Bank Accounts for the Poor

As President-elect Bill Clinton works to keep a focus on America’s economy there is at least one thing he can do which will put money in the pockets of the poorest of the poor without costing the taxpayers a penny. Clinton should support legislation proposed by the Senate Banking Committee last year which provides for “lifeline” basic banking accounts and check cashing privileges for low-income Americans.

Currently, poor Americans are largely dependent on commercial check-cashing services, which the Consumer Federation of America reports charge more than $8 to cash one $500 government check. Most check cashers charge far more for private-party checks, such as those paid to maids and gardeners. Commercial banks are not required to cash checks for non-customers, and those that do often charge as much or more than check-cashing services.

The lifeline banking account and check-cashing services that this legislation requires banks to provide can be accomplished in a manner that will provide banks with a profit. Customers would choose between either obtaining an identification card to be able to cash government checks at a bank or setting up a basic banking account, which will permit the customer to write a limited number of checks a month with a minimum balance of $25.

Federal laws mandating that banks provide such services will give low-income Americans an economical alternative to the check-cashing services that charge very high fees to their customers.

Even with the help of the President it will be quite a battle to get this legislation passed.

On one side are some of our country’s most dispossessed people--they tend not to contribute to political campaigns, disproportionately they do not vote, nor do they fall among the favored demographics of television or newspaper advertisers. On the other side has been the opposition of one of the oldest and strongest lobbies--the American Bankers Assn.

The President-elect has shown, through his Cabinet appointments, his visits to poor neighborhoods, and his two-day economic conclave an emphasis on the material well-being of Americans. Hopefully, he will join in the effort to pass legislation that will end the rip-off of America’s poorest residents.

RICK TUTTLE

City Controller

Los Angeles