NEW YORK - President Clinton on Thursday trumpeted plans for government-designed, low-cost bank accounts as part of a tax break and economic development package that will anchor the final budget proposal of his presidency.
"Far too many families have no bank accounts at all," he said in a luncheon speech on the second day of the Wall Street Project Conference hosted here by Rev. Jesse L. Jackson's Rainbow/Push Coalition. "They wind up spending a lot of their precious money on unnecessary fees" to cash checks and pay bills.
The President provided little detail about the so-called "First Accounts" except to say the administration would work with the financial services industry to offer affordable services for low-income Americans, provide safe access to money through more automated teller machines in underserved areas, and deliver accompanying financial planning services.
An administration official said that the accounts would be strictly voluntary for financial institutions and consumers. The President next month will ask Congress for $30 million in fiscal year 2001 to fund a test program for these accounts, the official said. They could resemble the accounts the Treasury Department created last year for electronic payment of federal benefits to people without bank accounts, but the First Accounts would be aimed at a younger, more urban group of low-wage earners who do not receive benefits payments and thus are not eligible for the existing Treasury-designed accounts.
The official added that First Accounts, although still on the drawing board, would function like checking accounts and would be separate from the President's proposal for government-financed universal savings accounts, or "USA Accounts."
In addition, President Clinton, trying to smooth over relations with community groups, promised a renewed effort to promote the Community Reinvestment Act.
He said he would hold a roundtable discussion with industry executives this spring to foster corporate appreciation of the 1977 law that requires banks and thrifts to make loans to creditworthy borrowers in all segments of their markets.
"We had to work hard to ensure that when we passed the financial modernization bill and expanded the powers and opportunities for banks, we expanded the CRA as well and kept it instead of weakening it," said President Clinton, who was introduced with high praise for his economic policies by Citigroup co-chairman and co-chief executive Sanford I. Weill.
Wider use of the CRA combined with additional New Markets and Empowerment Zone tax credits and other economic initiatives unveiled this week, President Clinton said, would benefit many minorities who missed out on the economic boom.
But activists are clearly still wounded by the President's signing of the financial reform law in November. They disputed claims by the President and other allies at the conference that the CRA was protected and, by some accounts, expanded.
"Make no mistake about it, CRA was weakened," said John Taylor, president of the National Community Reinvestment Coalition. He criticized the law for widening the period between CRA exams for most small banks to at least four years from the typical 18 months, and for imposing burdensome reporting requirements on community groups.
Representatives from Citigroup, Bank of America Corp., and other financial giants said they are ahead of schedule in satisfying their multibillion-dollar community reinvestment commitments, but San Francisco Mayor Willie Brown chastised them for making low-risk loans under the guise of the CRA that "just don't get translated into dramatic improvements" for inner cities.