City to urge low-income families to use banks

13 04 2009

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April 13, 2009
City to urge low-income families to use banksBy Dan Klepal
dklepal@courier-journal.com

Louisville is one of eight cities chosen for a national program to encourage low-income families to begin banking with mainstream financial institutions, rather than using pay-day lenders and check cashers who often charge high fees.

The Bank on Cities campaign is led by the National League of Cities. It is modeled after Bank on San Francisco, an initiative developed by San Francisco Mayor Gavin Newsom and Treasurer Jose Cisneros that helps create relationships between local governments, citizens, local banks and credit unions. It tries to ensure all residents have access to bank accounts.

The project aims to expand low-income families’ access to free and low-cost bank accounts to help them build savings and establish a credit history.

CLOUT, a Louisville advocacy group, estimates there are 29,000 households in the city that do not have bank accounts. Nation-wide, there are 28 million unbanked and 44 million “underbanked” Americans who lose $11 billion each year to check cashers and payday lenders, according to the National League of Cities.

Louisville Mayor Jerry Abramson has appointed John Fischer, assistant director of economic development, to oversee the Louisville campaign. Fischer said his goal is to have all banks and credit unions with branches in Louisville to be part of the campaign.

“Payday lenders and check cashing companies certainly serve a purpose,” Louisville Mayor Jerry Abramson said. “But often they take advantage of people in vulnerable situations. This new program will help people learn how to work with our … banks to start a relationship and build a financial future.”

Throughout the one-year project, the cities will receive technical assistance from National League of Cities through various seminars. City officials will develop action plans to achieve their goals with the help of National League of Cities staff and other national experts.

“The opportunities this program provides are critical to enhancing the broader economic vitality of cities,” said Kathleen Novak, president of the National League of Cities and mayor of Northglenn, Colo.

Other cities participating in the program are Indianapolis; St. Petersburg, Fla.; Newark, N.J.; Denver, Colo.; Gaithersburg, Md.; Bryan, Texas; and Rapid City, S.D.

During the first two years of Bank on San Francisco, more than 31,000 accounts were opened through 17 participating financial institutions, saving San Franciscans nearly $20 million, according to the league of cities.

The Bank on Cities campaign is supported by the Annie E. Casey Foundation and the Ford Foundation.

Reporter Dan Klepal can be reached at (502) 582-4475.
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http://www.courier-journal.com/article/20090413/NEWS01/90413011/-1/nletter02?source=nletter-business

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