Read the California Public Banking Option Act, AB 1177
Low-wage Black and brown households have borne the brunt of systemic racism in our financial institutions. In our current crisis, with unemployment high, homelessness rising, and an unprecedented wave of evictions looming as a result of the Covid-19 pandemic, communities of color continue to face barriers to financial stability and wealth-building opportunities, including a disproportionate reliance on exploitative alternative financial services.
The challenges facing Black, brown and immigrant working people are extreme and urgent. The passage of AB 1177 (the California Public Banking Option Act) in 2021 takes a major step in leveling the playing field and addressing systemic racism by creating a public option for banking.
FAQs
What is the California Public Banking Option Act?
Following the success of CalSavers and CalKids, innovative programs that address racial disparities in retirement and college savings, the California Public Banking Option Act - AB 1177 (Santiago, Carrillo, Chiu, Garcia, Kalra, Lee), forms a Blue Ribbon commission comprised of financial access experts, community members, and representatives from the Treasurer’s office and the Department of Financial Protection and Innovation to oversee a market analysis on how the CalAccount program could be implemented.
CalAccount creates a stable, affordable platform for basic banking that would eliminate the need for costly and exploitative alternatives, such as check cashing and pre-paid debit cards, in addition to expanding access to credit building tools for communities that have been historically shut out from basic financial services.
Why CalAccount?
More than 30 percent of Black households and more than 30 percent of Latino households - and 1 in 4 California households - are currently unbanked or underbanked, meaning that they lack access to basic financial services. The unbanked and underbanked pay proportionately more to access the money they earn, lack secure means to save, and have fewer opportunities to build credit.
Unbanked and underbanked Californians alack access to basic financial services we take for granted, such as the direct deposit of paychecks to automatic bill pay and recurrent contributions to their organizations or charities.
CalAccount bridges the financial services gap that disproportionately impacts low-income workers and communities of color. By providing zero-cost access to financial services, CalAccount reduces the risk of poverty and homelessness facing communities by addressing the financial exclusion of Black, brown, immigrant and low-income people.
How does CalAccount work?
All Californians are eligible to opt-in to CalAccount, and participation is voluntary. With CalAccount, account holders can sign up for debit cards that can be used for purchases wherever debit cards are accepted and at designated banking partner ATMs. Account holders can authorize their employers to directly deposit their pay into their CalAccount accounts or use the account to receive public benefits such as federal and state stimulus funds. CalAccount account holders can also use the platform to manage and prioritize payments as money is deposited into their account.
A Board made up of experts in banking and financial inclusion oversees the administration of the CalAccount platform, ensuring that the program and partner financial institutions are upholding CalAccount’s mission to provide tools for financial stability to California’s most vulnerable residents.
Is CalAccount a statewide public bank?
No, CalAccount does not create a new bank. Instead it creates a statewide retail banking option through which every California worker can access zero-cost financial services. While not a statewide public bank, CalAccount complements the goals of the public bank movement in that both address the long-term exclusion of Black, brown, immigrant and low-income workers from financial institutions. CalAccount and the vibrant public bank movement at both the local and federal level speaks to the need to reimagine financial institutions as fundamental to creating a just and equitable recovery.