BILL REQ. #:  H-4491.2 

Read first time 01/24/08.   Referred to Committee on Insurance, Financial Services & Consumer Protection.

     AN ACT Relating to establishing the financial services intermediary; and adding a new chapter to Title 43 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that many residents in the state do not have access to the mainstream financial products and services that are available to the general public. Despite efforts to address these inequities, a significant number of people remain unbanked or underbanked. New and innovative approaches need to be created to encourage asset building, strengthen economic prosperity, and ensure the sustainability of these communities.
     The legislature intends to establish a framework that will provide access to capital and services to low-income individuals through a network of community-based organizations, financial institutions, consumers, and local and state governments. The creation of this state framework will allow state-chartered and tribal financial institutions and credit unions to provide essential financial products and services to low-income clients. These include, but are not limited to: Earned income tax credit services, individual development accounts, short-term loans, wire transmitting services, check cashing, mortgage loan assistance, and financial literacy training to educate the client on the importance of savings, investing, and borrowing.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Individual development account" or "account" means an account established by contract between a low-income individual and a sponsoring organization for the benefit of the low-income individual and funded through periodic contributions by the low-income individual that are matched with contributions by or through the sponsoring organization as provided in RCW 43.31.450 through 43.31.485.
     (2) "Low-income individual" means a person whose household income is equal to or less than either:
     (a) Eighty percent of the median family income, adjusted for household size, for the county or metropolitan statistical area where the person resides; or
     (b) Two hundred percent of the federal poverty guidelines updated periodically in the federal register by the United States department of health and human services under the authority of 42 U.S.C. Sec. 9902(2).

NEW SECTION.  Sec. 3   (1) The financial services intermediary is established in the department of financial institutions to improve the ability of low-income individuals to access and use mainstream financial products offered by financial institutions.
     (2) The financial services intermediary shall:
     (a) Coordinate with financial institutions to leverage the financial resources of low-income individuals served by community-based asset building coalitions to offer mainstream financial services to those individuals;
     (b) Consult and cooperate with organizations and government agencies that are already engaged in asset building and financial literacy activities, such as the financial literacy public-private partnership established in RCW 28A.300.450;
     (c) Enter into memoranda of agreement with community-based asset building coalitions and financial institutions as provided in section 5 of this act;
     (d) Identify strategies to make more mainstream financial products available to low-income individuals; and
     (e) Perform other duties as deemed appropriate by the intermediary.

NEW SECTION.  Sec. 4   (1) The department of financial institutions and the department of community, trade, and economic development shall jointly establish the financial services intermediary. The director of the department of financial institutions and the director of the department of community, trade, and economic development, or their designees, shall convene and serve as cochairs of the intermediary. The intermediary shall consist of eight members, or their designees, as provided in this subsection.
     (a) The director of the department of financial institutions;
     (b) The director of the department of community, trade, and economic development;
     (c) The state treasurer;
     (d) The executive director of the Washington state investment board;
     (e) The director of the department of revenue;
     (f) The executive director of the housing finance commission;
     (g) The executive director of the higher education coordinating board; and
     (h) The executive director of the Washington state microenterprise association.
     (2) Staff support for the financial services intermediary shall be provided by the department of financial institutions and the department of community, trade, and economic development or a person or nonprofit entity as provided in subsection (3) of this section.
     (3) The financial services intermediary may contract with a person or a nonprofit entity to administer the financial services intermediary who has relationships with the financial services sector and experience working with nonprofit programs involving asset accumulation for low-income individuals.
     (4) The financial services intermediary, in cooperation with the department of financial institutions and the department of community, trade, and economic development, shall report to the legislature November 15th of each year on:
     (a) Whether programs of the financial services intermediary have resulted in broader access to and use of mainstream financial services and products by low-income individuals; and
     (b) From the perspective of financial institutions, whether low-income clients who have participated in programs of the financial services intermediary are better informed about the financial services and products available to them.

NEW SECTION.  Sec. 5   (1) Financial institutions and community-based asset building coalitions choosing to participate in the programs of the financial services intermediary shall enter into and comply with the terms of memoranda of agreement with the financial services intermediary.
     (2)(a) Memoranda of agreement between financial institutions and the financial services intermediary shall require that financial institutions:
     (i) Offer mainstream financial products and services to low-income individuals who are party to a contract as provided in subsection (3) of this section;
     (ii) Cooperate with and provide feedback to the financial services intermediary, community-based asset building coalitions, and other organizations and governmental agencies that are offering financial literacy programs;
     (iii) Provide information to the financial services intermediary to assist in meeting its reporting requirements in section 4(4) of this act; and
     (iv) Meet other requirements as established through the memoranda of agreement with the financial services intermediary.
     (b) Memoranda of agreement between community-based asset building coalitions and the financial services intermediary shall require that community-based asset building coalitions:
     (i) Offer individual development account programs as provided in RCW 43.31.450 through 43.31.485;
     (ii) Offer financial literacy programs, approved by the financial services intermediary, for low-income individuals;
     (iii) Provide information to the financial services intermediary to assist in meeting its reporting requirements in section 4(4) of this act; and
     (iv) Meet other requirements as established by the financial services intermediary.
     (3) Low-income individuals who participate in the programs of the financial services intermediary shall:
     (a) Adhere to rules and procedures for individual development accounts as established in RCW 43.31.450 through 43.31.485;
     (b) Participate in financial literacy programs approved by the financial services intermediary; and      
     (c) Meet other requirements as established by the financial services intermediary.

NEW SECTION.  Sec. 6   (1) The department of financial institutions shall track and monitor financial institutions' participation in the programs of the financial services intermediary and share this information with the intermediary.
     (2) Participation by banks in the programs of the financial services intermediary shall be considered by the director of financial institutions when he or she investigates and assesses the bank's performance record in meeting community credit needs as provided in RCW 30.60.010.

NEW SECTION.  Sec. 7   Sections 1 through 6 of this act constitute a new chapter in Title 43 RCW.