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Low Cost
Slow Adoption
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In
issue 99:09:02, we told you about ETAs, Electronic Transfer Accounts.
These are government-subsidized low cost bank accounts offered to
low-income Americans so that they can receive their government benefits
checks without getting gouged by check cashers. Now,
about a year after the program started, only 700 people in the entire
country have signed up. ETAs were expected to attract approximately 6
million low-income Americans and banks were to earn $12.60 for each
account. Part
of the reason the accounts haven’t taken off is because only one major
bank, Wells Fargo, offers ETAs. Even then, they are only offered in select
states. Why
haven’t banks signed on? Well, some believe that ETAs are risky and lack
a profit margin. They may have a point, as banks are required to accept
applicants even if they have bounced checks before. Also, some banks have
gotten into the check cashing business themselves by either developing
check-cashing ATMs or investing in check cashing chains. Also,
the ETAs haven’t been marketed well. Since the large banks haven’t
signed on, the Treasury has delayed advertising and inserting flyers with
government checks. “This
thing is a complete failure,’’ said Ed Mierzwinski, consumer program
director at U.S. Public Interest Research Group. “The idea of paying
banks a $12.60 bribe to open affordable accounts clearly isn’t
working.’’ Critics
say that the ETAs weren’t designed with the poor in mind in the first
place. They say that the goal was to save government money in postage from
mailing government checks. “The
numbers are disappointing,’’ said Donald V. Hammond, assistant
Treasury secretary in charge of the program. “We would like to have seen
more institutions actively marketing accounts by this point in time.”’
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