Fresh from completing a merger that made it the country's largest black-owned bank, OneUnited Bank has rolled out a low-cost package of accounts aimed at unbanked residents in the inner-city neighborhoods where it does business.
Kevin Cohee, the $500 million-asset company's chairman and chief executive officer, unveiled the OneUnited Bank Membership Program Monday at a news conference in Los Angeles. He said banks - particularly black-owned banks - need to do a better job of providing financial services to the poor.
"Despite our progress, we still see a proliferation of check-cashing outlets in inner-city communities, while nearly one third of the residents do not have bank accounts," he said.
OneUnited, formerly Boston Bank of Commerce, completed its purchase of Family Savings Bank in Los Angeles on Dec. 31, supplanting the $469 million-asset Carver Bancorp Inc. in New York as the nation's largest black-owned bank company. It also has branches in Miami and is eyeing expansion into other cities with large black populations, including Washington and Detroit.
(It was rumored to be interested in Independence Federal Savings Bank in Washington, which recently hired an investment bank to help it sort through its strategic options. OneUnited's chief counsel, Robert Patrick Cooper, refused to comment, but Independence may have become less attractive because of allegations made this month that it was involved in an embezzlement scandal at the Washington Teachers Union.)
Enrollees in the Bank Membership Program can open as many checking and savings accounts as they need, for a flat monthly fee of $5. There are no minimum-balance requirements and no transaction fees.
Two leading proponents of bringing low-cost banking services to poorer people said the initiative is a step in the right direction, though it removes only one of the barriers - balance minimums - that keep these people out of banks.
John Caskey, a professor of economics at Swarthmore College in Swarthmore, Pa., said he did not "expect it to attract too many people who are outside the system right now."
He and Jean Ann Fox, the director of consumer protection at the Consumer Federation of America in Washington, said that for the program to really resonate with unbanked consumers, it would need an affordable overdraft protection plan. Ms. Fox said that it is the $25 and $30 charges banks assess each time an account is overdrawn that keep poor consumers - whose balances frequently hover close to zero - from maintaining checking accounts.
But Teri Williams, OneUnited's executive vice president and Mr. Cohee's wife, said that removing minimum balances was more important than making overdrafts less painful.
Minimum-balance requirements "don't work in our community," she said. "Expecting people to keep $10,000 in a bank account is unrealistic."
Ms. Williams, who helped design Membership Banking, said OneUnited plans to promote financial literacy.
"We're going to educate people" not to write checks in excess of their account balances, she said. "It's a question of building up a nest egg so that you're not living beyond your last dollar."
A number of banks have been trying to serve the unbanked population, which a recent article by two officials at the Federal Reserve Bank of Chicago put at 10 million.
Earlier this month, for instance, Milwaukee's Marshall & Ilsley Corp., the holding company for the $30.1 billion-asset M&I Bank, announced its M&I Thrift Savings Account. Those signing up for it pay no fees as long as they maintain a $50 balance, and they are eligible to receive loans of as little as $1,000.
Others have taken advantage of a Clinton administration initiative that makes federal money available to banks willing to offer no-fee deposit accounts. But most bank companies, including Marshall & Ilsley, are emphasizing newly arrived immigrants more than inner-city blacks in customer acquisition.
