We must find ways to help these families overcome barriers that make it difficult for them to enter the financial mainstream and build a stable, secure financial future. Stegman contends that a little-noticed amendment authorizing electronic funds transfers, or direct deposit, of federal benefit checks can have maximum impact if coupled with a national savings program to help working poor people save money. The federal government wants to shift from paper checks to electronic deposit for all federal benefits to save millions in processing costs each year. But a major barrier to this effort is the large number of benefits recipients without bank accounts. Banks have little incentive to provide accounts that don't generate profits.
Poor people have little incentive to open accounts without opportunities to save.
Stegman proposes simultaneously offering incentives to banks to encourage them to extend accounts to unbanked families through the proposed First Accounts legislation. This legislation would provide incentives to financial institutions to match funds saved by low-income working people who opened special savings accounts. Stegman, former assistant secretary at the U.S. Department of Housing and Urban Development, works through the Center for Community Capitalism to create public policies that foster innovative public-private partnerships that reinvigorate markets and increase jobs, incomes and wealth in America's disadvantaged communities.