Two states are considering duplicating a program in New York that rewards banks with government deposits for opening branches in neighborhoods with little or no banking services.

Lawmakers in California and Texas have introduced bills that would create "bank development districts," specially designated low-income areas that are underserved by banks...

The bills are modeled after a nine-year-old New York law that offers banks select state and municipal deposits for two years, partial property tax breaks for 10 years, and other perks for opening branches in specially designated districts...

California could use a similar program - more than a fourth of adults there are unbanked, said Olivia Calderon, a policy representative in the Sacramento office of the New America Foundation. The nonprofit public policy institute helped draft Assembly Bill 1502, from Rep. Ted W. Lieu, D-El Segundo.

"Too many people are living outside the financial mainstream, vulnerable to burglaries or alternative outlets that charge them ridiculous rates to do something as simple as cash their paycheck," Ms. Calderon said. "If banks build branches in their communities and then reach out to them, people will come..."

For the complete article, please visit the American Banker website.