Low-Income San Franciscans Get Boost into Banking

MICHELE NORRIS, host:

Now, a story from San Francisco about a program to help people without a lot of financial resources. Over the past year, more than 11,000 people with low incomes opened bank accounts. Many of them for the first time. The city helped organized the effort along with nonprofit groups, the Federal Reserve, and more than a dozen commercial banks.

As NPR's Elaine Korry reports, the National League of Cities says the program is a model for the rest of the nation.

ELAINE KORRY: For most middleclass people, it's hard to imagine how anyone might get by without a checking account, or automated tellers. But it's a convenience that 50,000 people in san Francisco didn't have. They're a population known as the unbanked.

Mr. BILL GANDY(ph) (Computer Programmer): Not having a bank account really does cripple you.

KORRY: Bill Gandy is a 49-year-old computer programmer. He used to spend hours traversing the city to pay his rent, telephone, gas and electric bill all in cash. Besides wasting time, not having a bank account also cost Gandy money.

Mr. GANDY: You incur a lot of fees at the check-cashing places, and that's 100, 200 bucks sometimes. So that's highly inconvenient.

KORRY: It hadn't always been that way, about nine years ago, Gandy had a checking account then lost it through his own financial mistake.

Mr. GANDY: I had a little bit of problem. I was going through a relationship that broke off. We built weird little mishmash with our finances at the end. And it threw us into a situation where all of a sudden, we were on checks system.

KORRY: Checks system is like a financial blacklist for customers who mishandle checking accounts. Once on the blacklist, it's very hard to get off. Many other San Franciscans didn't qualify for a checking account, mostly because of their low income. Like Gandy, they had to rely on check-cashing outlets. And that bothered Jose Cisneros, the city treasurer of San Francisco.

Mr. JOSE CISNEROS (City Treasurer, San Francisco): It really just tore me out to think about, literally, thousands of folks in the city having to pay these unnecessary, unreasonably high fees just to get access of their own funds.

KORRY: Cisneros and Mayor Gavin Newsom convened a meeting with the city's banks. And together with nonprofit groups, they came up with Bank on San Francisco, a program of free or low-cost financial services for poor people. Bill Gandy got a second chance over the summer when Wells Fargo offered him a checking account after he took a basic money management course.

Michele Ashley with Wells Fargo said Gandy's is one of 2,000 new accounts they've opened.

Ms. MICHELE ASHLEY (Spokesperson, Wells Fargo): It's the right thing to do. And we see so many people with different stories but at the end of the day, we want to make them be more financially successful and give them the tools to do that.

KORRY: So far, the Bank on San Francisco program has gotten 11,000 people into free bank accounts. Average monthly balance is rising, now up to about $850. Cities including New York, Boston, Chicago and Atlanta are eager to learn how San Francisco did it, and the National League of Cities is leading an effort to see the program expanded.

According to the league's Clifford Johnson, cities themselves are important bank customers and they should use their financial clout to bring banks to the table.

Mr. CLIFFORD JOHNSON (Executive Director, Institute for Youth, Education and Families, National League of Cities): We are convinced that city leaders have key leverage, you know, have key roles to play.

KORRY: It's estimated up to 50 percent of urban poor people survive without a bank account. Johnson says it wouldn't take much to get them into the system. From outreach education and lower minimum balances, they take the first step toward financial stability. And who knows, banks might well find themselves with a new crop of lifelong customers.

Elaine Korry, NPR News, San Francisco. Transcript provided by NPR, Copyright National Public Radio.