Bank on California will be based on the successful Bank on San Francisco initiative, which has resulted in 11,000 new starter checking accounts in the city. Institutions participating in the program are included in the city's literature and marketing materials, and can work with other participating non-profits to bundle services, but don't receive any financial incentives or assistance.

Four credit unions participated in San Francisco's program. They included the $600 million San Francisco Federal Credit Union, which has a 30,000 members and a community charter. That CU's CEO, William Wolverton, said participating banks signed up the majority of the 11,000 new customers thanks to their extensive branching networks. At the same time, he said, San Francisco FCU has seen some second-chance checking activity as a result of the program. Wolverton added that in his experience, many unbanked in San Francisco avoid mainstream accounts because they're dodging unpaid taxes, child support, and parking tickets.

Joking that his impending retirement allows him to make controversial statements, the CEO also opined that if the government truly wants to grow mainstream banking numbers, it needs to be more flexible with people who can't afford to pay levies.

"If you call any credit union department that handles levies, they'll tell you they have 100 to 150 levies per month they have to take care of," Wolverton said. "Financial institutions have become an extension of the government's collection department, and for me, that's an important piece of the puzzle."

Wolverton said he discussed his concerns with State Treasurer Bill Lockyer, but was told the levies aren't going away any time soon, especially in light of the state's budget crunch.

"I hate to criticize the program, because it really is a good initiative, but I think it's going to take a little bit more than this," Wolverton said.

The governor's 2008-2009 budget, released a few weeks ago, is attempting to correct the state's estimated $14 billion deficit over the next 18 months. With the trimmed budget comes little hope of any new legislation that requires state funding, Fong said.

Fong said the budget is so slim, he's not concerned about AB 1502, a bill proposed last year that would create a Banking Development District Program to provide tax incentives, access to below-market public funds, real estate assistance, and other services to help banks–but not credit unions–recoup the costs of providing services to the unbanked. The bill missed a Jan. 15 deadline to move out of committee for the 2008 legislative season, Fong said, and is essentially dead. He added that the bill's sponsor has a good relationship with credit unions and had also authored last year's state Credit Union Modernization Bill (AB 1518), so Fong didn't feel the omission was intended as a slight.

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