Gov. J.B. Pritzker today signed legislation designed to make it easier for low-income people to find low-cost products offered by banks, and while the measure doesn’t require any financial institution to do anything, it certainly can’t hurt.
The bill specifically is targeted at helping the estimated one-fifth of Illinois households who conduct their financial affairs outside of the traditional banking system, often by using relatively high-fee payday loan outlets, auto title lenders, pawn shops and the like. According to Pritzker, such folks will end up paying an average of $40,000 in fees over their lifetimes.
The new measure doesn’t directly change that but authorizes Illinois Comptroller Susana Mendoza to certify and publicly post information about low-cost products offered by banks and credit unions that include features such as no maintenance fees, limited charges for overdrafts and secured personal loans for those with low credit scores.
“Many of us take for granted being able to cash a check at our bank, open a savings account to plan for our family’s future or secure a loan at a reasonable interest rate” Mendoza said in a statement. “But thousands of Illinoisans don’t have these options, and they pay for it in inordinate fees and sky-high interest rates. Bank on Illinois will help them break that cycle.”
The bill doesn’t empower Mendoza to develop new programs, merely to publicize existing products that pass muster. And to do even that, she’ll work with an advisory commission. That may explain why the bill passed both houses of the Legislature by unanimous votes.
But, as one insider put it, “Look at this is sort of reverse shaming. You’d think that this list would encourage banks to offer more programs like this.”
Perhaps. Like I said, it’s a start.