AB 1365 by Assemblymember Garcia soared through two Assembly Committees this week; the bill moves CA forward on CalAccount – a voluntary, no-fee, no-penalty banking option for Californians
SACRAMENTO– This week, the California State Assembly Committees on Banking and Labor voted overwhelmingly to pass AB 1365 (Garcia), a bill to eliminate barriers to banking for California residents through a retail banking option that is fee and penalty free.
“Congress just overturned a CFPB rule that would have returned more than $5 billion in big bank overdraft fees to working people, so now it is more important than ever for California to lead on protecting consumers’ paychecks. It’s time that ALL Californians have access to basic banking services that don’t have junk fees taking a bite out of their wallets,” said Carla Sanchez-Adams, Senior Attorney, National Consumer Law Center.
“Living paycheck to paycheck means choosing between handing over a huge chunk of your earnings to check-cashing shops or paying hundreds in bank penalties if your check doesn’t cover all your bills. Either way, corporations are pocketing the money I earn and that my grandkids are counting on to eat,” said Sandra Jauregui, a Jack in the Box worker from Sacramento. “I’m going to keep fighting for a fair paycheck, that puts me in a situation where these fees won’t be so harmful to me and my family, but until then and for everyone else going through what I’m going through now, the amount CalAccount would save my family will make a big difference.”
“AB 1365 will create a first-in-the-nation banking option for Californians who have been forced out of the traditional banking system or that suffer the economic cost of paying high banking fees.” said Assemblymember Garcia, author of the bill, adding, “This retail banking option would give consumers access to a national network of ATMs as well as direct deposit and automatic bill payments.”
“More than one in six California households either lack a bank account or depend on risky alternatives to traditional banks, like check cashers or non-FDIC-insured apps. Obscene fees are just one more way the system stacks the odds against working families. CalAccount puts money back where it belongs, in our communities, not in the hands of predatory companies,” said Trinity Tran, Executive Director of the California Public Banking Alliance.
A recent report from the Roosevelt Institute found that California has one of the highest concentrations of unbanked people in the US. The study highlighted some of the barriers that have led to these numbers including non-sufficient funds (NSF) and overdraft fees that affect customers with the lowest balances.
“California’s unbanked and underbanked households are predominantly headed by low-income Black and Brown people and single mothers who pay more for financial services while missing out on opportunities to build credit and savings. CalAccount flips the system from penalizing those who can’t afford basic banking to lifting up these low-income Californians,” said Paulina Gonzalez-Brito, CEO of RISE Economy.
“56.9% of surveyed survivors of gender-based violence (GBV) in California report having a harm-doer control their bank account. GBV is financially devastating, and financial institutions have a duty to support survivors subjected to economic abuse. Given that survivors need every dollar they earn to build their safety and economic freedom, CalAccount will create a first-of-its-kind, survivor-supportive retail banking option that could mark a significant step toward economic justice,” said Cynthia Amezcua Zamudio, State Policy and Advocacy Manager with FreeFrom.
AB 1365 puts California in a leadership position on protecting consumers from excessive fees to access their own earnings, just as Trump is dismantling the Consumer Financial Protection Bureau (CFPB), a critical consumer protection agency. Already, a CFPB rule capping overdraft fees at just $5 is on the chopping block, putting an estimated $5 billion in consumer dollars in banks, not communities. The tear-down of the CFPB also means existing prohibitions against predatory banking are unlikely to be enforced.
“As Trump-imposed tariffs hike the costs of basic goods, resulting in employers laying workers off and wages remaining stagnant, access to fee and penalty free banking is more needed than ever. California has the ability to lift up all workers through a public banking system and lead the nation on banking affordability; we cannot miss this opportunity,” said David Huerta, President of SEIU California and SEIU United Service Workers West.
AB 1365 will now head to the Assembly Appropriations Committee.
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