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Banking on the Future

Banking on the Future

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Published by Scott Stringer
Stringer 2013 - Banking on the Future
Stringer 2013 - Banking on the Future

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Published by: Scott Stringer on Jul 24, 2013
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 1
Banking on the Future: A Plan to Strengthen NYCFamilies and Businesses
Introduction/Background
In the United States, roughly 8.2 percent of all households have no bank or credit unionaccounts, and instead rely on check cashers and other "fringe" financial serviceproviders to pay their bills and manage their daily lives.
1
In New York State and NewYork City, the numbers are even worse.Statewide, 9.6 percent of households are unbanked, and a 2010 study by the
Department of Consumer Affairs’ Offi
ce of Financial Empowerment (OFE) found thatmore than 825,000 adults in New York City
13 percent of all households
do not
have bank or credit union accounts, a huge impediment to these individuals’ personal
financial security.
2
 In the city, the percentage of unbanked varies greatly between boroughs andcommunities. While Staten Island has an unbanked population of only 2 percent, theBronx has an unbanked population of 29 percent, one of the highest rates in thecountry. Some neighborhoods
from Morris Heights, Bronx, to Ocean Hill, Brooklyn, toWashington Heights in Manhattan
have unbanked populations approaching or exceeding 50 percent.There is also an immense disparity in bank utilization along racial and class lines.Statewide, only 3 percent of Whites are unbanked, while 23 and 26 percent of Blacksand Hispanics, respectively, are unbanked.
3
And while less than one percent of households earning more than $75,000 annually are unbanked, a whopping 30 percentof households earning less than $15,000 are.Crucially, the OFE study found that mere proximity to a bank or credit union is noguarantee that residents will open a bank account. Rather, the financial literacy of a
1
http://www.fdic.gov/householdsurvey/.
2
http://www.nyc.gov/html/dca/html/pr2010/pr_022510.shtml.
3
http://www.fdic.gov/householdsurvey/2012_unbankedreport_app_h-i.pdf.
 
 2
particular individual is the greatest determining factor in whether he or she opens anaccount or not.Opening a bank account is a critical building block toward financial empowerment. New
York City may be the beating heart of the world’s financial markets, but with nearly 1
million New Yorkers lacking a bank account, we are failing to truly provide the benefitsof the banked economy to the working class and maximize the fiscal health andeconomic vitality of the city.
The Comptroller plays a critical role in the City’s banking system, from
advising on thefinancial health of the city, serving on the New York City Banking Commission,supporting the Banking Development District Program to working with religiousinstitutions and community organizations to organize citywide conferences andseminars regarding financial literacy and financial products and services offered bybanks. As Comptroller, Scott will use this authority, as well as the power of the bully pulpit, tobring banking and financial literacy to all New Yorkers. Specifically, Scott will:
Expand Bank On Manhattan, which he pioneered as Manhattan BoroughPresident, to link New Yorkers to affordable, safe checking accounts in their neighborhoods and promote financial well-
being in the city’s communities
.
Develop an innovative public-private partnership based on a model program inSan Francisco that offers every student entering kindergarten in public schools acollege savings account with the first deposit made by the City.
 
Utilize the Comptroller’s banking and fiscal advisory
responsibilities deposits topromote banks with City deposits to provide additional lending to smallbusinesses and assist New Yorkers struggling with foreclosure.
 
Work with other City agencies, including the Department of Small BusinessServices, to bring critical workshops on financial literacy and businessdevelopment to neighborhoods throughout the five boroughs.
 
Recommendations
Expand Bank On Manhattan Citywide as Bank On NYC 
Bank On Manhattan is a public/private partnership, based on a national model that aimsto help unbanked New Yorkers open low-cost, safe checking accounts and createopportunities for financial education in the community. Its nine financial partners offer achecking account with certain baseline features, including low fees, low minimumopening deposits and balances, overdraft protection, and more.
During Scott’s tenure as Borough President, the
 
Bank On Manhattan program broughtmore than 12,000 low-income
residents into the ―banked‖ world—
saving each individual
 
 3
hundreds of dollars a year in check cashing fees and setting them on the road tofinancial security and promoting broader economic stability for the city.
4
 
As Comptroller, Scott will make it his mission to transform Bank On Manhattaninto Bank On NYC
helping people in underbanked communities in all fiveboroughs.
Start Financial Literacy Early with a Kindergarten to College Savings Plan
Bank On Manhattan has done a tremendous job bringing the power of banking toworking class people throughout New York City. The financial education componentprogram of the program has also empowered over 30 organizations to host Bank OnManhattan financial education workshops that have reached more than 800 individualsin need, but we should not wait until people reach adulthood to introduce them to thecore concepts of saving, financial planning, and account management.
 
 According to a2010 studyfrom the Center for Social Development at WashingtonUniversity in St. Louis, children with a savings account are up to seven times more likelyto attend college than children without an account.
5
Moreover, many researchers
believe that opening a savings account not only increases a child’s chances of attending
college by helping to reduce its cost, but also by making college a long-term goal for thechild from day one.
As Comptroller, Scott will work with the Mayor and the private sector to introduce
“Kids, Cash, and College”—a program modeled after San Francisco’s
groundbreaking Kindergarten to College plan that is the
 
nation’s first universal
college savings account program.
6
 
KCC will provide
every 
New York City student entering kindergarten in our publicschools a college savings account of their own. In addition, the City (and potentiallyprivate sector sponsors) will provide the initial deposit of $50 to kick-start their pathtoward higher education and financial literacy.
7
Scott has already demonstrated throughBank On Manhattan that such an approach can work
 –
everyone that attends aworkshop and opens an account receives a $50 initial deposit from the program. In SanFrancisco, private donations from local nonprofits provide additional bonus payments for good saving behavior, including a match of up to the first $100 that a family places in itsaccount.
8
 
4
An average household in Manhattan without a bank account will spend approximately $530 a year to cash their  paychecks and pay their bills; see: http://bankonmanhattan.com/.
5
http://csd.wustl.edu/publications/documents/wp10-01.pdf.
6
http://www.k2csf.org/.
7
If resources allow, New York City should boost the initial deposit to $100 for low-income children who qualify for 
free or reduced lunch. In 2013, NYC DOE has approximately 70,000 kindergarten slots. KCC’s annual cost would
therefore begin at $3.5 million annually, with the cost expected to rise modestly as more students attendkindergarten.
8
http://www.governing.com/blogs/view/gov-why-san-francisco-gave-every-kindergartener-in-public-school-a-bank-account.html.

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