Anne Stuhldreher at the community launch of Payday Plus SF
In addition to our support of legislation at the state level, we provide ongoing strategic, analytic, research, and communications support to local initiatives throughout California. This includes our work on the following initiatives:
Payday Plus SF (payday loan alternative)
Banking Development districts (BDDs)
The Earned Income Tax Credit (EITC)
We helped conceive and provide strategic support for Bank on San Francisco
and launch six “Bank on” coalitions throughout the state. These coalitions aim to help “un-banked” residents open starter accounts and enter the financial mainstream. Forty-two thousand San Franciscans have now opened starter bank accounts through the program, which has become a national model.
We brought the Bipartisan Asset Policy Forum, an institution in the Capitol that provides staff and legislators with the latest asset building research and best practices, to Los Angeles with the Banking on Opportunity event, which brought New America together with Mayor Villaraigosa's office, and asset building expert Manual Pastor, to discuss the potential of Bank on LA.
We are a resource to over 50 “Bank on” coalitions forming throughout the country. We also helped the Governor and President Clinton launch Bank on California, the first state level effort. Anne Stuhldreher recently spoke about Bank on at the National Conference of State Legislature's Women's Legislative Network Financial Stability Seminar- view her presentation, summing up these efforts, here. The Obama Administration has called for a national Bank on USA initiative and has allocated $50 million for cities to start Bank on initiatives. The Treasury document can be viewed here.
Payday Plus SF
We were instrumental to the conception and launch of the City of San Francisco's alternative to payday lending, in December 2009. Payday Plus SF loans loans are small cash advances for emergencies, but they are capped at 18% interest, have repayment periods of up to a year, and provide customers with financial education. The City Treasurer and Mayor Gavin Newsom’s offices partnered with credit unions to develop loan products for low-income residents.
Low-income workers and the unbanked often need access to short-term loans, but traditional payday lenders charge interest rates of up to 459% in California. This program not only helps people avoid the debt trap of payday loans, it allows them to build credit and their own financial safety net. Payday Plus loans are provided by credit unions, and although similar to payday loans, their interest rates, repayment terms, and credit reporting make them a much more responsible option.
We held a community forum following the press launch of the program to inform San Franciscans about the problems caused by conventional payday loans and various financial empowerment solutions moving forward in Washington, DC and Sacramento. Our community event, after the press conference launch (see our photos here) provided a forum for members of the community to learn about this important step towards equal access to fair credit. We provide ongoing strategic guidance to develop, launch, and replicate this initiative in other interested cities. Several other cities throughout California are considering replicating the program and numerous Sacramento legislators have asked to be briefed on its progress.
Banking Development Districts (BDDs)
We are working in increasingly diverse ways to help bring BDDs to California communities. We provide strategic support to Los Angeles to provide deposits of city funds to spur banks to locate in underserved areas. We helped the office of Los Angeles City Councilmember Richard Alarcon to develop a banking development district initiative, which would provide deposits and other incentives to banks that locate in underserved communities. The ordinance directs City Attorney Carmen Trutanich to draft an ordinance to implement BDDs in Los Angeles, making it the second city in the nation to do so (after New York City, which has an enriched program that provides extra incentives).
In May 2009, we applauded LA City councilman Richard Alarcon when he introduced the motion. When that motion was passed in October, we joined the councilman, local credit unions, and other advocates for the press conference, and a following discussion with key players, generating media awareness of the measure. The increasing visibility and success of these local actions builds momentum for a program that increases equal access to financial services. Together with the City of LA we are working to legislation in Sacramento to create a statewide measure as well.
The Earned Income Tax Credit (EITC)
Widely recognized as the most effective anti-poverty program undertaken by the federal government, the EITC can generate savings and lifts families and their children out of poverty by the millions annually, while incentivizing work. Anne Stuhldreher gives this background, and more, in her testimony to the Los Angeles Committee on Jobs and Business Development.
The credit is an important part of the economic stimulus as well. The EITC was expanded as a part of the American Recovery and Reinvestment Act to have a maximum income limit of $48,279, and a $5,657 maximum credit. In response, and to increase awareness of the EITC's importance, we published the report Left on the Table in March 2010 through a partnership with Fresno State economists. The report estimates that over 800,000 Californians are missing out on more than one billion dollars in unclaimed EITC refunds - hurting families throughout our state and our local economies.
"For those with few resources, the value of savings is that they can be converted to assets, and thus chart a path toward greater economic stability and opportunity." - The Assets Agenda