An estimated 50 credit unions are slated to sign up for the "bank on" program that was started three years ago in California and is now expanding to other states with an eye to assisting the unbanked.
So far, more than half a dozen credit unions in Rockford and suburban Chicago have signed up for the program that was unveiled at press briefings coordinated by Giannoulias in Rockford, Aurora and downstate with the Illinois Credit Union League also taking part.
The "bank on" program is aimed at encouraging financial institutions to help the unbanked avoid payday loans and get access to financial counseling, Giannoulias said.
Illinois CU leaders taking part in the program have stressed that many minorities in cities like Rockford and Chicago "have been left behind in the traditional banking system."
Ed Berg, CEO of First Northern CU, Chicago, said by participating in the program, Rockford community groups and nonprofits "can refer people to our credit union who truly need our help. Without partner referrals, we may never be able to reach them."
Karen Jurasek, president/CEO of Generations CU in Rockford, said many of the nonprofit partners in the program provide essential services, such as housing and job training, "but their clients lack the skills necessary to manage their housing expense and their paycheck."
A study by the Pew Charitable Trust found that Rockford, a manufacturing city of 160,000 and once an auto making hub, is home to 4,600 unbanked households, "which means these households rely on check cashers, payday lenders and pawn shops to cash checks, pay bills or wire or borrow money instead of using a bank or credit union."
Jurasek of Generations noted that many of the unbanked "have a language barrier or lack transportation," which hinders access to financial institutions. He said the "Bank On Rockford" program is a "dynamic program that provides a conduit" to these individuals.
The average unbanked household in Illinois pays $574 a year just to cash payroll checks, leaving $22,376 in remaining income, said Giannoulias.
"Too many Rockford residents are ripped off by check cashers and payday lenders and become trapped in an endless spiral of debt," said the state treasurer.