Washington, D.C. - The Pew Charitable Trusts announced a new project today, aimed at helping America's workers underserved by mainstream financial institutions secure access to safe, affordable, fair, and empowering bank accounts. The Pew Safe Banking Opportunities Project, a two-year $2.1 million initiative, will develop and promote standards for bank accounts so that moderate- and low-income households that are new to or have been left out of the mainstream banking system are less likely to have to rely on overly expensive, income-stripping financial products.
The project will work with industry representatives, state and local governments, consumer advocates, and personal finance experts to develop and promote the standards.
“The three core principles that will guide the development of the standards are clarity, consent and fairness,” said Shelley Hearne, Managing Director of Health and Human Services for Pew. “For too long, millions of households that lack a basic bank account have had to rely on expensive check-cashing establishments.”
These alternative financial service businesses are estimated to charge full-time workers more than $800 every year, on average, just to cash their paychecks.
There are also millions of additional hard-working households that do have a basic bank account, but stand to lose hundreds of dollars every year in confusing, overly expensive bank fees often tied to basic bank accounts.
The project will develop standards for safe, affordable, fair, and empowering bank accounts, promote their voluntary adoption by banks and credit unions, and educate the public about the standards. Banks and credit unions that adopt the standards will be eligible to use an easily identifiable logo that will help consumers know the product is safe.
Promoting safe basic financial services is especially important amidst the current economic downturn, when people face a growing imbalance between their income and costs of living. Families will better manage this downturn if they can cover rising food and gas prices instead of putting their dollars toward cashing paychecks and paying bank fees.
Matt Fellowes has joined the staff of The Pew Charitable Trusts as director of the Pew Safe Banking Opportunities Project. Previously a Fellow at The Brookings Institution, Fellowes has worked with a wide range of policymakers across the country on strategies to increase access to banks among moderate- and low-income households. His research on the topic has been cited widely by journalists and academics and his counsel is sought by banks, foundations, elected officials and consumer advocates.
”Too many families today face a dizzying, and overly expensive, array of choices to meet their basic banking needs,” said Fellowes. “This project strives to cut through that complexity by developing and promoting a safer, more affordable basic bank account alternative that serves the bottom lines of both consumers and banks.”
Today's announcement marks the fourth major project launched by Pew in its growing effort to promote family financial security. In 2004, Pew launched the Retirement Security Project through a grant to Georgetown University to identify policies that make it easier for people to save for retirement. In 2005, Pew initiated the Project on Student Debt at The Institute for College Access and Success to help students and their families avoid unmanageable student debt burdens, prevent unnecessary borrowing and borrow more wisely. And last year, Pew announced a new investment to prevent irresponsible subprime mortgage practices with a two-year grant to the Center for Responsible Lending.