Angelenos to the Financial Mainstream

Today the city of Los Angeles made its second attempt to bring under-banked and unbanked Angelenos to the financial mainstream. Two months after Mayor Villaraigosa launched Bank on LA, City Councilmember Richard Alarcón launched the Banking Development Districts (BDDs) Initiative. Los Angeles has recognized the need for placing affordable financial services at the hands of its people and is taking major steps toward eliminating dependency on fringe financial institutions.

While 1.5 million households are unbanked state-wide, Los Angeles has the third highest percentage of unbanked households nation-wide. For the Angelenos who do not have a simple checking or savings account, BBDs are a promising way to gain access to the appropriate financial services and products necessary to get connected to savings and asset building. Research shows that a full time worker conducting business with non-traditional financial institutions can pay tens of thousands of dollars in fees in a life time. This is a chunk of money large enough to start a small business, send a child to college, build a retirement or put a down-payment on a house.

BDDs are a strong step in the direction of helping low-income households hold onto their hard earned dollars. Modeled after New York State’s successful program, state and local deposits will be used to encourage banks to locate in underserved neighborhoods (identified as BDDs) and provide products appropriate to the needs of the people. In Los Angeles this means thousands of unbanked households will soon have the opportunity to conduct affordable financial business, safely set aside savings, and begin building assets to secure a nest egg or off-set future financial trauma.