California passes Public Banking Act, can create toll-free bank accounts and debit services
Governor of California Gavin Newsom signed on California Bank Act place.
The legislation establishes the BankCal program (BankCal) to provide Californians with free and penalty-free transaction accounts and debit card services.
HISTORICAL! Today governor @GavinNewsom sign # AB1177, the California Public Banking Option Act, which sets in motion the creation of the CalAccount program guaranteeing basic banking services to all Californians without fees or penalties. pic.twitter.com/JGIJBuu2j6
– California Public Banking Alliance (@calpba) October 4, 2021
The legislation (AB 1177) establish a council of nine members, the members of which include public officials and the staff of which is made up of employees of the office of the state treasurer.
According to the bill, California citizens are losing “hundreds of millions” in fees to payday lenders and check cashing transactions.
“With BankCal, more families will be able to keep the money they have earned, put food on the table and build up their savings. Creating a public option for banking and closing the racial wealth gap is not only a moral imperative, but it also creates greater financial security for all of our communities. This bill is an essential step in meeting the needs of unbanked and underbanked people and brings us one step closer to fairer construction after the pandemic. “
The legislation also mentions Fintechs or neo-banks – Chime is specifically mentioned because the document emphasizes the need to serve the sector of the community that remains under or unbanked.
The bill encountered opposition from the American Bankers Association, the California Chamber of Commerce, the Independent Bankers Association and others.
The legislation was one of a series of bills dealing with financial services, including strengthening the protection of consumers in the financial services industry.
AB 390 streamlines auto-renewal cancellation and increases notice for continuous service subscriptions, and AB 1405 and SB 531 expand consumer rights and notification requirements related to debt settlement and collection.
Last year, Governor Newsom signed a law establishing the Financial Protection and Innovation Department, bringing in additional investigators and lawyers to oversee financial institutions and crack down on financial predators. The agency is modeled on the Federal Bureau for Financial Consumer Protection (CFPB).
The creation of federal consumer banking services sparked interest in Washington, DC following President Biden’s appointment of Omarova willow become Comptroller of the Currency – the main banking regulator. Omarova is in favor of eliminating private bank accounts in favor of activating accounts held by the government.