Magazine article Government Finance Review

Bank on San Francisco: Welcoming All Citizens into the Financial Mainstream

Magazine article Government Finance Review

Bank on San Francisco: Welcoming All Citizens into the Financial Mainstream

Article excerpt

The Bank on San Francisco program won the 2008 Louisville Award for Innovation in Government Finance. The Government Finance Officers Association gives this special recognition to acknowledge exceptional accomplishments that introduce new concepts or techniques with enduring value to the government finance profession.

Like most cities, San Francisco is a city of two different financial services systems. In one, people may choose from a variety of institutions to safely save and access their income, obtain loans to buy homes and build businesses, and create financial stability and prosperity. But for many San Franciscans, there are seemingly insurmountable obstacles to accessing this system.They turn to check cashers, payday loan providers, pawn shops, auto title lenders, and rent-to-own stores. These alternative providers charge high fees and can mire individuals in a cycle of debt, even if they work hard and earn a paycheck week after week. Individuals are hard-pressed to build savings and assets if they rely on check cashers to conduct their financial lives.This problem is not unique to San Francisco. In fact, one in four Californians - and an estimated 22 million Americans - are "unbanked," meaning they lack access to a basic checking or savings account.

An estimated 50,000 San Francisco households are unbanked, and it was incumbent upon the city to take action and assist these citizens. Families that rely on check cashers can spend approximately 5 percent of their income each year to cash checks and pay bills. Those who least can afford it are charged 3-10 percent of the value of their checks just to access their own money. Unable to build assets and save for the future, these families are particularly vulnerable in times of crisis, and they are more likely to become victims of crime. In the event of an emergency such as a fire or an earthquake, these families risk losing everything and will be unable to access needed funds remotely

In response to this obvious need for better financial products for city residents, the San Francisco treasurer's office created Bank on San Francisco. This initiative is a collaborative effort, along with the Federal Reserve Bank of San Francisco; EARN, a non-profit organization that matches the savings of low-wage workers and helps them invest in assets that build wealth; and 17 local banks and credit unions. San Francisco is the first city in the nation to seek to address the problems faced by the unbanked, helping all citizens make the transition into the financial mainstream.

In late 2005, the mayor and treasurer's office challenged every bank and credit union in San Francisco to form a partnership with the city to create Bank on San Francisco. The program emerged one year later, committed to the ambitious goal of getting banking services for 10,000 unbanked San Franciscans during the first two years of the project. Less than a year into the program, this goal was exceeded. Through Bank on San Francisco, 11,000 checking accounts were opened in the first year. In light of this achievement, the program is now on track to open 20,000 new accounts by the end of 2008.


People who do not have bank accounts pay more than those who do to conduct their daily financial lives. In addition, families without accounts don't have a safe place to keep their money They walk around with wads of cash in their pockets or keep it at home in a coffee can. Robberies are more prevalent around check cashers, especially on payday. Unbanked individuals are especially vulnerable in the event of a disaster. Seven of every ten Hurricane Katrina evacuees did not have bank accounts. Their savings washed away with the rest of their belongings, and without direct deposit, they had no way to access payments such as social security or wages remotely

A bank account is the first step to financial security Without one, it is harder to get well-priced car loans, credit cards, or mortgages - the financial tools needed to climb the economic ladder. …

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