NLC, Treasury Co-Host Meeting for Municipal Leaders on Expanding Access to the Financial Mainstream

August 09, 2010

By Laura McComas

City officials and municipal staff from 26 cities, along with their local financial institution and community-based partners, gathered in Washington, D.C., last month for a two-day meeting co-hosted by NLC’s Institute for Youth, Education, and Families (YEF Institute) and the Department of Treasury. 

The convening brought these local leaders together with senior department officials and national experts for in-depth discussions focused on improving opportunities to connect financially underserved families with mainstream banking options that allow them to better save and protect their money. City teams shared information about promising practices and challenges they have faced in launching “Bank On” programs or similar financial access initiatives.

The Bank On model, first developed by the City of San Francisco in 2006, focuses on developing partnerships between local government, financial institutions and community organizations to build pathways for unbanked and underbanked residents to gain access to mainstream financial products and services and avoid predatory financial practices. Over the past few years, NLC has provided assistance to more than 70 cities seeking to replicate this model. More than 25 cities have launched Bank On initiatives and many more are in the process of developing similar programs.

The federal government has taken note of this highly successful local model, and this event provided department officials, the Federal Deposit Insurance Corporation and the Federal Reserve Bank with an opportunity to learn about city-level experiences.

Bank On as a Poverty Reduction Tool

Meeting participants heard firsthand about the benefits that a Bank On program can provide to a local community from Savannah, Ga., Mayor Otis S. Johnson, who served as the keynote lunch speaker. Mayor Johnson outlined Savannah’s process in establishing its Bank On program as part of a broader, comprehensive poverty-reduction strategy.

“Bank On Savannah is an important tool in our toolbox of strategies to take people and places out of poverty,” said Johnson. “By combining this initiative with other tools in the toolbox, we have a better chance at being successful in meeting our main challenge: reducing persistent poverty.”

Michael S. Barr, assistant secretary for financial institutions, Department of Treasury, gave participants a broader perspective of the importance of financial access initiatives like Bank On in his remarks about the recent financial reform bill and the increasing need to provide all residents the chance to access safe and affordable financial products.

Bank On USA

With national attention focused on the success of the Bank On model, President Obama included a provision in the 2011 budget to establish a “Bank On USA” initiative, which would provide $50 million to local communities to promote access to mainstream financial services among underserved households. Provisions for this program were included in the financial reform bill, which was signed into law last month. If appropriations for the program are made, the Department of Treasury will begin implementation of the program in 2011.

The best practices shared at the convening will inform the development of the Bank On USA initiative. The YEF Institute will continue working with the Department of Treasury to capitalize on the momentum behind financial access initiatives like the Bank On program and will also continue supporting cities that interested in pursuing similar efforts.

Details: Learn more about the Bank On Cities Campaign or contact Laura McComas at (202) 626-3056 or mccomas@nlc.org or Sarah Bainton Kahn at (202) 626-3044 or bainton@nlc.org.