The city is collaborating with 22 banks and credit unions to offer services to people who are "unbanked" — those who have no bank accounts and turn to high-cost payday lenders for their financial transactions.
It was a rare sight in these troubled financial times: a room full of smiling bankers.
They assembled in Seattle City Hall on Monday to support Bank on Seattle, a new program making it easier and cheaper for people to open savings and checking accounts.
The city is collaborating with 22 banks and credit unions to offer services to people who are “unbanked” — those who have no bank accounts and turn to high-cost payday lenders for their financial transactions.
Seattle estimates there are 52,000 households in King County without traditional banking services. They pay an average of $800 a year in check-cashing fees.
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Seattle modeled its initiative after a similar program in San Francisco. That program has been in place for about two years, and participating banks now have $4 million in deposits from the new customers, according to the Federal Reserve Bank of San Francisco.
In Seattle, the goal is to get 10,000 people to open accounts over the next two years, with 80 percent of the accounts remaining open for at least a year and banks providing financial education for customers.
About 30 nonprofit groups are involved, including Hopelink, United Way of King County and YWCA of Seattle-King County.
Barbara O’Leary-Hatfield Liberace, 69, related the difficulty in dealing with banks after the death of her husband in 1992. Her income fell from $5,000 a month to less than $500, and eventually the bank foreclosed on her West Seattle home, she said.
“I went from a homeowner to a homeless person living on the street,” she said. She did not have enough money to open a bank account, which typically requires $100.
“What do you do in the meantime?” Liberace said. “You have to put it in the heel of your sock and hope to God you still have it in the morning.”
Bank on Seattle is targeting customers aged 18 to 45 with low to moderate incomes who have had negative banking experiences, or have not opened bank accounts because of cultural or language barriers. The program also seeks to give people in the Chex System, a banking blacklist, another chance.
Most of the participating banks allow people to open accounts with $50 or less. All but two of them offer free checking, and the others charge $6 a month. Banks agreed to waive one instance of insufficient funds and check overdrafts a year. They will also accept a Mexican Matricula Consular card as a primary identification in lieu of a U.S. government-issued ID or state driver’s license.
In some cases, local credit unions are offering low-cost and low minimum-balance accounts, but the program will help them market their services to new populations, including outreach to immigrant groups.
“Many of these people haven’t been told ‘no’ before,” said City Councilmember Sally Clark. “They’ve just never thought to ask.”
Scott Jarvis, director of the Washington State Department of Financial Institutions, sought to put the program in context with the current banking crisis.
“You have to get in the door,” he said. “Affordable financial services are the entryway. If we can get them in the door, they’re learning about how the system works, they’re learning about financial practices and forming relationships with banks. There’s financial literacy involved … all these things that help us become better financial citizens.”
Liberace said she has started working with ACORN, one of the Bank on Seattle partners that provides free financial counseling on mortgage problems, home foreclosures, tax questions and more. She also had a message for the banks.
“Teach them to lower their fees and to be courteous to people whether you’re dressed nice or not,” she said. “Don’t make us feel invisible or beneath your grade.”
Kristi Heim: 206-464-2718 or firstname.lastname@example.org