No-Cost Checking for Poor and Elderly Killed in California Senate Committee

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SAN FRANCISCO -- A bill requiring banks and thrifts to provide "baseline" checking accounts at virtually no cost to consumers has died quietly in the California Senate.

The proposal, introduced by Sen. Nicholas Petris, a Democrat, on behalf of a variety of consumer groups, was heard Wednesday before the Senate banking and commerce committee but failed to win even a motion putting it up for a vote. The bill was introduced in reaction to the concern that basic banking services are being priced out of reach of the poor and elderly, forcing them to operate on a cash-only basis and endangering their safety.

The bill was strongly opposed by the California Bankers Association, which argued that banks are not public utilities and should not be ordered to provide

a particular product or service at a specified price.

Mr. Petris' proposal would have required depository institutions to offer baseline accounts, enabling a consumer to make at least five deposits per month and to write at least 12 checks at a charge of no more than $1 a month.

It also prohibited a bank or thrift from requiring more than a $25 deposit to open a baseline account, prohibited requiring any minimum balance in the account, and limited identification requirements to open such an account.

The bankers association, which coordinated a hard-hitting, grass-roots campaign opposing the proposal, estimated that each member of the Senate committee probably received at least 65 calls or cards from banking constituents urging a vote against the measure.

Association lobbyist James Clark said one of the key reasons that the proposal did not win support was that "the marketplace is addressing the need" for low-cost checking. He noted that many banks have long offered free checking services to the elderly. Also, he revealed that Security Pacific National Bank, which started offering a discount checking account almost a year ago, now has more than 40,000 accounts under that plan. …