Business

Coming Soon to California: A ‘Zero-Fee’ Public Banking Option

Proponents of public banking in California say Wall Street banks have failed low-income communities, particularly people of color. They also say the public banks will provide easier access to capital that will be critical to helping small businesses and neighborhoods rebound after the pandemic.

Published

3 years ago

October 20, 2021

Isabelle Price

A woman sits at her dining room table with laptop and financial reports doing her monthly budget. She is smiling at the ease of use as she works on her smart phone banking app to do monthly finances, pay taxes and save money for the future.

On October 4, Gov. Gavin Newsom signed legislation paving the way for a new public banking system in California.

AB 1177, known as the ‘California Public Banking Option Act,’ creates a zero-penalty, zero-fee, and zero-minimum-balance platform for basic financial services.

These services include direct deposit from employers and public benefits, automatic bill pay to registered payees, recurring payments and donations to account holders’ organizations or charities of choice, and an infrastructure to support account holders in building credit.

“AB 1177 will help Californians stay protected from overdraft fees and penalties and give them an opportunity to save money and build wealth while fighting the racial wealth gap,” said Assemblymember Miguel Santiago (D-Los Angeles), lead author of the bill.

“California is leading the nation’s public banking movement and we must keep working to provide no-fee banking services to all Californians,” he added.

Santiago wrote the bill with the intention to help close the financial services gap that leaves 1 in 4 Californians unbanked or underbanked. Modeled after the state’s public retirement program CalSavers, the bill forms a commission of representatives from the Treasurer’s office, the Department of Financial Protection and Innovation, financial access experts and community members to oversee market analysis on how the program should be implemented.

“Financial exclusion and scarcity have been a tool for oppression, discrimination and systemic inequity for too long. Public banking options such as BankCal, along with new technology that allows for free exchange over the internet, are urgently needed to decentralize power, privilege and financial control,” said Briana Marbury, executive director of the Interledger Foundation, a non-profit that advocates for standards and technologies that support an open and integrated global financial system.

Opponents of the bill believe that government-owned banks open the door for corruption and that the cost of any mismanagement of funds will come out of taxpayers’ pockets.

A 2015 article published by the Cato Institute critiques past public banking projects, highlighting shortcomings and failures.

Mark A. Calabria, who was chief economist to former Vice President Mike Pence and former director of the Federal Housing and Finance Agency authored the article.

He cites devastating losses Germany’s public banks suffered during the sub-prime mortgage crisis of 2008.

Calabria also points to public banking failures closer to home.

“The recent history of Fannie Mae and Freddie Mac, quasi‐ public banks at the federal level, illustrates that mismanagement and corruption are alive and well at the intersection of the public and private,” he wrote.

However, Trinity Tran, co-founder of the California Public Banking Alliance, argues instead that AB1177 does not create a new bank but “creates a statewide retail banking option through which every California worker can access zero-cost services.”

While California is known for its groundbreaking legislation, it will not be the first state with a banking system like this. North Dakota’s public banking system was founded back in 1919.

Marbury believes that the bill is only the first step toward a broader initiative that would revolutionize accessibility to financial growth and equality.

“This is an exciting development, but not far-reaching enough. Public banking initiatives should be introduced in other states across the U.S. to ensure equal access to financial services for the most vulnerable sectors of our population while elevating the economic health of society as a whole,” she said.

In addition, global financial inclusion should encompass both “brick and mortar” bank access for everyone and a more inclusive internet,” she added.

Isabelle Price

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Business

Maximizing Your Bank Branch Experience

In a world of online tools that let you make banking transactions with the touch of a button, the idea of visiting a branch might seem unnecessary. However, if you haven’t visited your local branch recently, you might be surprised by what it has to offer. Your branch is much more than a place to deposit and withdraw money – it can offer the opportunity to build valuable relationships with people who can help you achieve financial independence.

Published

19 hours ago

May 3, 2024

Oakland Post

Diedra Porché, National Head of Community Banking, JPMorgan Case & Co.

Sponsored by JPMorgan Chase & Co.

In a world of online tools that let you make banking transactions with the touch of a button, the idea of visiting a branch might seem unnecessary.

However, if you haven’t visited your local branch recently, you might be surprised by what it has to offer. Your branch is much more than a place to deposit and withdraw money – it can offer the opportunity to build valuable relationships with people who can help you achieve financial independence.

Diedra Porché, Head of Community and Business Development at Chase, talks about how the bank model has evolved to maximize the branch experience for customers; how connecting with your local branch team can help you think differently about money and investing for your future.

How can a customer feel connected to a bank branch?

I love that question because we ask ourselves the same thing every day. Being part of the community means meeting with local leaders to find out what they need from us and then designing our branches around that. For example, at some of our community branches we have what we call a living room where we can host financial workshops, small business pop-up shops or nonprofit organization meetings. We also hire locally. You feel much more connected talking about financial aspirations with people from your community who went to the same high school, place of worship or maybe frequented the same recreation center down the street when they grew up.

How can I build a relationship with my bank?

Customers should feel comfortable sharing their goals, needs and wants with their banker. Also, it helps to remember the Community Manager is there to help solve your finance challenges and build a roadmap for success. You might have a short-term or long-term goal to open a business, build your credit, become debt-free, buy a home, or save for retirement, and our community team can help. At Chase, we strive to make dreams possible for everyone, everywhere, every day. Your financial future starts with building those relationships.

How can customers change negative perceptions they have about managing their money?

Far too often, customers are intimidated when they visit a bank. Our goal is to demystify banking and money myths empowering people to make the right decisions. For example, a big myth is assuming you need a lot of money to have a bank account. You don’t! Another myth is you need to carry a balance on your credit card to build credit — actively using your credit card can demonstrate that you can use credit responsibly but carrying a balance won’t necessarily improve your credit score. Finally, understanding mobile and online banking safety is key. There are so many safeguards and protections in place to guard your personal information and funds.

What’s an easy step one can take to shift their financial behavior right now?

Cultivating self-awareness is a good first step. Start by taking inventory of your spending. Be honest with yourself about what you need and what you want. Too often, people confuse the two, which leads to bad decisions. Rent is something you need to pay. An extra pair of shoes is something you may want but before you buy them ask yourself if that’s the best use of your hard-earned money. Too often, our beliefs and our fears shape our financial realities. If any of those beliefs are limiting your financial behavior, it’s important to question and examine them, and then decide you’re open to learning something different.

What’s one perception about banking that you’d like to change?

I think folks are surprised there are so many resources available and accessible both at our branches and online, it’s always a good idea to visit a nearby branch and speak to a Community Manager or banker. Outside of what we offer in-branch, our teams also work with local neighborhood partners who provide a variety of services to support the community, businesses and residents. I received a unique piece of feedback from an employee who started with the bank and had lived in the same community his whole life. When he visited his local community branch, he said, “Diedra, when I walked in, I felt dignified.” Every time I recount that story, it warms my heart because that’s what we want — we want our centers to belong to the community.