* WCIA TV…
Banking service access will be expanding across the state. Governor JB Pritzker signed a bill Monday called Bank on Initiative.
Right now, 1 in 5 households in the state use nontraditional banking systems. The program will connect them with affordable financial help. The hope is this will reduce people’s reliance on predatory lenders that charge high fees for basic services.
* Public Radio…
Illinois Comptroller Susana Mendoza said a new state law, signed Monday, will ask banks and credit unions to list what they offer in the way of low cost methods for opening an account.
“We’ll set up a window on our website where people can enter their address and we’ll say here’s the nearest bank to you with an appropriate account that will work for you,” Mendoza said.
* Greg Hinz…
The bill specifically is targeted at helping the estimated one-fifth of Illinois households who conduct their financial affairs outside of the traditional banking system, often by using relatively high-fee payday loan outlets, auto title lenders, pawn shops and the like. According to Pritzker, such folks will end up paying an average of $40,000 in fees over their lifetimes.
The new measure doesn’t directly change that but authorizes Illinois Comptroller Susana Mendoza to certify and publicly post information about low-cost products offered by banks and credit unions that include features such as no maintenance fees, limited charges for overdrafts and secured personal loans for those with low credit scores. […]
The bill doesn’t empower Mendoza to develop new programs, merely to publicize existing products that pass muster. And to do even that, she’ll work with an advisory commission. That may explain why the bill passed both houses of the Legislature by unanimous votes.
But, as one insider put it, “Look at this is sort of reverse shaming. You’d think that this list would encourage banks to offer more programs like this.”
* Mendoza press release…
“The Community Bankers Association of Illinois appreciates the efforts of the governor, comptroller and General Assembly to highlight the needs of the unbanked and under-banked population. It is important to integrate these consumers into the mainstream financial world as an alternative to predatory actors like payday lenders and tile loans who charge as much as 500% interest for basic financial services.” […]
The Brookings Institute found that, on average, a full-time worker who doesn’t use traditional retail banking products is charged roughly $40,000 in lifetime fees. Low-income and immigrant consumers are more vulnerable to being targeted with long-term fees, in exchange for low-information lending documentation.
Lack of access to traditional banking is a problem in both rural and urban areas all over the state. Cook County has a combined unbanked and underbanked rate of nearly 30 percent. Macon County in central Illinois and Alexander County at the southern tip of the state both have unbanked rates of roughly 35 percent.