State mulls banking business to serve disadvantaged

Studies state 1 in 4 Californians lacks full access to banks, and many pay big fees

Anneisha Williams figures she has paid several hundred dollars in overdraft fees over the years, so when her last bank recently refused to refund about $500 a hacker stole from her checking account, Williams decided she was done with banks.

Williams, 38, works full time at a Jack in the Box in the Los Angeles area and is an in-home care provider. She also is raising six children; she doesn’t have time to hassle with a bank she no longer trusts, she said.

“They told me they couldn’t refund my money, basically, that it was just a loss,” she said. “It was just highway robbery.”

Now Williams does banking online through a financial tech company. It doesn’t charge her monthly fees and offers her free overdraft protection. But state law says such companies aren’t banks and can’t call themselves that.

Williams has joined California’s “unbanked” — some 7% of Californians who don’t have checking or savings accounts at traditional banks.

An additional 18% have bank accounts but end up using higher-fee financial services, such as payday lenders or checkcashing businesses. They are considered the “underbanked,” according to banking experts.

In total, 1 in 4 Californians lacks full access to banks, studies say. Many are low-income and minorities who pay high fees to access their cash.

Lawmakers say they’re preparing to help. The Legislature passed a law in 2021 creating a commission to explore a public banking option called Calaccount. Its report is due to the Legislature July 1, 2024.

Calaccount would be a staterun public bank, but the state