Los Angeles launches program for low-income workers´ access to banking

Source: Xinhua | 03-26-2009 09:44

LOS ANGELES, March 25 (Xinhua) -- With no sign of an economic recovery and the ever-rising unemployment rate, the city of Los Angeles have chosen to launch a program to help low-income workers learn how to save money.

The program, Bank on L.A., is a partnership between the city government and several banks, who are required to offer start bank accounts with reduced fees to attract residents with small payches.

It also involves an education campaign in lowest-income areas in the city, according to a press release by Mayor Antonio Villaraigosa‘s office.

Villaraigosa, who announced the program Tuesday, said he hopes it could start getting some 300,000 Los Anveles households without bank accounts to open them. The city has one of the lowest rates of possessing bank accounts in the United State.

"At this time of challenge, leaders in the public and private sectors must ensure that our working families have the resources they need to weather today‘s economic storm and prepare for a brighter tomorrow," Villaraigosa said.

With the new program, low-income families will no longer need to find the nearest check-cashing shop and pay eye-popping fees just to turn their checks into cash, the mayor said. Such fees often amount to 1 percent to 2 percent of a paycheck.

Economists say that these new accounts would not only help people save money and establish credit to enter the financial mainstream, but would be a boon for banks as well especially when they are losing deposits due to the economic recession.

The program will start with a nine-month pilot program to promote the benefits of having a bank account and help residents in some low-income areas build money management skills.

Editor:Shi Taoyang