Fearing that if it didn't act, the state legislature would, a group funded by the Massachusetts Bankers Association has gotten more than 140 banks to agree to lower fees and minimum deposit requirements for checking and savings accounts.

The Massachusetts Community and Banking Council, funded by the state industry association and formed in 1990 after several acrimonious battles over redlining, said Monday that participating banks won't charge more than $3 a month for checking and a dollar a month for savings accounts.

In addition, customers can now open checking and savings accounts with only a $10 deposit. The checking accounts will also offer eight free withdrawals a month.

Relaxed Requirements

Banks involved have agreed to loosen identification requirements, as well. Customers who can't produce a credit card or a driver's license will be able to use utility bills, for example, as identification.

The new account rules go into effect immediately.

Council president Richard Pollard, who is also president of BayBank Boston, said banks agreed to create the new accounts because the action allows them to offer services to the poor and "still make some money."

Banks hammered out the compromise with activists hoping to avoid state legislation that could have been more costly to industry.

Although no legislation is currently pending, bills in the past that never became law "scared the banks into taking a look at some of these issues," said Thomas Callahan, a council member and director of the Massachusetts Affordable Housing Alliance.

The council, which includes bankers and community organizers, was founded in 1990 after Home Mortgage Disclosure Act data boosted activist claims that banks discriminated in lending and did not provide enough service to minority communities.

As a result of the council's work, most Massachusetts banks now cash welfare checks and offer direct deposit to welfare recipients.

Mr. Callahan welcomed the new, cheaper checking and savings accounts. He said the accounts offer an alternative to check cashing stores, which frequently gouge customers with fees that range between 1% and 10% of check face values.

"Thousands of people have been forced out of the banking system because of the high fees in opening a checking account and doing basic business with the banks," he said.

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