CHICAGO – Underserved communities, which tend to be low-income and immigrant, will have expanded access to banking services under a new law backed by state Rep. Aaron Ortiz, D-Chicago.
“It’s unacceptable that working-class communities often lack the choice of basic banking services which forces them to rely on predatory entities like payday lenders,” Ortiz said. “This legislation will ensure working families are not locked into a perpetual of debt as they lose their hard-earned money paying off outrageous fees and high interest rates.”
Ortiz voted to pass Senate Bill 1332, which creates the Bank On Illinois program, enabling the Illinois Comptroller’s office to partner with banks, credit unions, consumer advocates and community organizations to certify financial products that benefit consumers and communities that lack traditional banking services. Under the Ortiz-backed law, underserved communities will have access to fair financial service options like no maintenance fees and low or no overdraft fees. Bank On programs will also provide secured personal loans that allow consumers with low credits scores to begin rebuilding their credit. The bill received bipartisan support, and was recently signed into law.
According to the Federal Deposit Insurance Corporation (FDIC), more than one-fifth of Illinois households do their financial business outside of the traditional banking system. Lack of access to traditional banking services forces people to rely on entities like payday lenders, cash checkers and other predatory lenders that charge outlandish fees for basic services and high interest rates on lending. The Brookings Institute found that on average, someone who has to rely on these predatory services pays roughly $40,000 in fees over a lifetime.
“In order to build a stronger Illinois, we must invest in all of our neighborhoods, ensuring working families are able to access credit and build wealth,” Ortiz added. “I’m grateful for the governor’s commitment to reinvesting in communities that have long been forgotten or ignored by self-serving politicians.”