Six banks have joined a statewide Iowa program for the working poor that will match some of their savings for buying a home, starting a business, or post-secondary education.
Iowa and the federal government will split the $1.2 million cost of the five-year pilot program, which started this month.
Washington has helped before with local programs of this kind, but never with statewide programs, said Debra A. Carr of the Iowa Institute for Social and Economic Development, the government agency in charge. Ms. Carr is its statewide program manager.
The Iowa program will match up to $4,000 for individuals and $8,000 for families. "We're giving assistance to folks who are already trying to help themselves," Ms. Carr said. "This benefits the individual or the family as well as the surrounding community,"
Poor people contact Ms. Carr's agency to join the program. After taking two financial training courses they open deposit-only savings accounts at participating banks, which must waive minimum balance requirements.
To obtain the matching funds, the individuals must keep going to bank-administered financial training classes.
The first bank to sign on was $1.1 billion-asset Bankers Trust Co. of Des Moines, which is not related to the New York bank that Deutsche Bank bought last year. Michele Howell, community development vice president of the Iowa bank, said the program will show participants "how to clean up their credit and budget their limited resources."
"A lot of people are not banked at all," Ms. Howell said. "They're using check services, payday lenders, and depleting what little money they have. This gets them on the right track."
The five other banks in the program include Firstar Bank. Ms. Carr's agency is trying to recruit more.
- Craig Woker