AB 2006 Authorizes State Credit Unions to Provide Services to the Unbanked
Bill Update: AB 2006 (J. Perez) was signed by Governor Brown on September 7.
CFC Position: Support
AB 2006 (Perez) enables state-chartered credit unions to provide vital financial services to Californians who do not have bank accounts. “Unbanked” residents are concentrated in lower income communities and have had to utilize predatory financial institutions for such basic services as check cashing, purchasing a money order, or transferring money to family members.
Federal legislation enacted in 2006 enabled federally chartered credit unions to offer check cashing, money order and money transmittal services to persons in the credit union’s field of membership, regardless of their membership status. This provided a better alternative to the check cashing storefronts that have proliferated in lower income neighborhoods and that charge exorbitant fees to a segment of our community that lacks the financial assets to open bank accounts.
Existing law prohibits an officer, director, committee member, or employee of a state-chartered credit union from extending any benefit or service of the credit union to any person, unless that person is admitted to membership in the credit union. Enabling state credit unions will open up several hundred new outlets throughout California, making it easier for the unbanked to have consumer- friendly alternatives for essential financial services.
Credit unions are non-profit consumer cooperatives, and have a strong record of providing safe and economical financial services to their members. AB 2006 creates a level playing field for state chartered credit unions to offer services comparable to those now permitted for federally chartered credit unions.