriers to opening or maintaining a bank account and bring in billions in local spending from savings from high-cost fees and interest.”
More than 200 racial and economic justice groups, faith-based organizations, businesses, and labor unions endorse BankCal, in addition to the cities of Los Angeles, Long Beach, Berkeley, and the City and County of San Francisco.
The Senate Labor and Senate Judiciary Committees will hear BankCal in early July.
Assembly Member Miguel Santiago is the Chair of the Assembly Committee on Communications and Conveyance and Chair of the Assembly Select Committee on Los Angeles County Homelessness. He also sits on the Assembly Committees on Public Safety, Health, Higher Education and Utilities and Energy. He represents the 53rd District composed of the cities of Los Angeles, Huntington Park, and Vernon.