September 10, 2021 – Rick Girling, Steve Sittig, Trinity Tran, California Public Banking Alliance.
Today the California State Legislature approved landmark legislation guaranteeing universal free banking access to all Californians. AB 1177 sets into motion the creation of the CalAccount program guaranteeing all California residents access to basic banking services without fees or penalties. The California Public Banking Option Act addresses the inequities in financial services acutely felt by communities that have been hardest hit by the pandemic and recession, inequalities such as discrimination, predatory lending, and vicious spirals of debt.
Californians are demanding banking reform because Wall Street banks have historically failed low-income communities of color. The State Legislature’s approval of AB 1177 paves the way for a banking system centered on people instead of profits. In just a few months, AB 1177 has garnered extraordinary support in the effort to assure that all Californians gain access to banking services. The California Public Banking Alliance, along with AB 1177 co-sponsors, SEIU California and the California Reinvestment Coalition, gained endorsements from over 230 labor, community, and environmental justice groups to extend financial services to unbanked and underbanked residents. This broad support paid off handsomely as the legislation moved through the State Legislature and now heads to the Governor’s desk.
A public option for essential financial services can replace exploitative alternatives to traditional banking, reducing the wealth gap and helping Californians to avoid catastrophic debt. As many AB 1177 supporters have explained, it’s very expensive to be poor. Minimum balance requirements, late fees, overdraft fees, higher interest rate charges for loans to the financially insecure, as well as check cashing and money order fees add up to substantial financial burdens placed on those least able to pay. As Mayron Payes testified to the State Assembly, “A lot of street vendors don’t have a banking relationship because of the high fees and couldn’t maintain the minimum balance. Many of them are operating on a cash basis and couldn’t open a bank account.” This law would provide a banking card to all residents who request one that will enable them to have access to free banking services essential to everyday living.
There is a broad basis of support for this needed financial reform. The state’s largest union, SEIU California with 700,000 members, is the primary proponent. Other labor unions such as the California Labor Federation and UFCW Western States Union have joined in. Community activist groups are showing strong support. Indivisible CA: StateStrong and 350.org chapters throughout the state are mobilizing their members to advocate for AB 1177. Environmental activists such as Friends of the Earth and Greenpeace International see the benefits of making financial services available to all.
Continue reading on CPBA’s Medium.