Unbanked? grab your ankles!

[hornadylnl]

Just found these articles online. It looks like we get to subsidize the poor, downtrodden, and irresponsibles bank accounts now. How are bank fees not going to go up to cover this crap?

Jconline - Programs help 'unbanked' avoid high fees
Programs help 'unbanked' avoid high feesUpdated 11/5/2009 8:25 AM ETBy Martha T. Moore, USA TODAY
Dozens of cities are launching programs to sign up low-income people as customers at commercial banks so they can avoid the high fees typical of check-cashing stores and payday lenders.
More than 50 cities and at least three states now have programs modeled on the 3-year-old Bank On San Francisco.
The programs — including Indiana's, launched last week, and Newark's, which began Monday — are aimed at the estimated 8.7 million American households that do not have bank accounts. Bank On programs encourage residents to open low- or no-cost checking accounts.
Participating banks and credit unions must offer "second chance" accounts for customers who have bounced checks in the past, and accept identification besides Social Security numbers, such as taxpayer identification numbers.
"We wanted to open up access to the financial mainstream," says Leigh Phillips of Bank On San Francisco, which has opened 41,000 accounts since 2006. "We do think we've made a pretty significant impact."
CHALLENGES: Banks reach out to cities' low-income residentsPeople who don't use banks spend an estimated $1,042 a year on check-cashing services, which charge a percentage of the value of the check, according to a study by the Pew Charitable Trust.
Fear of fees and lack of trust in banks are two main reasons why people do not have bank accounts, the Pew study found. Public scrutiny of overdraft fees on checking accounts, which in 2009 are expected to reach $38.5 billion, has led to congressional legislation that would regulate such fees.
"Clearly lots of lower-income folks are concerned about or have been burned by the tricks and traps of a traditional bank account," says Paul Leonard of the Center for Responsible Lending. "The big question is whether or not (Bank On programs) are creating sufficient safeguards to prevent the new enrollees from accruing fees."
Some Bank On programs require banks to waive one set of overdraft fees annually.
"It is a big issue that we need to pay attention to," says Jerry DeGrieck, who heads Bank On Seattle-King County.
City officials say it is too soon to know whether Bank On participants will really save money but that a bank account is a necessary step toward financial progress for low-income families.
"Even with the risks associated with fee structures," says Newark Deputy Mayor Stefan Pryor, a bank "still beats a check-cashing establishment on the corner of your neighborhood every time."


Jconline - Programs work through challenges of 'unbanked'


Programs work through challenges of 'unbanked' Updated 11/5/2009 8:42 AM ETBy Martha T. Moore, USA TODAY
NEWARK — Yvonne Jacobs dashes into Express Check Cashing, a combination liquor store and financial services establishment on Mount Pleasant Avenue. A sign spells out the rates: To cash your paycheck, Express takes 2%.
Down the block at Wachovia Bank, Jacobs could cash her check for free if she were an account holder — or deposit it and not risk carrying cash. But like an estimated 15,000 households here, Jacobs doesn't have a bank account.
CUTTING COSTS: Bank On model helps customers avoid high fees"I would like a bank account, because you need a bank account in this date and time," says Jacobs, a nurse. But banks charge fees: at Wachovia, $22 for an overdraft, $25 for a stopped check. "Every little thing, they charge you for," she says. At Express she pays up front. "I know it costs me X amount of money to cash my check," she says.
Jacobs is one of the "unbanked" people Anthony Santiago wants to reach. The chief operating officer of Newark Now, a community organization, Santiago is working with the city to encourage low-income residents to open bank accounts. Bank On Newark, with 11 banks and credit unions participating, launched Monday.
It is one of almost 60 Bank On programs created in the past three years, as cities persuade banks to offer special accounts for low-income residents — including those who have had problems banking in the past. The programs focus on financial education to move participants away from alternative financial services such as check cashers and toward bank accounts without running into overdraft trouble.
"Folks should be able to have a lot of the basic things we take for granted" such as debit cards, Santiago says. Newark's goal is to open 3,000 accounts in the program's first year.
But Orfilio Chaviano, the owner of Express, says his customers don't want to open bank accounts. "Pie in the sky," he calls the city's program, as he stands on Mount Pleasant Avenue near Jacobs. He says his customers prefer his upfront fees to worries about bouncing checks.
"I don't see how these people can maintain a bank account" without overdrafting, Chaviano says. "How much is a bank going to charge for a returned check? … They're more expensive" than a check casher, he says.
Cities are trying to help Bank On participants succeed by working with them and with the banks they will entrust with their money.
In Indianapolis, banks must go through a checklist of financial education topics before opening a Bank On account, says Perla Williams, Bank On project manager for the city. Customers are also referred to money management classes at community centers.
In Seattle, the Bank On program offers explanatory brochures — with information on avoiding fees — in 12 languages and helps banks write their own easy-to-understand information about accounts. Some banks in the program will give account holders $50 or $100 in a savings account if they go through money management programs run by community groups.
The program doesn't require financial education before opening an account. "It simply doesn't work," says Jerry DeGrieck of Bank On Seattle-King County.
Newark got participating banks to offer one free money order per month, which many low-income residents need because their landlords won't take a check, and which check-cashing stores offer more cheaply than banks do. "That's one little thing we had to fight for," Santiago says. "We asked for three, and they got it down to one. But at least the rent is taken care of."
Concern that new customers would get into trouble with automatic overdraft fees led New York to skip a Bank On program. Instead, the city will offer, through banks, checkless accounts in which customers get a debit card loaded with the value of the account. Once the money is gone, transactions won't go through.
"This is a way for us to guide people into a safe banking experience," says Department of Consumer Affairs Commissioner Jonathan Mintz. "It's a way to get them started, rebuild their confidence, rebuild their credit."