Copyright 2002 American Banker, Inc.
The American Banker
SECTION: COMMUNITY BANKING; Pg. 5
LENGTH: 538 words
HEADLINE: Advocates Bemoan Cuts In Program for Unbanked
BYLINE: BY BEN JACKSON
Former President Clinton's proposal for a program to get the unbanked into the financial mainstream survived into the Bush administration, but consumer advocates say the current, lower-funded version lacks the original's promise.
The First Accounts program provides grants to community groups and banks working together to establish bank accounts for people who have never had them or lost them because of financial troubles.
The Department of Treasury, which administers First Accounts, awarded $8.3 million in May to the organizers of 15 pilot programs working in 25 states. It had received 231 applications, with grant requests totaling $129 million.
Judith J. Chapa, the Treasury's deputy assistant secretary for financial education, said the goal is to open 35,445 bank accounts in the next two years through First Accounts.
The newest project kicked off last month under a partnership
between $1.3 billion-asset Shorebank Corp. of
"We intend to compete directly with the fringe financial services that prey on people in our communities," said David Marzhal, executive director of the nonprofit.
The current First Accounts is similar to the program conceived
during the final year of the
Battles with Congress over the budget and the fact that
Three things saved First Accounts, Mr. Barr said. First, it had bipartisan support and received some favorable press. Second, when the Democrats regained control of the Senate, the Banking Committee's new chairman, Sen. Paul Sarbanes, D-Md., was able to focus attention on the program. And third, First Accounts had advocates among officials at the Department of Treasury who came in with the new administration.
But Mr. Barr said that sharply reduced funding of First Accounts will deter bigger banks from testing ideas for large-scale efforts and hurt the program's chances of having a systematic impact.
"If you don't have enough money in hand, financial institutions won't take you seriously," he said.
Dory Rand, a staff attorney with the
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