“Bank On” initiative signed into law
Tuesday, Aug 20, 2019 - Posted by Rich Miller
* 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.
- Blue Dog Dem - Tuesday, Aug 20, 19 @ 12:56 pm:
I am thoroughly amazed at how financially inept young people are. Not all. But most. Please can we get this into our high schools.
- Jibba - Tuesday, Aug 20, 19 @ 1:06 pm:
BDD, this article did not mention young people at all. No one is on your lawn.
- Cheryl44 - Tuesday, Aug 20, 19 @ 1:08 pm:
BDD, Banks don’t want poor people using their services.
- Three Dimensional Checkers - Tuesday, Aug 20, 19 @ 1:11 pm:
This is a good program, but the state could do more if the payday and title loan industry did not have as much influence in Springfield as they do.
- Anotherretiree - Tuesday, Aug 20, 19 @ 1:14 pm:
There is an interesting book on this phenomenon,The Ubanking of America. It explains how people have fallen out of the banking system. BDD is an example of jumping to the conclusion that others are less intelligent because they are reacting differently than you due to their situation being different than yours and your generation. Tough to relate when yelling at them to get off your lawn.
- Stuntman Bob's Brother - Tuesday, Aug 20, 19 @ 1:36 pm:
==BDD, Banks don’t want poor people using their services==
You may be correct, but why? Could it be that a branch loses money when customers have low account balances and perform transactions that do not create income for the bank? Currency exchanges do not have high fees because they are “mean”, it’s because they want to make a profit. This is not entirely dissimilar from the “high taxes equal unprofitable casinos” discussion taking place.
- Amalia - Tuesday, Aug 20, 19 @ 1:41 pm:
well, I would have called it Credit Union On, but that’s me, and thousands of others who know that Credit Unions are a fantastic form of financial services delivery.
- G'Kar - Tuesday, Aug 20, 19 @ 1:41 pm:
Every time I see “Bank On” I want to add Wayne after it.
- BR91 - Tuesday, Aug 20, 19 @ 1:44 pm:
Mendoza PR machine in full effect after that shellacking she took in the mayor’s race. Is there an office opening up that we don’t know about? Is she angling for Sec State?
- ETown60120 - Tuesday, Aug 20, 19 @ 1:45 pm:
Banks (Chase’s of the world) only want customers that are profitable. If you notice larger banks do not do unsecured loans and always requiring a minimum balance to have a checking. Its all about the bottom line.
- A guy - Tuesday, Aug 20, 19 @ 1:47 pm:
==BDD, Banks don’t want poor people using their services.==
Not necessarily true. Banks put tons of resources into getting younger people into “core accounts” like checking and savings. They’re “banking” on them upgrading to more lucrative accounts later. Often the first lender you check with for loans is your current provider.
Younger people are more profitable than people think. They pay a lot more ATM fees and penalties than older demographics.
- Jibba - Tuesday, Aug 20, 19 @ 1:52 pm:
==You may be correct, but why? Could it be that a branch loses money when customers have low account balances and perform transactions that do not create income for the bank===
And precisely the point that the Comptroller is publicizing banks that have services for poor people, who might become less poor eventually if they can get out of the cycle of usurious fees. This is exactly what constitutional officers should be doing.
- Grandson of Man - Tuesday, Aug 20, 19 @ 2:36 pm:
“I am thoroughly amazed at how financially inept young people are.”
But if they were born rich and privileged and then had multiple bankruptcies, were in more debt than any other taxpayers, ripped off university students and contractors and bragged about not paying taxes, they’d be practically worshipped by certain people.
- Papa2008 - Tuesday, Aug 20, 19 @ 3:01 pm:
How many of these underserved, outside the mainstream, folks are hiding from creditors, Uncle Sam, Brother Illinois, child support, law enforcement, ICE, or any other authoritarian figures who have the ability to track you and seize your assets or your freedom? There is a reason cash based transactions are popular.
- cover - Tuesday, Aug 20, 19 @ 3:55 pm:
= How many of these underserved, outside the mainstream, folks are hiding from creditors, Uncle Sam, Brother Illinois, child support, law enforcement, ICE, or any other authoritarian figures who have the ability to track you and seize your assets or your freedom? There is a reason cash based transactions are popular. =
Staying unbanked to evade child support obligations is wrong in every sense of the word.
- A guy - Tuesday, Aug 20, 19 @ 4:04 pm:
==Staying unbanked to evade child support obligations is wrong in every sense of the word.==
Certainly is. There are also plenty of people who have “earned” their way out of the formal banking system with inappropriate banking behavior. It’s one thing not to make money on basic accounts. It’s entirely another to lose money on them. Some people do put themselves in the “cash in front” policy of financial services.
- Blue Dog Dem - Tuesday, Aug 20, 19 @ 8:18 pm:
Why does everyone want to go partisan. My kids grew up blue collar middle class and didn’t understand a thing about basic home finance. Ya’ll can talk whatever, but IMO WE CAN DO BETTER.
- the working poor - Wednesday, Aug 21, 19 @ 8:28 pm:
Blue Dog Dem, i’m trying to understand what prompted you to make that comment. as jibba mentioned, this article did not mention young people at all. this post is about predatory lending among low-income and immigrant populations. you sound a bit desperate to make a millennial diss. let’s not forget who raised millennials…